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Tesla shares fell in early Thursday trading after the company reported first-quarter results that exceeded estimates. Investors focused on Tesla’s plan to raise capital spending above $25 billion this year as it expands work on AI, robotics, batteries, and manufacturing.
The company also said free cash flow will remain negative for the rest of 2026, which kept attention on spending rather than the earnings beat.
Tesla reported first-quarter revenue of $22.39 billion, above the $22.08 billion Bloomberg consensus. Adjusted earnings per share came in at $0.41, ahead of the $0.35 estimate. Gross margin reached 21.7%, compared with the 17.7% forecast.
The stock rose after the results were released on Wednesday, but the move reversed during and after the earnings call. Tesla shares were down over 4% in premarket trading on Thursday.
The shift came as management gave a higher spending outlook and pointed to a longer wait for large earnings from robotaxis and other AI-related businesses.
Chief Financial Officer Vaibhav Taneja said Tesla expects 2026 capital expenditures to be "over $25 billion." The company linked that spending to new factories, battery and battery materials projects, AI compute expansion, and production lines for Megapack 3, Cybercab, and the Tesla Semi. Tesla said those investments are part of its current production and technology buildout.
Tesla said its robotaxi service expanded over the weekend to parts of Dallas and Houston. Before that move, the company operated robotaxis in Austin and offered ride-hailing services in the San Francisco Bay Area. Tesla also said robotaxi miles nearly doubled sequentially in the first quarter.
The company stated that service in Dallas and Houston was "unsupervised," meaning no safety driver was present. Tesla had used the same setup in a limited rollout in Austin. It also said Cybercabs are expected to replace the Model Y vehicles currently used in the service over time.
Tesla did not disclose how many robotaxis it operates in each city or how many of those vehicles run without a safety driver. Musk also said on the earnings call that substantial robotaxi earnings are not expected until 2027. That timeline remained a key part of the market response because robotaxis are central to Tesla’s longer-term revenue plans.
Tesla said it has started ramping additional AI compute and preparing for new manufacturing capacity. Those efforts include battery production, battery materials, Megapack 3, Cybercab, and the Tesla Semi. The company tied its higher spending forecast to that wider expansion program.
Musk said Tesla had completed the "taping out" stage for its AI5 chip. That marks the final design stage before production. The chip is intended for future Tesla vehicles, AI training clusters, and Optimus robots. Tesla plans to produce the chip at its Terafab facility, though Bloomberg reported that manufacturing silicon there may begin in 2029 before scaling up later.
Musk also said Tesla would "probably have Optimus useful outside of Tesla sometime next year." He added that the reveal of Optimus V3 would likely come in July or August near the start of production. Those comments added more detail to Tesla’s robotics timeline as the company pushes further into AI hardware and automation.
Tesla’s core vehicle business remained under review after the company reported global first-quarter deliveries of 358,023 vehicles earlier this month. That figure came in below the 364,645 expected by analysts. Deliveries were up 6.3% from a year earlier, though the prior-year comparison was affected by the changeover to the new Model Y. The company may also add a lower-cost model to its lineup as it works to support vehicle demand.
For now, investors appear to be weighing that auto business against Tesla’s larger push into robotaxis, AI infrastructure, robotics, and chipmaking. The latest earnings report showed stronger quarter-one figures, yet the stock reaction made clear that the market wants faster progress and clearer returns on spending.
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