Tesla reported delivery of 480,126 vehicles in the second quarter, surpassing sell‑side expectations by 18% and representing the strongest quarterly growth rate since the third quarter of 2023. This rebound positions the company for its first annual delivery increase since 2023. Morgan Stanley responded by raising its 2026 vehicle delivery forecast to 1.67 million units and its 2027 forecast to 1.86 million units, while also projecting second‑quarter adjusted earnings of $0.69 per share, well above the consensus estimate of $0.49. The firm expects the automotive gross margin, excluding regulatory credits, to be 18.1%, broadly in line with market expectations. Barclays similarly upgraded its earnings outlook, forecasting adjusted earnings of $0.55 per share for the quarter versus a $0.47 consensus, and anticipates automotive margins to decline sequentially due to higher raw‑material costs and the absence of favorable one‑time items, though margins remain healthy. Both analysts note that a stronger automotive business provides an additional growth source, validates consumer interest in Full Self‑Driving (FSD), and supplies cash to fund Tesla’s Robotaxi, Optimus humanoid robot, and semiconductor initiatives. However, they caution that these benefits may not be sufficient for a major re‑rating. Morgan Stanley estimates 2026 capital spending at $26.8 billion and a free‑cash‑flow burn of $11.4 billion, increasing pressure for tangible returns from Tesla’s physical AI investments. Regarding Robotaxi, Barclays estimates Tesla currently operates roughly 30 to 50 vehicles in Austin, with smaller fleets in Dallas, Houston and Miami, and notes that many rides still require safety monitors. Morgan Stanley projects the Robotaxi fleet to reach 1,500 supervised and unsupervised vehicles by year‑end, with planned launches in Phoenix, Orlando, Tampa and Las Vegas. Both firms maintained Equal Weight ratings on the stock. Morgan Stanley raised its price target to $417 from $415, attributing only $47 of the increase to the automotive segment, while Barclays lifted its target to $370 from $360, still below Tesla’s market price at the time of publication.