Tesla's 35% EPS Miss and GM's 10% Beat: Buy, Sell, or Stay Away?

Tesla's revenue beat was not enough; GM's profit beat was

Tesla delivered second-quarter revenue of $28.24 billion, beating expectations of $25.71 billion. But revenue only matters in autos if it converts into profit. It did not here. Adjusted EPS was $0.33 versus $0.51 expected, and the stock dropped nearly 3% in after-hours trading. For investors, that is the key takeaway: a top-line surprise does not rescue a quarter when profitability slips.

GM looked like the opposite story. It posted adjusted profit per share of $3.57 versus $3.20 expected and raised its 2026 profit outlook to $14 billion to $16 billion. That matters because it answered the harder question: can the business keep earning through a shaky economic backdrop? In this quarter, the answer was yes.

The contrast is the real story. Between these two auto stocks, GM looked like the more durable business this week because its profit beat was backed by better operating leverage and a higher outlook.

Tesla: delivery growth returned, but profitability still stumbled

Tesla still moved enough vehicles to suggest a rebound. Earlier this month, it reported a 25% year-over-year increase in vehicle deliveries, a real improvement after consecutive annual declines. But the earnings report reinforced the same problem: more cars were not translating into better profit quality. The quarter also included a $1.005 billion unrealized gain on Tesla's SpaceX equity investment, which helped headline revenue but did not make the core operating picture cleaner.

The core auto business got less profitable

Tesla's auto gross margin fell to 16.3% without regulatory credits from 19.2%, while GAAP net income dropped 5% to $1.11 billion and operating margin narrowed to 1.4%. That is the more important signal than the revenue beat. If demand is recovering, the economics should improve, not thin out.

Operating expenses rose 47% to $4.35 billion, and 2026 CapEx guidance above $25 billion would be nearly triple last year's $8.5 billion. So Tesla is asking investors to look past weaker car margins and a softer core earnings base while it spends heavily on future projects.

Why the bull case still depends more on promise than proof

The bull case is not zero. Tesla still has cash, growing deliveries, and several long-term narratives attached to the stock. But the bear case is stronger in this quarter: margins slipped, one-off gains helped the headline, and spending is accelerating. That combination is not a clean buy signal. It is a sign to demand more proof from the core business.

GM: truck and SUV strength made the quarter work

GM's quarter was straightforward, and in autos that is usually a good thing. Adjusted EPS came in at $3.57 versus $3.20 expected, global operating profit rose 30% to $3.94 billion, and North America profit jumped 43% to $3.45 billion. Management then lifted its full-year profit view to $14 billion to $16 billion. That looks closer to operating strength than accounting optics.

By contrast, Tesla's auto gross margin slipped from 19.2% to 16.3%, which makes GM's steadier profit base stand out even more.

What drove GM's better results

Reuters said the quarter was supported by profitable SUV and truck sales and solid pricing in North America. That is the kind of earnings mix investors usually want to see. It suggests the company is still getting paid for the vehicles it sells, rather than relying on financial engineering or distant promises.

GM is not risk-free. It still expects a meaningful hit from tariffs and higher supply costs, and net income fell 31% year over year because of restructuring charges tied to its EV factory footprint. But the core message of the quarter was positive: profit grew even with a difficult macro backdrop.

Buy, sell, or wait? GM has the cleaner setup, Tesla still needs proof

These are two different assignments.

GM looks buyable on proof, not hope

• Buy rationale: The quarter already showed profit power, and management raised its full-year profit outlook to $14 billion to $16 billion.
• Buy signal: Another quarter of stable or improving profit, with North America remaining a strong earnings contributor.
• Watch: Whether tariff pressures and higher supply costs start to erode margins.
• Avoid if: The next report shows the core operating engine softening instead of holding up.

Tesla is still more of a future-option stock than an earnings-stock

• Stay patient if: you need cleaner profitability, better auto gross margins, and less reliance on non-recurring gains before paying up.
• Watch: whether delivery growth starts to translate into stronger margins and cash generation, not just higher revenue.
• Avoid if: spending keeps rising faster than the core business can support.

Buy the quarter you can see, and keep waiting for verification where the evidence is still mixed.