Tesla has powered up a massive artificial intelligence computing cluster in Texas, but the celebration was short-lived as the company’s ballooning capital expenditure plans sent shares sliding. The Cortex 2 supercomputer, featuring more than 130,000 graphics processing units, began operations at the Gigafactory Texas facility in late April, designed to train software for autonomous vehicles and humanoid robots.
The infrastructure push comes with a staggering price tag. Management has raised the 2026 investment budget to over $25 billion, up sharply from the previously planned $20 billion. That nearly triples last year’s spending level and has triggered alarm bells among analysts. Morgan Stanley warns that Tesla could burn through roughly $11.6 billion in cash this year, though other analysts applaud the aggressive AI strategy.
The spending shock landed just as Tesla reported better-than-expected first-quarter operational results. Revenue reached $22.38 billion, while adjusted earnings per share of 41 cents beat Wall Street estimates. But the fine print revealed significant one-off support: $480 million in gains from tariff refunds and reversed warranty provisions, plus an extension of supplier payment terms from 61 to 71 days. That helped generate $1.4 billion in free cash flow, though CFO Vaibhav Taneja warned that the rest of the year would see negative free cash flow as the investment wave crests.
Investors reacted with a selloff that erased initial after-hours gains of about 4%. Trading volume surged to 93.1 million shares, roughly 47% above the three-month average — a clear signal of market anxiety. The stock closed Friday at €320.70, down roughly 14% year-to-date and about 7% below its 200-day moving average.
Robotaxi Rollout Hits the Streets, But Expansion Pace Falters
While the capex drama dominated headlines, Tesla’s robotaxi ambitions advanced on the ground. On April 18, the company launched its first fully unsupervised ride-hailing service in Dallas and Houston. Paid robotaxi miles nearly doubled in the first quarter compared with the previous three months.
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Yet the scale remains modest. Dallas’s operating zone covers roughly 78 to 90 square kilometers, while Houston’s spans just 30 to 39 square kilometers. By contrast, rival Waymo has been active in both cities since February 2026 and now completes 500,000 paid rides per week across ten US cities.
Tesla had promised to be operational in seven US cities by the end of the first half of 2026. Dallas and Houston are ticked off, but the remaining five — Phoenix, Miami, Orlando, Tampa and Las Vegas — have slipped from a concrete “1H 2026” commitment to vague “preparations are underway” language. With just two months left in the half, the timeline looks stretched. Phoenix appears closest to launch, with roughly 60 Model Ys spotted equipped with new rear-camera washing systems.
Safety Concerns and Competitive Headwinds
Regulatory disclosures have added to the pressure. Tesla’s pilot fleet in Austin was involved in 14 collisions during its initial phase, with reports putting the autonomous vehicle accident rate at four times that of human drivers — a data point regulators will scrutinize closely.
Meanwhile, competition intensifies in the core automotive business. BYD and Xiaomi are expanding market share globally, while Tesla juggles development of the Cybercab, the Tesla Semi, the Optimus humanoid robot and its own AI infrastructure. CEO Elon Musk tempered expectations, warning that initial production of both the Cybercab and Semi would be “very slow.”
The coming weeks will bring concrete milestones: production ramp data from Texas, results from unsupervised robotaxi tests in select US cities, and the rollout of Autopilot version 14.3.2, which is now being deployed across North America with faster response times. Whether Phoenix gets the green light this week and how quickly Cybercab production accelerates will likely shape near-term sentiment more than any analyst forecast.
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