Tesla Stock Could Benefit as Trump Locks Down the U.S. Power Grid

Elon Musk’s Tesla (TSLA) has plenty on its plate right now. The EV giant is pouring billions into high-profile bets such as robotaxis, humanoid robots, and a massive chip fabrication plant, all in the hope of unlocking its next phase of growth. But those ambitious investments are already showing up in the numbers, weighing on profits and pushing free cash flow into negative territory. Now, a major policy shift from Washington could give Tesla’s energy business an unexpected boost. On Aug. 27, President Donald Trump signed an emergency order aimed at keeping certain foreign-made transformers and other critical power equipment out of the U.S. electric grid. 

The order broadly restricts the purchase, import, or installation of certain foreign-made bulk-power system equipment and related software if they could create cybersecurity or operational risks. It also opens the door to new rules that could affect equipment already installed across the U.S. That could be a big deal for the U.S. energy industry. China currently accounts for roughly 80% of the world’s battery and solar inverter manufacturing capacity, according to the International Energy Agency. 

In addition, scores of Chinese-made large power transformers have entered the U.S. over the past decade, according to a 2020 Commerce Department investigation. The executive order warned that “certain foreign actors” are “increasingly creating and exploiting vulnerabilities in the United States bulk-power system.” For utilities and other businesses that rely on this equipment, the message is clear. Some foreign-made products could soon face tighter restrictions. The Department of Energy will now work on the rules needed to put the ban into effect. And that could create an opening for U.S. companies.

Analysts believe domestic electric-equipment manufacturers and other companies involved in U.S. energy infrastructure could benefit as utilities look for alternatives to foreign-made equipment. Tesla could be one of the companies to watch, thanks to its growing energy-storage business and expanding role in the power market. So, while Tesla is dealing with rising costs and weaker cash flow as it pours money into its futuristic ambitions, Trump’s latest move could give the company a fresh potential catalyst. Thus, here’s a closer look at TSLA stock and where it fits in to all this.

About Tesla Stock

Founded in 2003 and now headquartered in Austin, Tesla was built with a bold mission to bring electric vehicles into the mainstream and challenge the long-standing dominance of gasoline-powered cars. Under the leadership of Elon Musk, the company quickly stood out by combining cutting-edge technology with sleek, high-performance designs. What started with the niche Roadster eventually turned into mass-market hits such as the Model 3 and Model Y, which helped accelerate the global shift toward electric vehicles. But Tesla’s ambitions have grown far beyond cars. 

Over the years, the company has expanded into energy storage, solar solutions, artificial intelligence, and robotics. Products and technologies such as the Megapack battery system, Full Self-Driving (FSD) software, and the upcoming Optimus humanoid robot highlight just how wide Tesla’s vision has become. Increasingly, the company is positioning itself as a broader AI and technology platform, with innovation and automation serving as the backbone of its ecosystem rather than simply focusing on the auto business.

Yet for all its scale and ambition, Tesla’s stock is having a tough time keeping up. With a market capitalization of roughly $1.40 trillion, TSLA has struggled to gain momentum in 2026. Investor sentiment has been weighed down by concerns over Tesla’s aggressive spending plans and growing skepticism about the company’s expensive push to reinvent itself as a physical AI powerhouse. And the numbers tell the story. 

Tesla has fallen to the bottom of the Magnificent Seven pack this year, emerging as the group’s worst-performing stock in 2026. The EV maker’s stock is up just 0.13% over the past year but has fallen nearly 23% so far in 2026, dramatically underperforming the broader S&P 500 Index ($SPX), which has gained about 19% over the past year and 12.6% year-to-date (YTD). The gap becomes even more striking when looking at Tesla’s record high. After hitting an all-time peak of $498.83 in December last year, TSLA has since tumbled about 30% from that level.

Inside Tesla’s Q2 Earnings Report

Tesla’s fiscal 2026 second-quarter earnings report, released on July 22, delivered a mixed bag for investors. While the EV giant posted record revenue and record vehicle deliveries, sharply weaker profitability and a surge in spending overshadowed the top-line strength, sending Tesla shares tumbling almost 14.5% in the following trading session. Total revenue jumped 26% year-over-year (YoY) to a record $28.24 billion, comfortably topping Wall Street’s consensus estimate of $26.71 billion.

A major driver was Tesla’s record second-quarter vehicle deliveries, which reached 480,126 units, up 25% YoY. The company’s Services & Other business also provided a meaningful boost, with revenue soaring 50% YoY to $4.58 billion. Tesla’s energy business continued to gain ground as well. Revenue from its Energy Generation and Storage segment, which includes solar and battery energy-storage systems, climbed 13% YoY to $3.14 billion.

But beneath that impressive top-line growth, Tesla’s profitability story was far less encouraging. Gross margin fell to 16.8% from 17.2% a year earlier, missing expectations as the company dealt with lower average selling prices per vehicle and declining regulatory credit revenue. At the same time, Tesla significantly ramped up spending on artificial intelligence and other research and development initiatives. Operating expenses surged 47% to $4.35 billion, growing much faster than revenue.

The result was a sharp squeeze on profitability, with Tesla’s operating margin plunging to just 1.4% from 4.1% a year ago. The pressure carried through to the bottom line. Non-GAAP earnings per share fell 18% YoY to $0.33, dramatically missing Wall Street’s $0.54 consensus estimate by 39.1%, marking a major disappointment for investors.

Cash flow also flashed a warning sign. Tesla generated negative free cash flow of $1.1 billion during the quarter, compared with positive free cash flow of $146 million a year earlier and $1.44 billion in the first quarter of 2026. Meanwhile, capital expenditures skyrocketed 142% to $5.79 billion, up from $2.39 billion in the same quarter last year, highlighting just how aggressively Tesla is investing for the future.

Despite the near-term financial pressure, Tesla says it remains focused on expanding its product lineup while keeping an eye on costs, scale, and future monetization opportunities through AI-powered services. The company said it is focused on growing sales volumes through a differentiated and efficiently managed product portfolio while leveraging and optimizing its existing production capacity before committing to new factories and production lines.

Tesla’s first-generation production lines for the Optimus humanoid robot are being installed in preparation for production this year. At the same time, Tesla is ramping up capacity and infrastructure across several long-term initiatives, including AI computing, solar, battery materials, and semiconductor manufacturing.

What Do Analysts Think About TSLA Stock?

Despite Tesla’s recent struggles, Wall Street hasn’t given up on the EV giant. Analysts maintain a consensus “Moderate Buy” rating, with 15 of the 42 analysts covering TSLA stock recommending a “Strong Buy,” two calling it a “Moderate Buy,” 20 rating it a “Hold,” and just five issuing a “Strong Sell.”

The numbers also point to meaningful upside. The average price target of $397.17 suggests Tesla's stock could climb about 15%, while the Street-high target of $600 points to a potential gain of as much as 74% from current levels. So, while Tesla faces plenty of near-term challenges, Wall Street still sees significant room for the stock to accelerate.