Tesla shares tumble 13% after earnings miss and AI spending concerns

Tesla's shares dropped roughly 13.5% on Thursday, delivering one of the sharpest single-day losses the automaker has recorded. The decline followed the release of second-quarter results that showed earnings of 31 cents per share, well below analysts' consensus of 51 cents, although revenue beat forecasts. Investors also noted the company's $5.8 billion spending in the quarter, which pushed free cash flow into a negative $1.1 billion for the first time in more than two years.

The sell-off occurred amid a broader market pullback, with the Nasdaq slipping more than 2% after earnings reports from major technology firms revived worries about high AI expenditures and rising oil prices heightened inflation concerns. The S&P 500 and Dow Jones indices each fell over 1% as results from Alphabet and Tesla failed to meet investor expectations.

During the earnings call, CEO Elon Musk addressed questions about the rollout of the driverless Robotaxi service and the Optimus humanoid robot, projects he has long promoted as future revenue drivers. Musk said the Robotaxi rollout is proceeding cautiously to ensure safety and avoid regulatory scrutiny, and he described Optimus as potentially the company's biggest product, while acknowledging technical hurdles.

Analysts said the heavy investment in robotics, autonomous vehicles and AI has shifted focus away from Tesla's core electric-vehicle sales, which have been buoyed by European demand and higher fuel prices. The stock's performance made Tesla the worst-performing member of the so-called “Magnificent Seven” megacap group, whose combined losses erased roughly $767 billion in market value on the day.