Tesla's (TSLA) ramping up of capital expenditures as it transforms into a physical artificial intelligence player is a positive for the company, Wedbush said in a Thursday note.
Tesla expects more than $25 billion of capital expenditures in 2026, a significant increase from the guidance of around $20 billion it initiated last quarter, Wedbush analysts said. Tesla's planned multi-year capital investment phase, which includes six factory buildouts and its AI5 inference chip program, will result in negative cash flow throughout the year, the analysts said.
Stabilizing demand for Tesla's existing vehicle lineup has driven Q1 results that featured earnings and revenue beats, the analysts said. They noted that the company continues to zero in on autonomous technology with production of the Cybercab and Tesla Semi anticipated later in the year.
The approval of its Full Self-Driving supervised system in the Netherlands sets up an EU-wide review in May, while China approval is expected by Q3, according to the note. Tesla expects to launch unsupervised Full-Self Driving by Q4 at around a dozen US states, with recurring revenue projected in 2027, the note said.
Wedbush maintained its outperform rating and $600 price target on the stock.
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