Profits fall, but Tesla’s shares keep rising on AI hopes

Inthe stock market's rarefied air where mega-cap technology behemoths reside, Tesla Inc. stands out—but for all the wrong reasons.

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Tesla is expected to report a 25% drop in Q3 profits

(AP)

Chief among them is a stunning lack of earnings growth while its stock price continues to soar. The Elon Musk-led electric vehicle-maker is expected to post a 25% drop in third-quarter profits from a year ago when it reports earnings on Wednesday, according to data compiled by Bloomberg. The decline is nothing new, as Tesla’s results have been in retreat for multiple years.

What is notable, however, is the way Tesla shares have been impervious to the drop, more than doubling in the past 12 months. It’s a tribute to Musk’s success in turning investors’ attention away from selling EVs and toward this vision of an artificial intelligence company focused on self-driving cars and humanoid robots.

“The Tesla story is never really about the current quarter, but rather the broader expectations that it can keep innovating and pivoting to the future,” said Daniel Newman, chief executive officer of the technology research and advisory firm the Futurum Group.