• Goldman Sachs (GS) reiterates Neutral rating and $360 price target on Tesla (TSLA) ahead of Q3 earnings.
  • The bank expects improving vehicle revenue from the Model Y L ramp, but higher costs and capex could limit 2026 EPS upside.
  • Goldman believes robotaxis, FSD and humanoid robots will matter more for Tesla’s stock reaction than Q3 earnings themselves.

AI Ambitions Overshadow Quarterly Results

As Tesla prepares to report third-quarter results on October 21, Goldman Sachs is telling clients that the electric-vehicle maker’s artificial intelligence narrative will dominate the stock’s reaction—not the numbers themselves. The bank reiterated its Neutral rating and $360 price target, according to a note to clients, emphasizing that milestones in autonomy and robotics carry more weight than near-term earnings.

The call comes on the heels of Tesla’s October 2 delivery report, which showed 486,532 vehicles delivered in the quarter, beating StreetAccount’s consensus of roughly 461,100. Production totaled 464,391. While the sequential increase of about 1.3% signals stabilizing demand, deliveries still fell 2.1% year over year, a decline partly attributed to the expiration of the U.S. federal EV tax credit in late 2025.

Energy storage deployments also edged higher to 13.7 GWh from 13.5 GWh in the prior quarter, offering a second growth vector. But the company’s latest financials underscore the cost of its AI pivot: Q2 revenue rose 26% year over year to $28.24 billion, yet GAAP net income fell 5% to $1.11 billion, and adjusted EPS of $0.33 badly missed the $0.51 consensus. Operating margin compressed to 1.4% from 4.1% a year earlier.

Spending Surge Raises Stakes for Autonomy

The pressure stems largely from Tesla’s aggressive investment in AI, robotaxis, and humanoid robots. Operating expenses jumped 47% to $4.35 billion in Q2, while capital expenditures soared 142% to $5.79 billion. Free cash flow turned negative to the tune of approximately $1.1 billion, and management reiterated plans to spend more than $25 billion annually.

“What institutional investors like us are really focused on is regulatory stability,” said Andrea Valeri, Blackstone (BX)’s country chairman for Italy, at a recent conference—a sentiment that echoes broader concerns about the regulatory landscape facing Tesla’s Cybercab. Indeed, the company’s robotaxi ambitions hit a potential snag last month when the National Highway Traffic Safety Administration (NHTSA) demanded answers by September 30 about whether Tesla’s Cybercab complies with existing safety standards, including whether temporary human controls were part of its certification basis. Tesla began commercial deployment of a small number of Cybercabs in Austin on September 3. The outcome of that inquiry remains unclear.

The Model Y L, a six-seat variant launched in China in August 2025, has shown encouraging demand signals, with estimated delivery dates for new orders stretching into early 2027. But analysts caution that volume alone does not guarantee margin improvement, especially as average selling prices remain under pressure and incentives persist in key markets.

The Road Ahead

Goldman’s stance is not new. The bank lowered its target from $390 to $360 in July while maintaining a Neutral rating, and has consistently flagged that upside depends on greater contributions from FSD, Optimus, and robotaxis. The upcoming earnings call will be scrutinized for automotive margins, cash flow, and concrete progress on autonomy—not just another restatement of long-term vision.

Tesla CEO Elon Musk’s January announcement that Model S and Model X production would end at Fremont to make way for Optimus manufacturing underscores the pivot from premium vehicles to robotics. Whether that bet pays off before cash reserves dwindle is the central question for investors. As Goldman’s note suggests, the market may care less about Q3 earnings and more about whether Tesla can turn its AI promises into profits.

Correction: An earlier version of this article misstated the sequential change in Q3 deliveries. It rose approximately 1.3%, not 1.5%.