Tesla plunges 15% after Q2 miss as operating income sinks 57% on AI, robotaxi spending

Published Jul 25, 04:57 PM UTC

Tesla shares dropped approximately 15% to $319.69 following its Q2 2026 earnings report, which showed record revenue of $28.2 billion (up 26% YoY) but a sharp 57% decline in operating income to $398 million, squeezing margins to 1.4%. Adjusted EPS fell 18% to $0.33. The profit decline was driven by heavy spending on AI, robotaxi services, the Optimus robot program, and CEO Elon Musk's stock-based compensation, along with a 67% drop in regulatory credit revenue. The company also burned $1.1 billion in free cash flow due to doubled capital expenditures. Despite the miss, Wall Street's average price target of $412 implies 29% upside, and the consensus rating remains a buy. The article questions whether the drop is a buying opportunity or if analysts are slow to adjust their long-term bullish thesis on Tesla's future high-margin software and robotaxi network.