Tesla just had its roughest quarter in at least a decade, but some analysts and investors are still dreaming big.

Elon Musk’s carmaker said on Wednesday that revenues plunged 12% year-over-year to $22.5 billion in the second quarter.

Tesla’s stock fell as much as 9% in early trading on Thursday morning on the disappointing earnings, its biggest intraday fall since March.

In a call with analysts, Elon Musk took a victory lap after Tesla finally launched its robotaxi service in Austin, predicting that the company’s driverless ride-hailing service would cover half the US population by the end of the year.

However, he also warned that Tesla could face “a few rough quarters,” as it weathers shifting tariffs and the end of EV tax credits in the US.

Despite the stock price fall, the reaction from Tesla investors and analysts suggests those who are more bullish on the automaker aren’t overly concerned by these speed bumps and are looking toward Musk’s promises of a trillion-dollar AI future.

Nearly 45% of analysts who cover Tesla retain a buy rating for the automaker, while 31% have a neutral or hold recommendation, Bloomberg data seen by BI shows. Just under 25% have a sell rating on Tesla’s stock.

“The stock always remains a battle between what can be and what is,” Joseph Spak, a US auto analyst for UBS, told BI via email.

“Bulls will continue to look past valuation, look for evidence of AI progress and dream big,” he added.

Wedbush Securities analyst and longtime Tesla bull Dan Ives wrote in a Thursday note that Tesla faces headwinds and “clear growth challenges” for the rest of the year.

While Ives was cautious, he also said that Musk’s return to working full-time at Tesla as a “wartime CEO” after his stint in politics was the “biggest and best possible news” for investors, with the EV giant now in a prime position to seize a piece of the “$1 trillion” robotaxi market.

Tesla investor and Deepwater Asset Management partner Gene Munster wrote in a Wednesday blog post that investors had been disappointed not to hear more details about Tesla’s robotaxi rollout in Austin, with executives not addressing when the company will remove its human safety monitors or open the service to the public.

However, he said he still believed Tesla was in pole position to win the autonomy race, even with details about the company’s next steps lacking.

That position was echoed by analysts at financial services firm Cantor Fitzgerald, who wrote in a Thursday note that they remain “bullish” on Tesla due to the robotaxi expansion and the company’s Optimus robot beginning high-volume production in 2026.

‘A battle between what can be and what is’

Amid those heady dreams of a glorious robot future, Tesla’s present looks decidedly less rosy, with sales of its EVs underwhelming so far this year.

The company reported its second consecutive decline in year-over-year deliveries earlier this month, as it faces rising competition and brand damage from Musk’s forays into US politics.

As Musk warned on the earnings call, things are likely to get worse before they get better.

Analysts for investment firm William Blair said that the market for zero-emission regulatory credits, which bought in $439 million for Tesla in the second quarter, is expected to be almost completely eliminated in the US by the Trump administration’s One Big Beautiful Bill.

“We are entering a vulnerable time for Tesla, as near-term headwinds, like auto and energy demand, subsidy cuts, and tariffs, pressure financials in the crucial transition to the long-term vision of real-world AI and higher-margin products like robotaxi and Optimus,” they wrote.

In a research note published on Thursday, analysts for JPMorgan cut projections for Tesla’s earnings per share for 2025 and 2026.

Morgan Stanley, meanwhile, lowered its estimates for Tesla’s sales and now estimates the automaker will see a 14% drop this year, with analyst Adam Jonas warning that it may take years for Tesla to make money on its new initiatives as it crosses the “chasm to autonomy.”

Spak, the UBS analyst, said the bank had cut its estimates for Tesla vehicle deliveries and earnings per share for 2026 due to the end of EV incentives and regulatory credits in the US.

He added that the reveal that Tesla’s upcoming “affordable model” was a cheaper Model Y variant could limit incremental demand.

“However, at the same time, the vision of Tesla as the leading player in robotaxis and humanoids is in its infancy and the ventures are progressing,” he said.