Wall Street wants answers on robotaxis and 'physical AI' as Tesla gears up for earnings
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- Tesla earnings are on deck and Wall Street is eager for answers about the EV maker's big initiatives.
- Analysts are focused on robotaxi deployment and humanoid robots, pillars of the bull thesis for the stock.
- It's also the first report since SpaceX went public. Expect questions to come up about a possible merger.
Tesla reports second-quarter earnings after closing bell on on Wednesday, and Wall Street analysts have some pressing questions about Elon Musk's ambitions for the EV maker.
While Tesla deliveries recently showed that sales are rebounding, Tesla stock hasn't reflected renewed bullishness from investors. Shares are down 15% year-to-date, making the stock among the weakest of the Magnificent Seven.
Investors and analysts hope the Q2 earnings report will offer insight into how Musk plans to reinvigorate the bullish sentiment in the latter part of the year. Key to the bull thesis are robotaxi deployment and humanoid robots, which upbeat Wall Street analysts increasingly see as more important than vehicle sales as drivers for future growth.
It is also the first report since SpaceX went public in June, with investors likely to on the lookout for answers about a potential SpaceX-Tesla merger.
Here's what analysts say they're focused on as Tesla prepares to report.
Bank of America
BofA rates Tesla stock as a "Buy" ahead of earnings and maintains a $391 price target, about 2% higher than Tuesday's price. The bank's analysts see robotaxi deployment and optimus humanoid robot production as key points of interest.
"We think focus for earnings will remain on TSLA's robotaxi deployments," BofA wrote. "TSLA added an additional market & is scaling TX fleet. We think core auto business remains healthy with reported 2Q deliveries above Street as TSLA gains global BEV market share."
Morgan Stanley
Morgan Stanley analyst Andrew Percoco recently lowered his Tesla stock price target slightly, from $417 to $415, and maintains an equal weight rating. The price target implies a 9% jump from current levels. While he expects to see progress on several key fronts, he doesn't expect the report to deliver a significan narrative update to spur a new burst of growth for the stock.
"Strong auto and energy deliveries improve near-term fundamentals, but we continue to believe Robotaxi and Optimus will be the primary drivers for the stock," he said. "Into earnings we expect constructive updates across both, though likely not enough to drive a decisive re-rating."
Oppenheimer
Analysts at the firm say that Tesla's transition to a leader in "physical AI" will require substantial capex to acquire the necessary compute power and memory capacity.
"We anticipate investors will begin looking at capital investments as a leading indicator of Physical AI success," Oppenheimer analysts wrote."
The firm recently raised its capex outlook for Tesla from $18 billion to $20 billion for the year as it predicts Tesla to "aggressively bring capacity online to enable AI-driven learning cycles on product design, manufacturing processes, and software integration in to products."
Oppenheimer rates Tesla at "Perform," and does not have a 12-18 month price target.
Barclays
Barclays is less bullish on Tesla stock than some Wall Street peers, maintaining a $370 price target and equal weight rating. While its analysts noted that the company's automotive business is improving, they raised the question of how much it actually matters going forward.
"We believe the key message from the market with respect to Tesla's frothy multiple has been that Tesla's current revenue stream (which is predominantly automotive) is increasingly irrelevant, with the key focus for the stock on future mega-growth initiatives in AI - Robotaxi /FSD / autonomous driving + bots / Optimus humanoids," Barclays wrote.
Cantor Fitzgerald
With an equal weight rating and a $510 price target for Tesla stock — an increase of 34% from current levels — Cantor Fitzgerald is among the biggest bulls as the company gets ready to report. Analyst Andres Sheppard highlighted the company's vehicle deliveries beat and successful robotaxi rollout, noting that his team expects to see progress continue.
"Overall, we continue to see Tesla's Robotaxi segment and Cybercab as a software-as-a-service, high-margin model," he noted. "We continue to expect TSLA will have the ability to scale rapidly following commercialization (despite the delayed expansion) and capture meaningful market share."
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