MW Is Tesla succeeding in AI? Watch this for a clue.

By William Gavin

Where - and how - Tesla spends its capital may give investors a helping hand, says a bullish analyst

Tesla is working to scale up production of its Cybercab, a designated robotaxi vehicle designed for ride-hailing operations.

As Tesla has doubled down on artificial intelligence, investors are left trying to make sense of the company's progress. According to analysts at Oppenheimer, tracking how Tesla spends its cash may provide some insight.

"We anticipate investors will begin looking at capital investments as a leading indicator of Physical AI success," analysts led by Colin Rusch said in a note to clients on Thursday.

That makes sense given the sheer scale of the company's planned capital expenditures for 2026. Tesla $(TSLA)$ expects to book more than $25 billion in capex, much more than it has spent in prior years, and to record negative free cash flow for the rest of the year, according to Chief Financial Officer Vaibhav Taneja.

Rusch thinks Tesla will ultimately spend beyond that already high projection, estimating 2026 capex of $29.4 billion and 2027 capex of $30.4 billion, an increase from his prior expectations. The vast majority of that - $20 billion - will be spent on building out Cortex, Tesla's data-center cluster in Texas, he said.

"We believe [Tesla] will aggressively bring capacity online to enable AI-driven learning cycles on product design, manufacturing processes, and software integration in to products," Rusch said in his note, adding that boosting Cortex's capacity will be the "key variable for the stock" as investors expect AI to impact operations.

Oppenheimer rates Tesla's stock at outperform, but does not have a price target on it. Tesla shares are down slightly on Thursday.

Another chunk of capital, some $2 billion by Oppenheimer's estimates, could go toward building out the Terafab, a planned chip-making project Tesla is tackling alongside SpaceX $(SPCX)$ and with help from Intel. SpaceX, which public last week in an explosive debut, shares a CEO and founder with Tesla in Elon Musk.

During an earnings call in April, Musk said that Tesla will spend $3 billion on a research facility in Texas capable of making "a few thousand wafers" per month for chips. SpaceX will take care of the initial phase of building out the Terafab, according to Musk.

The Terafab is crucial for both Tesla and SpaceX to achieve their plans, which include developing humanoid robots and data centers in space. It will be expensive, although analyst estimates vary.

Also critical for the companies' plans are a gambit to boost solar and energy storage manufacturing capacity, the latter of which has been a growing part of Tesla's business. Rusch expects "limited focus" on Tesla's plans to scale up that capacity, which could cost more than $2 billion this year.

And of course, Tesla investors are monitoring for any developments with the company's Cybercab robotaxis and Optimus humanoid robots. Tesla has pushed back a planned showcase of its Optimus robots to late summer, citing fears that rivals may analyze its technology and quickly "copy everything they possibly can," as Musk put it.

Rusch expects Tesla to show "material progress" on its efforts to produce Optimus at its next quarterly earnings call.

As for the Cybercab, recent filings with U.S. regulators have given investors a full look at the technical specifications of the two-seat vehicle. Production began in April, although Musk has said that it will be slow at first. Tesla is testing 54 Cybercab vehicles across eight regions, according to a crowdsourced robotaxi tracker.

While Tesla is scaling up production, it's also looking to increase its reach across the United States. As of Thursday, just four U.S. cities - three of them in Texas - allow Tesla to operate a commercial ride-hailing service. The company employs self-driving Model Y SUVs in each of those cities in Texas, some of which are unsupervised.

Piper Sandler's Alexander Potter last week pointed to a series of developments with Tesla's technology, including its efforts to scale up, as evidence that it has solved the "self-driving puzzle." The company has announced plans to launch its robotaxis in five additional cities in the first half of 2026, which Potter said "might be unrealistic" but called evidence of a trend.

-William Gavin

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June 18, 2026 13:34 ET (17:34 GMT)

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