Tesla Shares Decline After Mixed Quarterly Results as Company Expands AI and Autonomous Driving Initiatives

Tesla shares fell sharply in Thursday trading after the electric vehicle manufacturer reported second-quarter earnings that delivered mixed results, with adjusted profits missing Wall Street expectations despite stronger-than-anticipated revenue. Investors also continued to assess the company's ambitious investments in artificial intelligence and autonomous driving technology.

The company reported second-quarter revenue of $28.24 billion, surpassing analysts' expectations of $26.32 billion and marking a 26% increase from the same period last year. However, adjusted earnings came in at $0.33 per share, below the consensus estimate of $0.50, while adjusted EBITDA totaled $3.2 billion, missing forecasts of approximately $4 billion.

Tesla shares declined more than 10% as markets reacted to the weaker profitability, even as the company highlighted continued progress across several long-term growth initiatives.

Tesla confirmed that production of its Optimus humanoid robot remains on schedule to begin later this year. The initial units will be used internally through the company's Optimus Academy to collect training data and further improve the robot's capabilities before broader deployment. The company did not announce when the next-generation Optimus model will be unveiled.

The automaker also reported continued expansion of its Robotaxi program, which now operates across seven major metropolitan areas. During July, Tesla expanded its fully autonomous ride service in Austin while launching operations in Miami, Orlando, and Tampa. The company said preparations are also underway for additional U.S. markets, including testing, regulatory approvals, and first-responder training.

During the earnings call, CEO Elon Musk said Robotaxi operations continue to grow at a rapid pace, with weekly autonomous miles increasing by more than 10%. He emphasized, however, that Tesla will prioritize safety as it scales the service.

Tesla also reported strong adoption of its Full Self-Driving (FSD) software, with active subscriptions climbing to 1.48 million, representing a 56% increase from a year earlier.

Analysts noted that Tesla's Cybercab program continues to make progress. According to Mizuho analyst Vijay Rakesh, Cybercab production has begun at Gigafactory Texas, with the autonomous fleet accumulating more than 380,000 unsupervised driving miles across seven cities. While Tesla's fleet remains significantly smaller than competitors such as Waymo, analysts said the absence of major incidents remains an encouraging sign for the company's autonomous driving strategy.

Although Mizuho lowered its Tesla price target from $480 to $450, citing near-term challenges including tariffs and the expiration of certain tax incentives, the firm continued to recognize Tesla's long-term opportunities in artificial intelligence and autonomous mobility.

Tesla's free cash flow remained negative during the quarter, recording an outflow of $1.09 billion. However, the result was substantially better than analysts' expectations for a $3.64 billion cash burn.

Looking ahead, Tesla reaffirmed its commitment to expanding its AI infrastructure and manufacturing capacity. Musk described 2026 as a "massive capital expenditure year," while Chief Financial Officer Vaibhav Taneja confirmed the company expects to invest more than $25 billion in capital expenditures this year, reinforcing Tesla's long-term strategy focused on robotics, autonomous transportation and AI-driven technologies.