Tesla Stock Plunges 14.5% on Earnings Miss, AI Spending Concerns

Tesla shares fell 14.5% on Thursday to close at $319.69, their lowest level since August 2025, after the company reported second-quarter results that missed Wall Street expectations. The earnings disappointment, combined with investor concerns over capital spending on artificial intelligence and robotics initiatives, drove the decline—the largest single-day drop since March 2025 and extending the year-to-date loss to approximately 29%.

Tesla reported Q2 revenue of $28.24 billion, up 26% year-over-year and exceeding the $26.32 billion consensus estimate. However, adjusted earnings per share of $0.33 fell sharply short of the $0.50 estimate, and adjusted EBITDA came in at $3.2 billion versus $4 billion expected. The company's automotive segment generated just over $20 billion in revenue (up 23% annually), but gross profits declined as operating expenses climbed faster than revenue, primarily due to AI-related capital spending and research and development costs.

Tesla confirmed it is expanding its Robotaxi service to seven major metropolitan areas, including new unsupervised operations in Miami, Orlando, and Tampa launched in July. The company said Cybercab production began at Giga Texas, with the vehicles accumulating over 380,000 unsupervised miles across the seven cities. CEO Elon Musk stated Tesla will "scale very rapidly with Robotaxi—more than 10% growth in miles driven per week," though acknowledged safety considerations will constrain expansion. However, analysts noted Tesla's Robotaxi fleet of approximately 25–50 vehicles remains significantly smaller than competitor Waymo's fleet of 2,000–3,000 vehicles.

On Optimus, Tesla's humanoid robot, the company stated production remains on track for later in 2026, with initial builds intended for its "Optimus Academy" for training data collection and functionality development. Musk told investors that Optimus will be "the hardest product to scale manufacturing that we've ever made at Tesla, because everything on the robot is new," but provided no timeline for volume production or details on when the latest version would be revealed.

Capital expenditure remains a central concern for investors. Tesla's free cash flow burn was $1.09 billion in Q2, less severe than the estimated $3.64 billion. CFO Vaibhav Taneja confirmed 2026 capex will exceed $25 billion, with spending directed toward Optimus production, AI data center buildout, and Cybercab manufacturing. Multiple analysts, including JPMorgan, Cantor Fitzgerald, and Mizuho Securities, cut their price targets following the earnings report. Morgan Stanley noted that without "consistent, transparent proof points" on robotaxi profitability and Optimus commercialization, "the market's tolerance for incremental capex" may narrow. During the earnings call, Musk did not rule out a potential merger of Tesla and SpaceX, stating such a decision "can't be talked about on an earnings call" and must follow "the appropriate process."