Tesla Inc. ( TSLA ) shares are trading lower on Wednesday, extending losses that began after the company's second-quarter earnings report last week.

TSLA shares are lagging the market. Check the price action here.

What To know: While Tesla recently secured a high-profile $16.5 billion AI chip manufacturing deal with Samsung and is reportedly in talks with LG for further semiconductor supply, the market remains cautious as investors digest the company's long-term strategy and immediate financial performance.

Last week, Tesla reported second-quarter earnings that missed expectations on both revenue and profit. Although CEO Elon Musk reaffirmed the company’s focus on long-term goals like autonomous vehicles, humanoid robots and expanded energy storage solutions, the shortfall in core automotive sales and lingering demand concerns weighed heavily on sentiment. Tesla stock is down over 20% year-to-date in 2025, underperforming the broader tech sector.

Following the earnings call, Tesla announced an eight-year, $16.5 billion chip production agreement with Samsung Electronics. The chips, known as AI6, will be used in Tesla's autonomous driving systems, humanoid robot program and internal AI data centers. Production will take place at Samsung's new Texas plant, a $40 billion facility partially backed by the U.S. Chips and Science Act. Musk said the partnership is "strategically vital" and hinted that the actual production value could be several times greater than the initial $16.5 billion figure.

In addition to the Samsung deal, reports on Tuesday indicate that Tesla is also working with LG on future semiconductor supply agreements, signaling the company's continued push to build out a dedicated AI and robotics hardware ecosystem independent of Nvidia and AMD.

Despite these major developments, some investors remain skeptical.

Analyst Tom Narayan of RBC Capital maintained an Overweight rating on Tesla and raised the price target slightly, citing potential upside from robotaxis and full self-driving (FSD) services. However, concerns remain about the viability of these projects in the near term, especially as adoption rates and regulatory approval outside the U.S. remain uncertain.

Criticism of the company's product strategy also continues to mount. Future Fund's Gary Black recently called the Cybertruck a "disaster" and suggested a smaller, more practical pickup truck could better serve Tesla's earnings potential. Meanwhile, former Tesla co-founder Martin Eberhard publicly criticized the company's abandonment of the $25,000 EV in favor of more niche products.

Tesla's leadership has tried to shift the narrative with bold forecasts. Musk has floated the idea of a $20 trillion valuation, contingent on flawless execution across all verticals, including autonomous mobility and humanoid robotics. For now, however, the market appears to be waiting for evidence that these ambitious projects can translate into sustainable revenue and profit growth.

With investor sentiment split and the stock trending lower, Tesla enters a critical phase where execution will need to catch up to vision. Despite the chip deals signaling strategic intent, concerns over automotive sales, operational costs and project timelines continue to shape the current outlook.

TSLA Price Action: Tesla shares were down 0.67% at $319.04 at publication on Wednesday, according to Benzinga Pro.

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