Tesla Stock in 2027: Why I Think It Still Has Room to Run
Key Points
Tesla’s near-term results are under pressure from shrinking margins, heavy spending, and negative free cash flow.
I think long-term investors should hold or add to their positions during periods of volatility if they still believe in Tesla’s broader vision.
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When friends ask me if they should sell their shares in Tesla (NASDAQ: TSLA), I always get snarky and start by asking a different question: Do you still believe Tesla is one of the companies shaping the next decade of transportation, energy, and automation, or do you see it now as just another carmaker that had a good run?
Sure, I often ask if they think the ticker will run more, but my answer, looking out to 2027, is that the stock still has room to run, and that selling it just because the last couple of quarters were messy would miss what is actually happening inside the business.
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The headlines lately have not been kind, but this is investing; you must wait to time out your investments. Tesla's second-quarter results showed revenue of around $27 billion, with automotive sales up about 23% year over year, yet the operating margin compressed to near 1%, and profit missed expectations after a stretch of price cuts and heavy spending.
Free cash flow even flipped negative as capital expenditures (capex) more than doubled sequentially, with guidance calling for more than $25 billion of capex for the year. On the surface, that looks like a company working harder for less earnings, which is why the stock has felt stuck.
But when I dig into the details, I see Tesla laying foundations rather than burning cash aimlessly. Vehicle production and deliveries in the first quarter continued to grow, with more than 408,000 units produced and 358,000 delivered. Energy storage deployments reached 8.8 gigawatt-hours, hinting at a growing business in grid-scale batteries and home storage that Wall Street often treats as a footnote.
Tesla's software push
Most important to me, the software story is finally starting to match the hardware story. Subscriptions among current owners for its full self-driving (FSD) reached about 1.28 million active users in the first quarter, up roughly 51% from the prior quarter, and Tesla disclosed hundreds of millions of dollars in annual recurring revenue from FSD alone.
That revenue is tied to software running on cars already sold. Each new subscriber generates high-margin income without building another factory. If Tesla can keep growing that base and eventually turn FSD into a more-autonomous robotaxi platform, the earnings power attached to each vehicle could look very different from a traditional auto company.
Musk also has a swarm of fans
There is also the Elon Musk factor, which you cannot ignore, whether you like him or not. His Space Exploration Technologies (NASDAQ: SPCX) went public in June 2026 at a valuation around $1.75 trillion and briefly traded over $2 trillion, and retail investors piled in so quickly that the stock became one of the most actively bought names in its first hours of trading.
Musk has an almost cultlike following among a certain slice of tech-focused investors who are willing to back his projects for long stretches as long as they see progress. That psychology affects Tesla. Many shareholders do not see this as just a car stock; they see it as a ticket on Musk's broader vision, and that long-term loyalty is one of the reasons management has been able to fund big bets on FSD, its Optimus humanoid robots, and new battery plants even when near-term margins are thin.
So, should you sell? I think it depends on why you bought the stock in the first place. If you came in only for short-term multiple expansion and you now feel uneasy about margin pressure and capex, trimming might make sense.
But if you own the stock because you believe it will be one of the central platforms for electric vehicles, energy storage, and autonomous mobility by the early 2030s, the current volatility looks more like the price of admission than a reason to bail.
For my own portfolio, I am hoping to load up on Tesla into 2027 with the understanding that the stock will swing with every earnings report, or even a Musk tweet. Underneath that noise, there is a company adding hundreds of thousands of cars, millions of software subscribers, and gigawatt-hours of storage capacity while training huge AI models on real-world driving data. To me, that mix still has room to run.
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Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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