Giant electric vehicle maker Tesla (TSLA) recently reported its first-quarter results, attracting the attention of Wall Street. One of the biggest factors that affected how results were perceived was the company’s increase in capital expenditures. The company’s first-quarter CapEx increased 67% year-over-year to $2.49 billion. Additionally, it expects its CapEx to reach $25 billion this year.
Tesla has been investing heavily to transform itself from an electric vehicle manufacturer to a pioneer in physical AI (such as robotaxis and its Optimus robot). However, this could put pressure on its cash flow in the short term. Wedbush’s Dan Ives believes a huge capex is necessary to achieve his goal of “becoming a physical AI stalwart,” maintaining a bullish “outperform” rating on the stock and a $600 price target, the highest on the street.
We analyze the company at this moment…
Tesla, based in Austin, Texas, increasingly presents itself as an artificial intelligence and robotics company rather than simply an automaker. It is investing heavily, on the order of tens of billions of dollars, in internal AI chips, data centers and manufacturing infrastructure to support autonomous driving software, robotaxi fleets and humanoid robots, rather than limiting itself to vehicle production.
At the center of this transformation is the company’s “Terafab” semiconductor project, humanoid robots, autonomous robotaxis, and close collaboration with SpaceX on custom chips and space systems. Tesla currently has a massive market capitalization of $1.4 trillion.
While the stock is up 45% over the past 52 weeks, it’s not considered enough by the standards Tesla previously set for itself. Tesla shares are down this year, mainly because investors are concerned about pressure on margins, weak demand in some markets and a high valuation that has discounted much future optimism. The latest delivery figures have also disappointed. This year, Tesla shares are down 16.9%. It last posted a 52-week high of $498.83 in December 2025, and it is down 24.6% from that level.
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Tesla’s lofty valuation refuses to drop. On a forward-adjusted basis, its price-to-earnings (non-GAAP) ratio of 178.60 times is eons higher than the industry average of 15.72 times.
As already said, Tesla showed a notable recovery in the first quarter after a drop in revenue in the previous quarter. Tesla’s revenue increased 16% year over year (YOY) to $22.39 billion. However, this figure was lower than the $22.64 billion that Wall Street analysts expected (according to an LSEG survey). The company’s automotive revenue also grew 16% to $16.23 billion.
Tesla produced 408,386 vehicles during the quarter (including production of 394,611 Model 3/A), a 16% year-over-year increase, while it delivered 358,023 units during the quarter, a 6% year-over-year increase. However, delivery figures fell short of analyst estimates, raising concerns among investors. On the other hand, the company’s active FSD subscriptions increased to 1.28 million.
Tesla’s operating margin rose 214 basis points year over year to 4.2% as the company recognized an increase in one-time auto benefits related to warranties and fees. Its non-GAAP EPS grew 52% from the prior-year period to $0.41, beating the $0.37 figure Street analysts were expecting.
Analysts believe Tesla can improve its results even further. For the current year, Tesla’s EPS (on a diluted basis) is expected to grow 24.8% year-over-year to $1.36, followed by a 39% increase to $1.89 for next year.
In addition to the reiteration of “outperform” by Wedbush analysts, following the first quarter results, other analysts have reiterated their stances on Tesla. Analysts at Cantor Fitzgerald maintained an “overweight” rating and a $510 price target on the stock.
On the other hand, analysts at RBC Capital reduced Tesla’s price target from $480 to $475, while maintaining the “Outperform” rating. The company cited higher CapEx and caution around humanoids as the main drivers of the reduced price target.
Needham analysts reiterated a “Hold” rating for Tesla with no price target, noting that the company’s margin outperformance in the first quarter could be temporary due to non-recurring gains.
Wall Street analysts are now taking a cautious stance on Tesla stock, with an overall consensus rating of “Hold.” Of the 42 analysts who rated the stock, 15 analysts gave a “Strong Buy” rating, two analysts gave a “Moderate Buy” rating, while 16 analysts are playing it safe with a “Hold” rating and nine analysts gave a “Strong Sell” rating. The consensus price target of $405.74 represents a 7.82% upside from current levels. Furthermore, the $600 price target given by Wedbush, the highest on the street, indicates an upside of 59.5% from current levels.
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As of the date of publication, Anushka Dutta had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
