Tesla cuts 2026 capex forecast to $20 billion, shares fall 2%

The reduced spending plan, announced Wednesday, followed a quarter in which Tesla spent less than expected on artificial intelligence and robotics projects. The lighter outlay helped the company post unexpectedly strong free cash flow, but it also raised questions among investors about whether the company is pulling back on the capital-intensive bets underpinning its growth narrative.

Tesla’s valuation leans heavily on future projects such as the Cybercab autonomous vehicle and the Optimus humanoid robot. eToro lead analyst Josh Gilbert said capital spending is “a delicate balance” for the company, noting that investors tend to welcome bigger budgets when they see returns, while a smaller one can signal slowing growth. He added that the capex reduction explains why the stock barely moved despite a quarterly result that beat expectations on most metrics.

Tesla did not detail which specific programs would see reduced funding, attributing the change instead to more efficient capital management.

Adding to investor uncertainty, Tesla and SpaceX have set up special committees to explore a potential merger, CEO Elon Musk said Tuesday. A combined entity spanning AI, vehicles, satellites and rockets could be valued at roughly $3.5 trillion, though AJ Bell investment director Russ Mould warned the deal could face significant regulatory hurdles and leave Tesla investors in limbo.

Tesla shares are down about 14% this year, lagging a roughly 15% gain in the Nasdaq, and remain about 23% below their record intraday high of $498.83 set in December. The stock still trades at 188.24 times forward earnings, far above Ford’s 6.58 and General Motors’ 5.16.

For markets, the capex cut and merger speculation add to volatility risk around Tesla, a heavyweight in the Nasdaq 100 and S&P 500, and could influence broader sentiment toward AI- and robotics-linked growth stocks.

Source: Economic Times Markets