Tesla Earnings Preview: “Braced For A Miss”

Tesla reports after the US market close on Wednesday and according to the UBS trading desk, there has been very little discussion around TSLA lately, with the stock drifting 14% lower for most of the year until last week, when it squeezed higher to trade just below $390. 

The company has been the laggard among mega-cap peers despite still-lofty expectations. Consensus points to 1Q revenue of about $22.7 billion, with adjusted EPS around 38 cents and roughly 25 cents on a reported basis, even as deliveries of about 358,000 vehicles missed forecasts and flagged softer core auto demand. Analysts still expect a sharp rebound, with roughly 30% profit growth and a 15% increase in revenue.

Markets will likely overlook near-term weakness but focus heavily on what’s next: Investors are looking for updates on the robotaxi rollout, AI and robotics, as well as clarity on cash burn tied to a planned step-up in capex to as much as $20 billion this year. The disconnect is stark: as Bloomberg notes, a cyclical slowdown in autos versus an equity story still priced on long-duration growth, reflected in valuation metrics that are stretched across the board (roughly 184x forward earnings, ~15x sales and over 100x EV/EBITDA).

Taking a step back, the good news for Tesla – and the broader market – is that earnings revisions for the S&P 500 continue to trend higher for 2026 and 2027, even if largely concentrated in a handful of AI stocks – and early results have been solid, with a strong beat rate. But the reaction function is fading. According to Bank of America, stocks are no longer rewarding top and bottom line beats as they typically do, suggesting a high bar for earnings driven gains as the index hovers near all-time highs. 

Tesla, as one of the highest-duration names in the market, becomes a key test of that dynamic. If management reinforces the AI/autonomy narrative and justifies elevated capex, it supports the broader recovery in tech. But the overhang remains what is going on with Iran and the state of peace talks. This is not a market driven by idiosyncratic earnings. Netflix’s 10% drop alongside rising indexes underscores that geopolitics are taking precedence.

UBS analyst Joe Spak upgraded TSLA from Sell to Neutral last week as the stock reached his price target, and now sees a more balanced risk/reward profile – near‑term demand challenges and an investment phase offset by a longer‑term physical AI opportunity.

For 1Q, Spak expects an EPS miss, which is unlikely to be a surprise. UBS is modeling adjusted EPS of $0.33 versus $0.44 consensus. However, Spak believes the buy side is already braced for a miss based on 1Q26 delivery data, particularly weaker energy storage deployments.

Spak is modeling auto gross margins (ex‑credits) of 16.1% versus 15.5% consensus, believing FSD could help keep margins slightly elevated. If Tesla books an IEPPA receivable this quarter, that could further support gross margins and provide upside to expectations. Otherwise, Spak expects updates on Tesla’s long‑term vision, primarily focused on Robotaxi, Optimus, FSD, and the TeraFab.

Key areas where UBS expects additional detail include:

1. Color on demand trends across all regions
2. Reasons behind the energy storage deployment miss and implications for the balance of the year
3. Updates on Robotaxi deployment across additional cities
4. Progress on Gen 3 Optimus
5. Capex outlook not only for 2026 but beyond, including funding plans (TeraFab, solar, etc.)
6. Progress on the six factories TSLA plans to build this year
7. Commentary on commodity and logistics costs

Tune in shortly after the close for the full results.