Technology has been one of the worst-performing sectors in the stock market this year, which is in stark contrast to its monster gains during 2020 and 2021. Not even prolific tech investor Cathie Wood has escaped the carnage. Wood is the head of Ark Investment Management, and its flagship Ark Innovation ETF (ARKK 3.45%) has lost 57% of its value this year.

Ark is known for investing in innovative companies with long-term time horizons, and despite the Ark Innovation ETF suffering steep losses this year, it has still more than doubled since its inception in 2014. That highlights the importance of ignoring short-term market gyrations and focusing on the big picture.

Three of Ark's seven ETFs currently own electric vehicle powerhouse Tesla (TSLA 3.87%), and those bets might be set to pay off big time. Tesla stock hit a 52-week low of $206.86 in May, and Ark thinks it could soar to $1,533.33 by 2026. The stock has already bounced to about $270, but that leaves plenty of upside potential for investors who buy now and take a long-term view.

A black Tesla car driving on an open road in the snow.

Image source: Tesla.

Why Tesla is so attractive to big investors

Not only is Tesla the largest producer of electric vehicles (EVs) in the world, but it's also the only profitable pure-play EV stock investors can buy in the U.S. right now. Tesla's competitors are either existing car makers that are still carrying their legacy combustion engine vehicle business, or they're new, up-and-coming EV hopefuls that haven't scaled production yet.

Plus, Tesla has developed some of the most advanced autonomous self-driving software, which could be the future, not just for personal vehicles but also the mobility industry. The company has revealed plans to release a fleet of fully-autonomous robotaxis in 2024, which won't require any human intervention.

Investors should take the timeline with a grain of salt, because it's not the first time Tesla has hinted at this move -- but it's certainly the trajectory the mobility industry is following. One estimate suggests autonomous vehicles will be a $2.1 trillion market opportunity by 2030.

But beyond the car industry, Tesla continues to expand its presence in residential solar and battery storage. Demand is growing rapidly, and the company has utilized a new facility solely to produce these batteries to ensure adequate supply. According to Tesla's 2021 impact report, the company has deployed four gigawatts of solar systems since 2012, generating 25 terawatt hours of clean energy.

That's more energy than every Tesla vehicle and every Tesla production facility has consumed over that time frame combined. It's cementing Tesla's legacy as a true green energy company and not just a carmaker.

Still, the cars do matter

In 2012, Tesla produced just 3,100 electric vehicles. In 2021, that number rocketed to 930,422, and it resulted in $53.8 billion in revenue for the year.

The company continues to rapidly expand its capacity with the recent opening of its new gigafactories in Austin and Berlin, which will nearly double its annual manufacturing capability to two million vehicles. Analysts are betting that once those facilities have ramped up, Tesla could generate $119 billion in annual revenue as soon as 2023.

It's likely electric vehicles will remain the heart of Tesla's business for years to come, especially as the company has outlined further expansion plans that include 10 to 12 new gigafactories with a total annual capacity of 20 million cars by 2030.

Cathie Wood is extremely bullish on Tesla stock

Combined, Ark's exchange-traded funds hold 3.7 million shares of Tesla worth about $1 billion right now, but that value might be set to soar. In April, the tech investment firm revealed it expects red-hot growth from Tesla by 2026 with the stock price potentially hitting $4,600. That was before the company's recent 3-for-1 stock split, so the adjusted price target is $1,533.33.

That means a potential upside of 474% from where Tesla stock trades as of this writing. And if it gets there, it would represent a 641% gain from its 52-week low set just three months ago. 

Ark anticipates Tesla's robotaxi business will really take off once it launches, predicting it could make up 60% of the company's value by the target date. But electric vehicles will still account for the majority of its revenue according to Ark's modeling.

The $1,533.33 price target sounds ambitious, but it's worth remembering Tesla stock has gained more than 21,400% since it became a publicly-traded company in 2010. Not to mention, Tesla does have a history of proving the doubters wrong.