Tesla's AI spending lags forecast, raising doubts on roadmap

Tesla has deployed just $2.5 billion of the $25 billion in capital expenditures it projected for 2026 back in April, according to a report first published by the Los Angeles Times. The slow spending pace is raising questions among investors about whether the electric vehicle maker can deliver on its ambitious artificial intelligence, autonomous driving, and robotics roadmap.

The concern marks an unusual reversal in market sentiment. While other technology giants face pressure to reduce AI spending, Tesla's investors want to see the company spend more — viewing capital deployment as proof that product development is actually progressing.

"For a growth stock, capex is the best indication you have of future growth," HSBC analyst Mike Tyndall told the Times. "If you're not spending the money, then you're not going to get the growth."

The credibility gap

Tesla's capital expenditure serves as what Haris Khurshid, chief investment officer at Karobaar Capital, calls a "credibility check" for companies selling long-term visions. CEO Elon Musk's history of missed deadlines and abandoned projects makes tangible spending signals particularly important for maintaining investor confidence.

The company's $25 billion annual capex forecast appears conservative compared to its Magnificent Seven peers. Alphabet, Amazon, Meta, and Microsoft have collectively forecast $725 billion in capital expenditures for 2026 alone. Yet Tesla shares have fallen 18% year-to-date through late July, the worst performance in the group.

To be fair, Tesla's development focus differs fundamentally from other tech giants. While companies like Microsoft and Google concentrate on expanding cloud infrastructure and AI services, Tesla is building physical AI applications: self-driving vehicles and humanoid robots. The capital intensity and timelines for hardware development follow different patterns than software and cloud services.

Valuation pressure mounts

Tesla's stock trades at roughly 163 times forward earnings, making it the second-most expensive company in the S&P 500 and by far the priciest Magnificent Seven member. Apple, the next closest, trades at about 34 times forward earnings. The S&P 500 overall trades at approximately 20 times earnings.

That premium valuation assumes Tesla's AI future has essentially arrived. Yet the company's core electric vehicle business faces intensifying competition in an increasingly capital-intensive market. Second-quarter results are expected to show net income of $1.2 billion on revenue of $26 billion — modest growth that doesn't obviously justify the valuation multiple.

Why it matters

The spending scrutiny has intensified since SpaceX went public in June 2026. With SpaceX raising $75 billion through its IPO and an additional $25 billion via bonds, Tesla now faces direct competition for investor attention within Musk's own portfolio. Speculation about a potential merger between the two companies is already circulating, driven by existing connections including Tesla's stake in the SpaceX-owned xAI and their joint Terafab chip fabrication venture.

"A publicly traded SpaceX forces Tesla to have tighter timelines with real deliverables," Max Gokhman at Franklin Templeton Investment Solutions told the Times. "I don't think investors will be patient on missed release dates or empty promises like they were before there was a clear way to play the Elon Mars shot."

Tesla's ability to execute on its robotics and autonomous vehicle promises may now determine whether it remains an independent company. Investors will be watching Wednesday's earnings report closely for signs of accelerated capital deployment and updated AI spending guidance.

Details were first reported by Jordan Fitzgerald for the Los Angeles Times.