10:47 AM EDT, 07/14/2026 (MT Newswires) -- Tesla's (TSLA) strong auto and energy deliveries set up the electric vehicle maker for a solid Q2, but investors remain concerned if Robotaxis and Optimus robots could advance fast enough to justify the accelerating artificial intelligence investment cycle, Morgan Stanley said in a research report emailed Tuesday.

The combination of high gas prices, a rebound in Europe volumes versus easy comps, and potential tailwinds from HW3 trade-ins likely supported Q2 auto deliveries, according to the note.

In Q2, the brokerage said it expects updates on Optimus Gen 3 validation and scaling, potential expansion cities for Robotaxi, and cybercab manufacturing readiness. The company will report Q2 results on July 22.

Expectations for FSD technology enhancements, along with the newly announced Model YL release in the US could continue to support volumes in 2026 and 2027, analysts wrote.

As capex remains on track to double this year with free cash flow turning negative, Tesla's ability to showcase tangible progress in scaling unsupervised autonomous driving is critical in supporting its valuation, Morgan Stanley stated.

The brokerage said it reiterated its equal-weight rating on the stock and boosted its price target to $417 per share from $415.

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