When Tesla Inc. (TSLA) reported fourth-quarter deliveries of 418,227 vehicles, down 16% year-over-year and missing analyst estimates, the headlines didn't look great. But according to Gene Munster of Deepwater Asset Management, there's a much more interesting story hiding beneath those numbers.

Looking Past the Tax Credit Distortion

The 16% decline looks rough at first glance, especially coming after a strong third quarter that saw deliveries rise 7% year-over-year. But Munster argues that Q3 got an artificial boost from customers rushing to take advantage of the federal EV tax credit before it expired in September.

"Cutting through the noise around the timing of the tax credit expiration, I believe deliveries would have been down ~5% in both September and December, signaling stabilization that should allow investors to remain focused on autonomy," Munster wrote in a recent blog post.

By his math, about 55,000 units that Tesla delivered in Q3 would normally have landed in Q4 or even Q1 of this year. Strip out that timing effect, and the picture looks more like stabilization than deterioration. That's particularly meaningful when you consider Tesla saw year-over-year declines of roughly 13% in both Q1 and Q2 of last year.

The Real Story: Market Share Gains

Here's where things get interesting. While Tesla's deliveries fell 16%, the overall U.S. EV market dropped 35% in October and November. That math tells you something important about market share.

"I believe these results indicate the first U.S. EV market share gains in a couple of years," Munster said.

Tesla's U.S. market share had slipped to under 50% in recent years as competition heated up. But according to Cox Automotive data for the first two months of Q4, Tesla's share jumped to roughly 65%. While that data excludes December, Munster believes the full quarter likely shows "a material improvement" in Tesla's competitive position.

That's a significant turnaround in a market where everyone else seems to be struggling even more than Tesla.

Why This Delivery Miss Didn't Tank the Stock

In previous years, missing delivery estimates would have sent Tesla shares on a wild ride. This time? Not so much. Tesla stock actually rose 4.02% to $455.70 following the report.

The reason is simple: investors have moved on. They're increasingly focused on Tesla's AI initiatives rather than quarterly vehicle delivery figures. As Munster put it, "Investors are likely to look past any December quarter delivery miss, as the results should suggest the auto business is beginning to stabilize."

The market has been rewarding that view. Tesla shares have outperformed the Nasdaq over the last six months and since the company's last delivery report on October 2.

"Investors are increasingly optimistic that Tesla is one of the best investments in physical AI, driven by FSD, Robotaxi and Optimus," Munster noted.

The Trillion-Dollar Question

Tesla currently trades at a market capitalization of $1.6 trillion, which Munster believes already reflects a premium beyond just the automotive business. But he thinks that's still undervaluing the company's AI potential.

When asked what Tesla should be worth given its leadership position in physical AI, Munster didn't mince words: "I see that target closer to $4T than $1T."

That's a bold call, but it reflects the fundamental shift in how analysts are viewing Tesla. The company isn't just an automaker anymore—it's an AI company that happens to make cars. Whether that justifies such a massive valuation remains to be seen, but for now, investors seem willing to give Tesla the benefit of the doubt.

Tesla shares are down just 0.5% year-to-date in 2026, trading in a 52-week range of $214.25 to $498.82. For a company that delivered worse-than-expected numbers, that's actually pretty remarkable.