Tesla (TSLA) Up 8% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Tesla (TSLA). Shares have added about 8% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Tesla due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Tesla, Inc. before we dive into how investors and analysts have reacted as of late.

Tesla Q1 Earnings Miss

Tesla reported second-quarter 2026 adjusted earnings of 33 cents per share, which declined 17.5% year over year. The figure missed the Zacks Consensus Estimate of 50 cents by 34%.

Revenues advanced 25.5% to $28.24 billion and surpassed the consensus estimate of $25.81 billion by 9.41%. Record second-quarter vehicle deliveries and growth across the energy and services businesses supported the top line. Deliveries increased 25% to 480,126 vehicles.

Revenue Growth Broadens Across Businesses

Automotive revenues rose 23% year over year to $20.52 billion. Automotive sales increased to $20.01 billion from $15.79 billion, while leasing revenues declined to $364 million from $435 million. Regulatory credit revenues fell sharply to $146 million from $439 million.

Energy Generation and Storage revenues grew 13% to $3.14 billion. Services and Other revenues jumped 50% to $4.58 billion, reflecting higher activity across used vehicles, Supercharging, service centers and insurance. Higher Full Self-Driving subscriptions also aided automotive ancillary sales.

Deliveries Set Record

Tesla produced 451,758 vehicles, up 10% from the prior-year quarter. Model 3/Y production increased 12% to 442,936 units, while production of other models declined 34% to 8,822 units.

Model 3/Y deliveries rose 25% to 467,762 vehicles, while other-model deliveries increased 19% to 12,364 units. Global vehicle inventory improved to 15 days of supply from 24 days a year earlier. The company exited the quarter with its largest order backlog since 2023.

Software and Energy Metrics Gain Momentum

Active paid FSD subscriptions increased 56% year over year to 1.48 million. Tesla achieved record FSD subscription additions and more than 55% of its North American deliveries included an FSD subscription at the time of purchase.

Energy storage deployments climbed 41% to 13.5 GWh, marking Tesla’s second-highest quarterly deployment volume. The company also expanded its charging network to 8,704 Supercharger stations and 82,357 connectors, representing increases of 18% and 17%, respectively.

Margins Contract as Expenses Climb

Gross profit rose 23% to $4.75 billion, but the GAAP gross margin contracted 41 basis points to 16.8%. Operating expenses surged 47% to $4.35 billion, driven by research and development spending related to AI, Cybercab, Optimus and Tesla Semi, as well as higher stock-based compensation and selling and administrative costs.

Operating income declined 57% to $398 million, reducing the operating margin to 1.4% from 4.1%. Automotive gross margin excluding regulatory credits was 16.3% compared with 15% a year earlier and 19.2% in the preceding quarter.

Energy gross margin fell to 20.4%, partly due to a roughly $240 million warranty charge tied to vendor battery-cell issues and the absence of prior-quarter tariff benefits. Services and Other gross margin improved sequentially to a record 14.1%, supported by higher volumes and better fleet cost management.

Cash Flow Reflects Heavy Investment

Net cash provided by operating activities increased 85% to $4.70 billion. However, capital expenditures more than doubled to $5.79 billion from $2.39 billion, resulting in negative free cash flow of $1.09 billion.

As of June 30, 2026, cash, cash equivalents and short-term investments totaled $43.52 billion, up 18% year over year but down $1.22 billion sequentially. Long-term debt and finance leases, excluding the current portion, were $7.92 billion.

Outlook Prioritizes AI and New Products

Tesla expects 2026 capital expenditures to exceed $25 billion and rise further over the next two to three years. Planned investments include Robotaxi fleet expansion, Optimus production capacity, semiconductor manufacturing, solar production and AI computing infrastructure.

Cybercab production has begun at Gigafactory Texas, while Tesla Semi and Megapack 3 remain scheduled to enter production in 2026. The company is installing first-generation Optimus production lines and expanding Robotaxi operations.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -24.42% due to these changes.

VGM Scores

At this time, Tesla has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a score of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Tesla has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Tesla belongs to the Zacks Automotive - Domestic industry. Another stock from the same industry, General Motors (GM), has gained 6.8% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

General Motors reported revenues of $48.03 billion in the last reported quarter, representing a year-over-year change of +1.9%. EPS of $3.57 for the same period compares with $2.53 a year ago.

General Motors is expected to post earnings of $3.37 per share for the current quarter, representing a year-over-year change of +20.4%. Over the last 30 days, the Zacks Consensus Estimate has changed +4.1%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for General Motors. Also, the stock has a VGM Score of A.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research