Tesla (NASDAQ:TSLA) stock fell in premarket trading on Thursday after the company significantly increased its capital expenditure plans to above $25 billion for the year, as it accelerates its shift toward artificial intelligence and robotics.
The electric vehicle maker’s shares had initially moved higher in after-hours trading following its earnings release but reversed direction after investors digested the larger spending outlook.
By 04:27 ET, the stock was down 2.2% in premarket activity.
Musk tempers expectations on robotics and autonomy
During the post-earnings call, CEO Elon Musk said he could not estimate Tesla’s production pace for its Optimus robot in 2026.
He pointed to challenges in repurposing manufacturing lines previously used for the Model S/X—vehicles the company discontinued earlier this year—toward robot production.
“Optimus is a completely new product with a completely new production line. It’s just literally impossible to predict,” Musk said, adding that production would likely be “quite slow at first.”
Musk also emphasized a “cautious approach” to Tesla’s plans for unsupervised autonomous driving and robotaxis, warning that revenue from these businesses will “not be super material” this year.
However, he added that revenue from these segments should become “material probably in a significant way next year.”
He also noted that older Tesla vehicles equipped with Hardware 3 systems will not receive unsupervised full self-driving capabilities, affecting roughly 4 million vehicles.
Strong Q1 results led by core auto business
Despite the strategic pivot toward AI and robotics, Tesla’s first-quarter performance was driven largely by its automotive segment.
The company reported earnings of $0.41 per share on revenue of $22.39 billion for Q1 2026, exceeding analyst expectations of $0.36 per share on $22.28 billion in revenue.
Tesla’s results come as investors closely track its transition from a traditional EV manufacturer toward a business centered on autonomy, AI, and robotics. Its core auto division has faced pressure, with deliveries missing expectations in the prior two quarters.
“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 company said.
“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.
Stock underperforms despite operational improvements
Tesla shares have lagged significantly this year, down 13.8% year-to-date, compared with a 4.3% gain in the broader S&P 500.
Automotive revenue rose 16% year-on-year to $16.23 billion, while gross margin improved by 478 basis points to 21.1%, well above analyst estimates of 17.7%.
Vehicle deliveries totaled 358,023 units in the quarter, up 6% from a year earlier, while production increased 13% to 408,386 vehicles.
“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,” said Steve Sosnick, chief strategist at Interactive Brokers.
“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,” he added.
Spending surge raises concerns over cash flow
Tesla raised its full-year capital expenditure guidance to more than $25 billion, up from a previous target of over $20 billion, as it invests heavily in AI and robotics initiatives.
“We were reminded that to unlock the opportunities ahead, Tesla is facing an elevated period of spend,” said Dan Levy, analyst at Barclays.
“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, analysts at William Blair reiterated a Market Perform rating, pointing to the company’s “transition to autonomy and robotics getting real, and hard, paired with the increasing capex warnings from Musk.”
Robotics and robotaxi expansion plans
Tesla said preparations for its first large-scale Optimus robot factory will “begin shortly” in the second quarter. The initial production line will replace Model S and Model X lines at its Fremont facility and is expected to have capacity of up to 1 million units annually.
“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.
On the robotaxi front, paid miles driven by its Cybercab autonomous vehicles nearly doubled in Q1 compared with the previous quarter.
“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.
Broader strategic focus and Musk’s wider ventures
Tesla’s earnings come as Musk is also focused on a potential initial public offering of his space company SpaceX later this year.
Some Tesla investors have long advocated for closer integration—or even a merger—between Tesla and SpaceX, arguing that combining the businesses could unlock synergies and strengthen resources available for Tesla’s transformation.
Musk has previously merged different parts of his broader business ecosystem. Tesla acquired SolarCity in 2016, and earlier this year SpaceX combined with Musk’s AI venture xAI, creator of the Grok chatbot, forming a group valued at $1.25 trillion.