Markets
markets
Jon Keegan

Tesla Q2 sales fall 12%; company says 2025 vehicle launches remain on track and more affordable model still coming

Tesla posted second-quarter earnings in line with analysts’ expectations despite a year-on-year drop in sales, and the company said its plans for new models this year and a more affordable model next year remain “on track.”

Shares were up 0.1% after-hours.

The company posted adjusted earnings per share of $0.40, matching FactSet’s consensus estimate. Total revenues were $22.5 billion, down 12% year on year, coming in slightly above expectations of $22.28 billion.

Net income dropped 16% year on year to $1.2 billion.

Auto sales down from last year

Automobile revenue dropped 16% year on year to $16.6 billion. Earlier this month, Tesla reported its largest quarterly drop in auto deliveries ever, selling 384,122 vehicles in the second quarter, which was about 60,000 fewer than the same period the year prior.

Tesla said that its “more affordable model” is on track for initial production next year, but few details are known about the long-awaited vehicle.

Robotaxi + Cybercab

Tesla didn’t give many specifics in its update on its long-promised robotaxi service. Tesla recently rolled out its first robotaxi rides in Austin, in a limited test for insiders with somewhere between 10 and 20 vehicles.

The company did say Wednesday that its Cybercab, the car designed to eventually operate those robotaxi routes, was “scheduled for volume production starting in 2026.”

For perspective, Tesla rival Alphabet’s Waymo service has over 1,500 driverless cars giving rides in five major markets, and it recently said that it’s provided over 10 million paid trips and is doing more than 250,000 rides per week.

Regulatory credits

During Q2, Tesla made $435 million from regulatory credit sales. Tesla has made hundreds of millions per quarter — $595 million in Q1 and an expected $622 million in Q2 — selling such credits to other carmakers to avoid fines for not having sold enough electric vehicles.

But that easy money may be drying up. President Trump’s massive tax bill that just became law could threaten more than half of Tesla’s profit, according to JPMorgan.

Full Self-Driving (Unsupervised)

Tesla did not give an update on another long-awaited feature: “unsupervised full self-driving.” The closest news related to this was a note in the earnings release that said one customer received their new Model Y via “the world’s first autonomous delivery” as the car drove itself across town, including highways, on a 30-minute trip.

Cars, robots, taxis, and... fast food?

There wasn’t a mention in the earnings about the new Tesla Diner that just opened up in West Hollywood, California. We’ll have to wait and see until next quarter how much the Tesla Diner’s $8 Wagyu Beef Chili Cup contributes to profits.

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Toby Bochan, Luke Kawa
2h
Markets end the week in the red as Broadcom and Oracle concerns drag the entire AI trade down

The S&P 500, Nasdaq 100, and Russell 2000 were all negative on Friday.

The lunchbox
markets
Matt Phillips

Data center trade deep in the red

The data center trade is seeing its steepest sell-off since the market rout that was ignited by President Donald Trump’s Rose Garden tariff announcement back in April.

Goldman Sachs’ themed basket of AI data center shares was down more than 6% at around 12 p.m. ET, putting it on track for its worst day since the tariff announcement.

Losses hammered seemingly every form of input needed for the sprawling concrete server warehouses at the heart of the investment boom.

Hardware makers including data storage companies like Sandisk, Western Digital, and Seagate Technology Holdings, as well as DRAM maker Micron — some of the best-performing stocks in the S&P 500 this year — were taking a licking, as were networking stocks Cisco and Arista Networks and data center builders such as Vertiv Holdings and electrical and mechanical contractor Emcor.

Optimism for all things AI has seemed to evaporate throughout the week, as the stock market greeted lackluster quarterly numbers from Oracle and Broadcom with jittery sell-offs and concern about growing debts that could crater cash flows.

Those worries seem to be spreading to ancillary beneficiaries of the AI boom on Friday, gouging a chunk out of charts that retail dip buyers have not — at least so far — stepped in to buy as we head into the weekend.

markets
Luke Kawa

Oracle denies Bloomberg report that it’s delaying some data centers for OpenAI to 2028 from 2027

Getting a multi-hundred-billion-dollar backlog for cloud computing revenues from data center projects is easy. Building them is hard.

Oracle extended declines to as much as -6.5% on the day on the heels of a Bloomberg report that the cloud giant has pushed back the completion dates for some of the data centers it’s building for OpenAI to 2028 from 2027, citing people familiar with the work. Oracle denied this report, telling Reuters that there have been no delays to any sites required to meet its contractual commitments and that all milestones remain on track.

Shares had fully pared their report-induced drop ahead of Oracle’s reply, but remain in the red for the day.

Bloomberg said the reported postponement was attributed to labor and material shortages.

Oracle has been spending more on capex than Wall Street had anticipated, leading to higher-than-expected cash burn. Management boosted its full-year capital spending plans by $15 billion after reporting Q2 results earlier this week.

Oracle’s cloud infrastructure sales came in short of estimates in its fiscal 2026 Q2, a signal that markets already had reason to doubt its ability to quickly turn its humungous RPO (that is, remaining purchase obligations) into revenues.

Traders also seem to be of the mind that potential delays to data center completions are going to limit sales for what goes into them.

Some of the bigger losers since the Bloomberg headline hit the wires include:

markets
Luke Kawa

Broadcom’s post-earnings tumble is weighing on Google’s entire AI ecosystem

Broadcom’s post-earnings plunge is prompting a sharp pullback in Google-linked AI stocks, which had been on fire thanks to the warm reception to Gemini 3.

The stocks getting hit hard:

A basket of these Google-linked AI stocks compiled by Morgan Stanley is suffering one of its worst losses of the year. This brisk retreat also follows the release of GPT-5.2 by OpenAI.

markets
Matt Phillips

Citi initiates coverage of Planet Labs with “buy” rating

Planet Labs was up after aerospace and defense analysts at Citi initiated coverage with a “buy/high risk” rating and $19 price target.

The stock is up more than 40% this week, after a strong earnings result that spotlighted the company’s growing opportunity in linking its core business of capturing daily images of the planet with AI technologies.

Citi analysts noted the potential for a positive flywheel effect for Planet Labs as it deepens its focus on integrating AI into its offerings:

“AI is accelerating the conversion of pixels to decisions, where Planet’s daily scan and deep archive offer a uniquely large training corpus and broad-area foundation for automation. AI-enabled solutions (MDA/GMS/AMS) are gaining traction with customers such as NATO and the U.S. DoW, validating the approach of integrating AI into broad-area monitoring products... These AI moves create a compounding advantage: more coverage generates more training data, which improves models, which in turn increases product utility and addressable demand.”

The stock has also caught the attention of some of the retail trading crowd, with call options activity spiking on Thursday as traders rode the market reaction to the results.

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