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Trinity Audioplayer ready...By Jordan Fitzgerald, Bloomberg
After hearing Tesla Inc.’s seemingly countless promises about artificial intelligence, autonomous driving and robotics, Wall Street wants the company to start putting its money where its mouth is.
Elon Musk’s electric-vehicle maker has spent just $2.5 billion of the $25 billion in 2026 capital expenditures it forecast in April. The slow pace raises questions about whether Tesla’s spending enough to deliver the progress that AI-hungry investors are eager to see.
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“It’s a capital-intensive industry,” said Jay Van Sciver, partner and managing director at Hedgeye Risk Management. “There’s no way they can actually get from A to B spending less.”
This puts the company on a completely different trajectory than most other tech giants, whose stocks are being punished when their AI spending is considered too profligate. For Tesla, on the other hand, an uptick in capital expenditures in its earnings report Wednesday afternoon and a higher outlook for AI outlays from management would likely give the shares a boost by signaling that the firm’s product development is moving in the right direction.
“For a growth stock, capex is the best indication you have of future growth,” said HSBC analyst Mike Tyndall, who has a sell rating on the stock. “If you’re not spending the money, then you’re not going to get the growth.”
Capex is a “credibility check” for companies like Tesla that sell long-term visions, according to Haris Khurshid, chief investment officer at Karobaar Capital, which owns Tesla stock through derivatives. But the reality is Musk’s track record is littered with missed deadlines and abandoned projects. Investors know this, which is why they want to start seeing signs of tangible progress.
“I’m less focused on any single number but rather seeing if the overall story is becoming more internally consistent,” Khurshid said. “Do the capex, management commentary and timelines all point in the same direction? That’s what separates a compelling vision from a compelling investment.”
Four of Tesla’s Magnificent Seven peers — Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp. — have forecast a combined $725 billion in capital expenditures in 2026 alone. Their stocks have taken a hit at one point or another over spending concerns as investors want to see bigger payoffs from those investments. By comparison, Tesla’s $25 billion annual capex forecast looks conservative, but its shares haven’t benefited from it, falling 18% in 2026 for the worst performance among the group as of Monday’s close. Tesla stock rose 1.6% Tuesday as the S&P 500 advanced.
“I don’t have a huge problem that they haven’t spent the money yet,” said Brian Mulberry at Zacks Investment Management, which owns Tesla stock. “But this is one of those input costs that could change the dynamic of overall earnings per share down the road if they don’t get it done soon and don’t manage the cost structure properly.”
To be fair, the products Tesla is developing are fundamentally different from what other Big Tech firms are doing. They’re primarily focused on expanding cloud-computing capacity and building AI services. Tesla is focused on the physical side of AI, pitching a future of self-driving cars and robot butlers.
“The question isn’t who’s spending more, it’s whether the spending is moving the company to the future it’s promising,” said Karobaar’s Khurshid.
The thing is, Tesla’s stock is priced as if that future is here already. At roughly 163 times earnings over the next 12 months, it’s the second-most expensive company in the S&P 500 Index and by far the priciest member of the Mag Seven, with the next closest being Apple Inc. at about 34 times forward earnings. The S&P 500 trades at about 20 times earnings as of Monday’s close.
Tesla is expected to report net income of $1.2 billion in the second quarter, up 2.7% from a year ago, on revenue of $26 billion, a 17% increase from the same period a year earlier. Meanwhile, the overall EV environment remains cloudy. Although the company saw blowout second-quarter vehicle deliveries, investors sold the news, sending the shares tumbling 7.5% on July 2 for their worst day in a year.
“There’s a lot less reason to believe in Tesla, I think now than there ever was,” said David Trainer, chief executive officer of the technology research firm New Constructs. “The core business is going and competing in an extremely capital-intensive area against super companies that were already profitable and are willing to go unprofitable.”
The pressure on Tesla to keep its promises has ratcheted up since Musk’s other company, Space Exploration Technologies Corp., or SpaceX, went public last month. If Tesla earnings fail to meet high expectations, SpaceX’s ambitions to colonize Mars and operate orbital data centers are likely to look more exciting to Musk fans. SpaceX is scheduled to report its results on Aug. 4.
Already, speculation about a merger between the two companies is swirling based on their existing points of connection — from Musk’s shared ownership, to Tesla’s stake in the now SpaceX-owned xAI, to the firms’ Terafab chip fabrication joint venture. SpaceX has high aspirations for AI and is busy raising cash through its landmark $75 billion IPO and a subsequent $25 billion bond sale.
Tesla’s ability to execute on robots and robotaxis, therefore, could determine whether it will remain independent in the future.
A publicly traded SpaceX “forces Tesla to have tighter timelines with real deliverables,” said Max Gokhman at Franklin Templeton Investment Solutions. “I don’t think investors will be patient on missed release dates or empty promises like they were before there was a clear way to play the Elon Mars shot.”
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