Tesla Falls Behind Magnificent Seven Peers Amid Capital Expenditure Concerns
Tesla is an outlier among its peers in the Magnificent Seven stocks, falling by around 23% this year while others have seen significant gains. The electric car maker's revenue did climb 26% year over year to $28.2 billion in the second quarter, but operating income dropped 57%. This follows a tough 2025 when deliveries dropped around 9% to 1,636,129 vehicles.
Tesla's delivery count is rising again, with the company delivering 480,126 vehicles in the second quarter, up 25% year over year. However, its profits aren't keeping pace, with operating income dropping to $398 million and an operating margin of just 1.4%. In comparison, five of the other Magnificent Seven stocks raised operating income by double digits in their latest quarters.
Tesla's capital expenditures are expected to reach over $25 billion in 2026, primarily due to its AI initiatives. The company has already spent around $8.3 billion in the first half and is planning to spend more than $16 billion in the second half. This spending is for projects such as its Robotaxi service and steering-wheel-free Cybercab.
The stock prices in a lot of success, with a price-to-earnings ratio around 155 based on next year's expected earnings. In comparison, Nvidia's stock costs about 15 times next fiscal year's expected earnings, despite its operating income more than doubling last quarter.