Tesla ( TSLA 1.02% ) is one of nine American companies with a market capitalization of $1 trillion or more, but I think it could drop out of that exclusive club in 2026. Its stock is trading at a sky-high valuation, which not only limits potential upside in the near term, but also opens the door to a sharp correction.

Investors are paying a hefty premium for Tesla stock in the hope the company's Cybercab autonomous robotaxi and Optimus humanoid robot become wildly successful. It's entirely possible that will happen, but both products are years away from commercializing at scale. In the meantime, most of Tesla's revenue comes from its electric vehicle (EV) business, which is on track for a second straight year of declining sales.

The competition is eating Tesla's lunch in the EV

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