Going Into Earnings, Is Tesla Stock a Buy, a Sell, or Fairly Valued?

Tesla is set to release its second-quarter 2026 earnings report on July 22. Here’s Morningstar’s take on what to look for in Tesla’s earnings and the outlook for its stock.

Key Morningstar Metrics for Tesla

• Fair Value Estimate

  : $450.00

• Morningstar Rating

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  : ★★★

• Morningstar Economic Moat Rating

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  : Narrow

• Morningstar Uncertainty Rating

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  : Very High

Tesla Earnings Release Date

• Wednesday, July 22, after the close of trading

What to Watch for in Tesla’s Q2 Earnings

• Tesla generated strong delivery growth in the second quarter after the early July report, and we will look to see the financial impact of this.
• Tesla’s free cash flow metrics are worth tracking as the company begins a heavy capital expenditure investment cycle to build the infrastructure required for its real-world artificial intelligence products.
• We will also be watching for an update on Tesla’s robotaxi rollout plans. We will look to hear management’s expansion plans, as well as an update on the robotaxi-dedicated Cybercab, which entered production.
• Along these lines, an update on when the full self-driving version 15 will be released would be appreciated, as Tesla’s FSD software could let it quickly expand its robotaxi fleet.
• Finally, we hope to hear an update on the Optimus humanoid robot project. We view the project as a large long-term growth driver for Tesla, as it could eventually perform many tasks and be purchased by both businesses and consumers.

Fair Value Estimate for Tesla

With its 3-star rating, we believe Tesla’s stock is fairly valued compared with our long-term fair value estimate of $450 per share. We raised our fair value from $425 due to our outlook for higher deliveries in 2026 than previously forecast, which will also drive higher automotive gross profit margins.

In 2026, we forecast deliveries will grow by roughly 10% to nearly 1.8 million, up from 1.64 million in 2025. We see lower U.S. deliveries in the first three quarters due to the U.S. EV tax credit expiration in September 2025. As Tesla ramps up production of its new, lower-priced Model Y and Model 3 vehicles, we expect automotive gross margins, excluding credits, to be in the high teens, slightly below management’s long-term goal of 20%. In the long term, we assume Tesla will deliver around 2.8 million vehicles per year by 2030, driven by the adoption of full self-driving software and the more affordable versions of the Model Y and Model 3.

Read more about Tesla’s fair value estimate.

Economic Moat Rating

We award Tesla a narrow moat, stemming from two of our five moat sources: intangible assets and a cost advantage. We think this combination will persist and allow the firm to generate excess returns on capital.

Tesla’s intangible assets come from consumers’ willingness to pay more for the technology that drives the brand. It also offers a high-tech vehicle for which customers do not have to visit a store for many service needs, which helps with brand equity. We also expect research and development to average 6% of sales over the next five years. With R&D spending in line with its peers, we think Tesla will be able to maintain its proprietary technological advantage.

We think Tesla benefits from a cost advantage in US electric vehicle production thanks to its manufacturing scale. We expect Tesla to continue to have lower costs than its US peers and have higher gross profit margins compared with its US automaker peers.

Read more about Tesla’s economic moat.

Financial Strength

Tesla is in excellent financial health. Cash, cash equivalents, and investments were $44.7 billion and far exceeded total debt as of March 31. Total debt was around $9 billion, but total debt excluding vehicle and energy product financing (nonrecourse debt) was less than $5 million.

Tesla’s growth going forward will be largely self-funded. With its positive free cash flow generation and large cash balance, we think Tesla should be able to fund its growth plans over at least the next two years without needing to raise debt.