Mobileye Shares Under Pressure Following Disappointing Forecast

Mobileye Global Inc A US60741F1049

Mobileye Global Inc A (MBLY) continues to face significant headwinds, with its stock recently touching an all-time low and trading near $9.80. The primary catalyst for this sustained weakness is a subdued 2026 outlook that fell short of market expectations, placing considerable pressure on the company's valuation.

The company's fourth-quarter 2025 results presented a mixed picture. Revenue for the period came in at $446 million, a 9% year-over-year decline, though it slightly exceeded the consensus estimate of $432.3 million. For the full year 2025, Mobileye reported a net loss of $392 million, with a non-GAAP net income of $286 million. The quarterly figures showed a non-GAAP profit of $45 million, a 58% drop from the prior year, and a GAAP quarterly loss of $127 million. The gross margin for Q4 contracted to 67% from 69% a year earlier, while operating income fell to $41 million from $101 million.

This performance, coupled with the forward guidance, triggered several analyst downgrades and price target reductions. For instance, RBC Capital lowered its target to $13 from $14, and Morgan Stanley reduced its target to $12 from $13, maintaining an Equal-Weight rating. The current average price target among 26 covering analysts is $16.50, with a range spanning from $10 to $27.

A Cautious 2026 Outlook

The guidance for 2026 has been a key disappointment for investors. Mobileye projects revenue between $1.90 billion and $1.98 billion, implying growth of just 0% to 5% over 2025. This forecast sits notably below the FactSet consensus and various analyst projections. Concurrently, the company anticipates operating expenses will rise by approximately 10% to around $1.1 billion. Drivers for this increase include the acquisition of Mentee Robotics, foreign exchange losses linked to the appreciation of the Israeli shekel, and continued investment in product infrastructure. Management also expects adjusted gross margins to decline in 2026.

Volume, Pricing, and Long-Term Strategy

Operational challenges are adding to the profitability pressure. The company reported an 11% decline in EyeQ system sales for Q4, citing inventory imbalances at customers as a headwind. For 2026, Mobileye forecasts shipments of roughly 37 million EyeQ units. It expects a front-loaded first quarter with about 10 million units as customers restock, followed by a stabilization at approximately 9 million units per quarter for the remainder of the year. Furthermore, the average system selling price is projected to decrease by about $0.80 per unit. This reduction is attributed to factors including a lower-priced second chip in the "Bridge" dual-chip EyeQ4 program and shifts in the vehicle mix.

Despite near-term pressures, the company continues to advance its long-term strategic initiatives. Its eight-year expected automotive revenue pipeline has grown by 42% over three years to $24.5 billion. Mobileye recently unveiled a "fast-slow" AI architecture for robotaxis and has an agreement with Volkswagen for the deployment of up to 100,000 robotaxis by 2033. The acquisition of Mentee Robotics expands its footprint in humanoid robotics.

Conclusion: Near-term pressure on the stock is likely to persist until key metrics—including shipment volumes, average selling prices, and margins—show signs of stabilization. A recovery in EyeQ sales beyond the first-quarter inventory restocking and a firming up of gross margins will be critical for any sustained share price recovery.

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