XPeng (NYSE:XPEV) has kicked off employee testing of its Robotaxi platform, which connects ride hailing, autonomous dispatch, and passenger journeys into one service and puts the company’s Physical AI ambitions in sharper focus for investors.

Despite the attention on Physical AI and Robotaxis, XPeng’s share price return has fallen 10.1% over the past month and 36.2% year to date, while the 1 year total shareholder return is down 25.1%. This suggests recent momentum has been weak even as deliveries, AI presentations and new safety partnerships keep the story in focus.

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Bulls see XPeng’s Robotaxi and Physical AI platform as the foundation for a stronger business, while bears point to share price and ongoing losses. Which side does the current valuation case support next?

Most Popular Narrative: 53.7% Undervalued

XPeng's most followed valuation narrative places fair value at $28.16 per share compared with the last close at $13.03, which frames the Robotaxi story within a much larger earnings and margin rebuild.

The analysts have a consensus price target of $26.291 for XPeng based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $33.26, and the most bearish reporting a price target of just $18.27.

Read the complete narrative. Read the complete narrative.

Want to see what is behind a fair value that sits well above XPeng's current share price? The narrative leans heavily on a sharp earnings swing, faster revenue compounding and a richer future profit multiple than the broader auto sector. Curious which mix of margins, growth and discount rate assumptions has to line up for that outcome?

This most popular view uses a discount rate of 11.46% and ties XPeng's Physical AI and Robotaxi push to a long term earnings profile that would support a higher valuation than today's share price implies, while still accounting for ongoing losses and capital needs. Analysts feeding into that narrative are factoring in both XPeng's existing smart EV line up and its licensing relationships as potential drivers of future profitability, even as the stock's recent returns lag the wider US Auto industry and market.

Result: Fair Value of $28.16 (UNDERVALUED)

However, XPeng investors still need to weigh ongoing net losses and heavy capital needs, along with intense Chinese EV price competition that could pressure margins and future assumptions.

Another View: XPeng Looks Expensive On Sales Today

While the popular XPeng narrative leans on future earnings to argue the stock is undervalued, a simple P/S check tells a different story. XPeng trades at 1.1x sales compared with 0.6x for the wider US Auto industry, which suggests a richer price tag than many sector peers.

Even against closer peers, XPeng’s 1.1x P/S is below the 2x peer average, yet still above an estimated fair ratio of 1.5x that the market could move toward. That mix leaves you weighing whether today’s premium to the broader industry is a warning sign or a price you are comfortable paying for XPeng’s Physical AI and Robotaxi ambitions.

Next Steps

With XPeng’s story pulling in different directions, this is a good moment to move quickly, test the numbers yourself and shape your own view. To understand why some investors are still optimistic about its potential rewards, start with the 2 key rewards.

Looking for more XPeng style investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.