Tesla Stock Falls 18% as Investors Concerned Over Elon Musk's AI and Robotaxi Spending
Tesla stock experienced its worst week since 2022, dropping by 18%, following concerns over CEO Elon Musk’s spending plans on artificial intelligence (AI) and robotaxi initiatives. Despite reporting strong second-quarter revenue of $28.23 billion — with electric vehicle sales contributing $20.51 billion — Tesla's operating margins fell sharply to 1.4% from 4.1%, while expenses surged by 47%. The company also reported negative free cash flow and a significant drop in its cash reserves. Tesla plans substantial capital expenditures, forecasting up to $25 billion for the year and announcing intentions to borrow an additional $30 billion. These financial pressures have raised concerns among investors who are now questioning whether Musk’s ambitious AI-driven projects — including self-driving technology and Optimus robots — will deliver returns in a timely manner or meet regulatory approval. The stock's decline has also impacted Elon Musk personally, reducing his net worth from over $1 trillion to approximately $709 billion. The market is reacting negatively due to Tesla’s high valuation, dwindling margins, and the uncertainty surrounding its long-term AI strategy.
Topics: AI spending Elon Musk Robotaxi Stock decline Tesla