On Tuesday, Tesla (TSLA) delivered earnings above Wall Street expectations. Adjusted EPS came in at $0.41, beating the $0.34 analyst forecast and marking a second consecutive earnings beat. Overall, Tesla and Elon Musk are still navigating the company through a major transitional period from an EV maker to an AI-first (physical AI) innovator. I have 3 major takeaways from the report, including:
1. Key Timelines Confirmed: Over the years, many timelines have been pushed back. Tesla CEO Elon Musk is known for providing very aggressive, often unrealistic timelines for next-gen products. However, Tesla reaffirmed that the Cybercab, Tesla Semi, and Megapack 3 all remain on schedule for volume production starting in 2026. In other words, this is a major signal to investors that its transitional period may finally be ending and that its new hyper-growth phase is beginning.
2. EV Business is Resilient: Though sales were reportedly weak in early 2026, Tesla still beat Wall Street EPS expectations. The second consecutive earnings beat confirms that while the legacy EV business is no longer growing rapidly, it’s stable enough to fund Tesla’s heavy investments in robotics and self-driving technology.
3. Trend Change?: With the after-hours action, Tesla shares briefly regained the 200-day moving average – a long-term trend filter used by investors. Meanwhile, Tesla’s sluggish price action lately has made the stock more attractive on valuation grounds. In fact, Tesla’s price to sales ratio of 14.42x is roughly the same as when it when public back in the early 2010s.
Stock Sells Off After Tesla CAPEX is Higher than Expected
The $25 billion in CAPEX guidance from Tesla is a $5 billion jump from the $20 billion forecast in January and nearly triple the $9 billion spent in 2025. The higher-than-expected CAPEX number seemed to spook investors in after-hours trading. That said, I would not read too much into short-term stock gyrations. Elon Musk and Tesla are betting all their chips on the future, which means negative cash flow this year, and a heavy-investment phase is to be expected. Additionally, any revenue from this spending will not be seen until at least 2027.
Bottom Line
Tesla’s latest earnings report represents a pivotal moment for the company as it transitions to an AI-first innovator. If investors believe Elon Musk can continue to innovate at a high level, TSLA shares are cheap currently. Additionally, shares may run up in anticipation of new product launches and the SpaceX IPO (Tesla announced it invested $2 billion in SpaceX).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
