Tesla stock reverses course as capex hike offsets Q1 beat
Investing.com -- Tesla (NASDAQ: TSLA) shares slid in premarket trading on Thursday after the company sharply raised its capital expenditure (capex) plans to more than $25 billion for the year, to help reposition the company as an AI and robotics powerhouse.
The electric vehicle maker’s stock initially rose in after-hours trading but reversed course on the big capex plans boost.
The stock was down 2.2% in the premarket trade by 04:27 ET.
Responding to questions during a post-earnings call, Musk said he did not know what Tesla’s production rate for its Optimus robot will be in 2026.
Musk flagged difficulties in transitioning the production lines for Tesla’s Model S/X, which the company discontinued earlier this year, towards building robots.
"Optimus is a completely new product with a completely new production line. It’s just literally impossible to predict," Musk said, adding that production was likely to be "quite slow at first."
Musk also flagged a "cautious approach" on Tesla’s unsupervised autonomous driving and robotaxi plans, warning that revenue from the businesses will "not be super material" this year.
But he noted that revenue from the two will be "material probably in a significant way next year."
Musk also said that Tesla’s older models-- running the company’s Hardware 3 computer-- will not actually receive unsupervised full self-driving. This covers roughly 4 million Tesla vehicles, a large chunk of owners.
Musk has repeatedly touted robotics and AI as the next major growth drivers for Tesla, arguing that the company’s EV business was no longer core. But its first-quarter earnings were driven chiefly by improving growth in its automobile business.
Tesla beats Q1 even as EV business fares better than expected
The Elon Musk-led company earned 41 cents per share on revenue of $22.39 billion for Q1 2026. Analysts had been expecting a profit of 36 cents per share on revenue of $22.28 billion.
Tesla’s quarterly results come at a time when investors are closely watching the firm’s progress in shifting from an EV manufacturer to a business focused on self driving, artificial intelligence, and robotics. The Magnificent 7 member’s core automotive business has been hurting, with vehicle deliveries missing Wall Street expectations two quarters in a row.
"We continued to make meaningful progress on the build out of the infrastructure and AI software that underpins our Robotaxi and future robotics businesses in Q1. We commenced ramp of additional AI compute, new factories across battery and battery materials, and further prepared lines for start of production of Megapack 3, Cybercab and the Tesla Semi," the EV maker said in a statement.
"We saw continued growth in demand for our vehicles in markets in APAC and South America, while also seeing a rebound of demand in both EMEA and North America," Tesla added.
TSLA stock has easily been the worst-performing member of the Magnificent 7 club this year, with shares down 13.8% YTD. That compares to a 4.3% rise in the broader S&P 500 index.
The company’s total quarterly automotive revenue rose 16% Y/Y to $16.23 billion, while its gross margin improved 478 basis points from a year ago to 21.1%, beating the analyst estimate of 17.7%.
Total vehicle deliveries were 358,023 in Q1, a 6% increase from a year ago. The company produced 408,386 vehicles in the quarter, up 13% Y/Y.
"The report is good enough for the 4% bounce. Adjusted EPS beat (and even a slight beat on unadjusted), along with a revenue beat and a surprise flip to positive free cash flow," Steve Sosnick, chief strategist at Interactive Brokers, told Investing.com.
"The car business improved, and there is nothing that disrupts the futurist products that give TSLA a premium valuation. All the key products in the pipeline (trucks, cabs, robots) are said to be on schedule. The key to the rest of the post-earnings reaction depends on what Musk says on the call," Sosnick added.
Musk has publicly outlined his ambitions into turning Tesla into a robotics and AI player, resulting in high capital expenditure.
Tesla on Wednesday raised its full-year capital expenditure guidance to more than $25 billion, up from a prior target of more than $20 billion.
"We were reminded that to unlock the opportunities ahead, Tesla is facing an elevated period of spend," Barclays analyst Dan Levy said.
"Moreover, we see question on the spend trajectory beyond this year for Terafab and solar – albeit with Elon’s other entities to help shoulder the load. And with elevated capex and opex, it’s a reminder that Tesla will likely be facing negative FCF for the coming years," he added.
Separately, William Blair analysts reiterated a Market Perform on the stock, citing the company’s "transition to autonomy and robotics getting real, and hard, paired with the increasing capex warnings from Musk."
Looking at updates in robotics, TSLA said preparations for its first large-scale factory to produce its Optimus robots will "begin shortly" in Q2. The first-generation line will replace Model S and Model X lines at its factory in Fremont, with a capacity of 1 million robots a year.
"We are also preparing Gigafactory Texas for the second-generation line, which is being designed for long-term annual production capacity of 10 million robots," the company said.
Turning to its Robotaxi business, paid miles in the autonomous cabs, called Cybercab, nearly doubled in Q1 from Q2. "Once in production, we expect that Cybercab will begin to replace the existing Model Y fleet and will be the largest volume vehicle in the fleet over time," Tesla said.
The company’s earnings report also comes at a time when top boss Musk has been preoccupied with carrying out what is expected to be a blockbuster initial public offering for his rocket company SpaceX later this year.
Backers of Tesla have long called for a tie-up or even an eventual merger with SpaceX, arguing that the consolidation will bring already interconnected businesses together and allow Musk to bring more resources to bear in overhauling Tesla’s business.
Musk has also previously merged different sections of a sprawling business empire that often sees companies share resources. Tesla acquired SolarCity, another Musk venture, in 2016. In February, SpaceX and Musk’s artificial intelligence startup xAI, which created the Grok chatbot, also fused to form a behemoth valued at $1.25 trillion.