Tesla has reported its second quarter 2026 financial results, beating Wall Street’s expectations on revenue while falling short on earnings as the company continued investing heavily in AI, manufacturing expansion, and Robotaxi.
Ahead of the report, analysts expected Tesla to generate $27.58 billion in revenue, GAAP earnings per share (EPS) of $0.36, non-GAAP EPS of $0.55, and negative free cash flow of approximately $3.25 billion.
Tesla exceeded revenue expectations, reporting $28.24 billion for the quarter, roughly $650 million above consensus. The company also generated $4.70 billion in operating cash flow and posted negative free cash flow of $1.09 billion, significantly better than analysts had forecast despite capital expenditures climbing to $5.79 billion.
Profitability, however, was weaker than expected. Tesla reported GAAP EPS of $0.32 and non-GAAP EPS of $0.33, missing consensus estimates of $0.36 and $0.55, respectively. Operating income came in at $398 million, well below the $1.50 billion analysts had projected, while operating margin fell to 1.4%. Gross margin also missed expectations, declining to 16.8% compared with the 19.5% consensus estimate.
The company attributed lower vehicle average selling prices, reduced regulatory credit revenue, and higher operating expenses tied to AI development, research and development, and stock-based compensation as factors affecting profitability during the quarter.
Tesla also cited increased energy warranty-related charges related to a vendor cell issue.
Tesla (TSLA) shares fell more than 2.5% in after-hours trading following the release of the report.
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