Tesla Is the Only Magnificent Seven Stock in the Red for 2026
2026-10-02 02:37
•Daniel Sparks •The Motley Fool
••••••• •••••••••• Axe Cap view
Tesla’s Fade Amid the Tech Rally
Tesla’s sharp profit decline contrasts with strong growth in other top US tech stocks, posing risks in an overvalued market.
Tesla’s 23% drop this year, despite 26% revenue growth, highlights a problem investors should not ignore: profitability. Margins have collapsed to 1.4%, and operating income fell 57%. This isn’t just a lull—it’s Tesla doubling down on long-shot bets like AI and robotaxis with over $25 billion in spending, none producing real returns yet. At a nose-bleed P/E of 155, Tesla’s price tags optimism that might be misplaced, especially compared to tech giants like Apple, Nvidia, and Microsoft showing stronger, steadier earnings. For South African investors, this tech story cuts through the usual currency noise—the rand’s moves against the dollar will matter but won’t save a company burning this much cash. Domestically, banks like Standard Bank and FirstRand feel the ripple effects from shifts in US tech funding and sentiment, making them secondary indicators for tech risk appetite. Watch Tesla carefully but don’t chase losses here. this is just our opinion and not financial advice
Avoid Tesla for now; better to favor local counters like Standard Bank and FirstRand, which will benefit indirectly if global tech stocks stabilize. Keep an eye on USD/ZAR to gauge risk sentiment shifts.
- TSLA
- Standard Bank
- USD/ZAR
- Tesla’s long-term AI and robotaxi projects could suddenly pay off
- Rand volatility could distort local tech investor appetite
6/10
Tesla is the only Magnificent Seven stock declining in 2026, down 23% despite strong sales growth of 26% year-over-year. The problem lies in profitability: operating income dropped 57% with margins shrinking to just 1.4%, while the company spends over $25 billion on AI and robotaxi initiatives that haven't yet generated measurable returns. With a P/E ratio around 155, Tesla's valuation appears disconnected from its current financial performance compared to peers.
Our take is based on reporting first published by The Motley Fool.