Teslas stock drops on Elon Musks $25B AI wager: Why investors are worried | Latest Tech News
Tesla CEO Elon Musk is asking investors to take a leap of religion on his pricey bets in self-driving technology and humanoid robots that have yet to generate significant income.
It raises a key query for investors: whether or not Tesla’s rising spending will be justified without the type of established, high-margin money engines that permit Big Tech friends to fund larger investments.
“If you think that Elon Musk’s view that Optimus will be ultimately their most worthy, most value-creating platform, and you think you’re skeptical, then the capex doesn’t make sense, and it’s probably not a good investment,” said Seth Goldstein, a Morningstar analyst, on Tesla’s humanoid robot, a still-in-development system Musk has said may very well be mass-produced.
Tesla CEO Elon Musk is asking investors to take a leap of religion on his pricey bets in self-driving technology and humanoid robots that have yet to generate significant income. Tesla
“But if you think that Elon Musk has proven himself that he can make seemingly impossible things a reality, then you’re willing to take the leap of faith here.”
The automaker’s shares closed down more than 3% on Thursday.
Tesla on Wednesday lifted its 2026 capital expenditure plan to more than $25 billion, practically triple last yr’s $8.53 billion, and greater than the $20 billion it forecast early this yr.
As Musk spends big to double down on artificial intelligence, robotaxis and robotics, the company expects destructive free money move for the remaining of the yr after posting a shock $1.44 billion surplus in the first quarter.
Musk has argued Tesla just isn’t alone, pointing to heavy spending across the technology sector.
Alphabet, Microsoft and Amazon are all committing tens to a whole bunch of billions of {dollars} toward AI infrastructure.
Musk raised Tesla’s 2026 capital expenditure plan to more than $25 billion, practically triple last yr’s $8.53 billion. AFP via Getty Images
But these firms possess established cloud and software program companies producing important and recurring money move.
Amazon is predicted to post destructive free money move in 2026, reflecting the size of its investment cycle. Yet analysts say that differs from Tesla’s place, as Amazon’s spending is underpinned by high-margin companies such as Amazon Web Services and promoting that have a observe file of ultimately translating investment into returns.
Tesla, in distinction, is betting on companies still in early development. Its robotaxi service is increasing step by step across a handful of US cities, while its Cybercab, a absolutely autonomous vehicle without handbook controls like a steering wheel or brake pedals, is only anticipated to start quantity manufacturing later this yr.
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