Tesla shares just logged their steepest drop in more than a year, as investors recoiled from weaker-than-expected profit and a sharp turn back to cash burn. The company is pouring money into artificial intelligence, robots and autonomy even as its traditional car margins come under strain. Tension between a costly tech future and a still‑maturing EV business is now front and centre for the market.
AI and related projects drove spending to $US5.8 billion, pushing Tesla into its first negative free cash flow in two years. Management still guides to capital expenditure above $US25 billion for 2026 and now talks about even higher outlays over time. Funds are earmarked for expanded factory capacity, Optimus humanoid robot production, development of the Cybercab service and growth of the robotaxi fleet. Investors are being asked to tolerate thinner near‑term profit in exchange for a bet on software and robotics.
Under the hood, the numbers looked far less futuristic. Second‑quarter revenue climbed 26% to $US28.24 billion, beating forecasts, helped by a record 480,126 vehicle deliveries, up 25% year on year.
Australia joined South Korea, Japan, Taiwan and Colombia in hitting quarterly delivery records as buyers looked to buffer themselves from oil price spikes linked to conflict in the Middle East. Yet operating income plunged 57% to $US398 million from $US923 million a year earlier as AI infrastructure spending ballooned and price cuts weighed on automotive earnings. Net income slipped 5% to $US1.11 billion while adjusted net income dropped 17% to $US1.15 billion, or 33 US cents per share versus analyst expectations of 51 US cents.
Tesla shares fell 4.2% in after‑hours trade to $US358 at 9:15am AEST, reversing recent gains built on enthusiasm for its AI narrative. The business now looks like a hybrid of a capital‑intensive carmaker and a high‑spend technology platform, a mix that unsettles some shareholders who remember earlier promises of leaner growth.
Analysts highlight a growing disconnect between the scale of current investment and the visibility on returns from robotaxis, Optimus and in‑house AI systems. The key question hanging over the stock is how long investors will subsidise this pivot before they demand clearer proof that the new strategy can justify the bill.
