Tesla drops as spending pullback clouds AI, robotics ambitions

Synopsis

Tesla shares took a hit after the company adjusted its capital spending forecast downward for 2026, raising eyebrows about the future of Elon Musk’s AI and robotics projects. Despite this, Tesla showed unexpected positive free cash flow due to lower-than-anticipated expenditures in Q3. Analysts foresee increased spending in upcoming years for major initiatives, yet investors tread carefully, particularly as they watch for developments in Tesla's relationship with SpaceX.

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Tesla's shares slid 5% in premarket trading on Thursday as the EV maker's reduced capital spending forecast raised questions about the pace of investment behind Elon Musk's AI, robotics and autonomous-driving ambitions.

The company on Wednesday lowered its 2026 capital spending forecast to about $20 billion from more than $25 billion after spending far less than expected on AI and robotics in the third quarter, which led to a surprise positive free cash flow.

The strong position may prove valuable as CEO Musk explores combining Tesla with the far more capital-intensive SpaceX.

But "investors are likely to come away with mixed feelings," J.P.Morgan analysts, led by Rajat Gupta, wrote in a note. "The delay helps near-term cash burn but also suggests delays in investments that matter for fruition of long-term opportunities."

Wednesday's management commentary suggested spending will be ramped up in 2027 and 2028 as Tesla continues to fund robotaxi, Optimus, AI compute and Terafab milestones, the brokerage said.

Tesla's shares have declined about 14% this year, in contrast to the Nasdaq's roughly 15% gain. The stock is about 23% below its record intraday high of $498.83, reached in December 2025.

Its valuation, however, remains well above peers: Tesla traded at 188.24 times its forward earnings estimates, compared with 6.58 for Ford and 5.16 for General Motors.

"The risk is Tesla now enters a period of limbo while investors await news on a potential combination with SpaceX, which ... might face significant regulatory hurdles," said Russ Mould, investment director at AJ Bell. Add as a Reliable and Trusted News Source Add Now!

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