Tesla Beats Q1 Estimates but Musk's Capex Hike and Robot Caution Hit Stock

Thursday, Tesla (TSLA) reported a real quarterly beat, with adjusted EPS of 41 cents compared to the 36-cent consensus and revenue of $22.39 billion compared to the $22.28 billion estimate.

The company's automotive gross margin jumped 478 basis points year-over-year to 21.1%, which was much higher than the 17.7% analyst estimate. From one year to the next, operating profit jumped 136% to $941 million.

The stock initially surged more than 4% after hours. Then Musk got on the earnings call.

By the end of the call, shares had gone down 0.7% to $384.69, after Musk raised his capital expenditure forecast from $20 billion to $25 billion, admitted that he doesn't know how fast Optimus will be made in 2026, and warned that revenue from self-driving cars would "not be super material" this year. 

There was a real beat. Musk said that the future is a lot more expensive and a long way off than investors thought it would be.

The Numbers That Actually Beat

The Q1 numbers show that the business is making a real comeback, which Musk has been playing down in public.

Total sales of cars and trucks went up 16% year-over-year to $16.23 billion. We delivered 358,023 cars, which is 6% more than last year, and made 408,386 cars, which is 13% more than last year. The company had positive free cash flow, which was the opposite of what it had in the previous quarter.

CEO of Interactive Brokers, Steve Sosnick, said, "The car business got better, and there is nothing that threatens the futuristic products that give TSLA a premium valuation." "The key to the post-earnings reaction depends on what Musk says on the call."

Sosnick's conditional proved accurate within the hour.

What Musk Said That Moved the Stock Back Down

Three statements from the earnings call did the damage.

On Optimus, Musk said he doesn't know what Tesla's production rate for its humanoid robot will be in 2026, pointing out that it might be hard to switch the Model S/X production lines to robot production. The manufacturing line for Optimus is brand new, just like the product itself. 

He said, "It's just literally impossible to guess." It would take a while to make things at first." That's not the story of robots growth that investors have been paying a lot of money for.

Musk said that Tesla is "cautious" about its approach to unsupervised autonomous driving and robotaxi. He warned that revenue from both will "not be super material" in 2026, but that it would be "material probably in a significant way next year."

About 4 million Teslas that use the older Hardware 3 computer will not be able to get unsupervised Full Self-Driving capability. Musk confirmed this, which is a big change that affects a lot of current owners and takes away a way to make money with FSD in the near future.

About capital expenditures: The guidance rise from $20 billion to $25 billion—nearly three times last year's $8.5 billion—shows how big Tesla's plans are to build out its AI, robotics, and self-driving infrastructure. 

Musk said that the rise was due to "substantially increased revenue streams" that he expected from new products in the future. The market's interpretation: spend now, make money later; time frame unknown.

The AI Pivot in Practice: Cybercab, Terafab, and the Optimus Factory

Even with the cautious call commentary, Tesla's operational promises are really big. The company said that work on its first large-scale Optimus plant, which will replace the Model S/X lines at Fremont and have room for one million robots a year, will start in the second quarter. At Gigafactory Texas, a second-generation line is being built with the goal of making 10 million robots a year in the long run.

Paid miles in Cybercab almost doubled in Q1 compared to the previous quarter. Tesla thinks that Cybercab will eventually replace the Model Y fleet as its most popular car.

The most ambitious part of the AI shift is the Terafab project that is being worked on in Austin with SpaceX. The goal is to make custom chips for self-driving cars, robots, and data centers in orbit. It is also the farthest from making money.

The Competitive Context Investors Are Pricing

Tesla stock is down about 13.8% so far this year, making it by far the worst-performing Magnificent 7 stock in 2026. This is in contrast to the 4.3% gain in the S&P 500. BYD and Xiaomi are becoming stronger competitors in the core EV market. This is especially true in the APAC markets, where Tesla reported growth in demand this quarter.

In Musk's call, the most important question for investors became clear: Is Tesla an electric vehicle (EV) company with a robots option, or a robotics company that still sells EVs? The EV business is getting better, as shown by the Q1 numbers. The capex guidance and the Optimus caution show that the robotics business is not as far along as the premium value thought.

The beat in Q1 shows that the core car business is strong; a gross margin of 21.1% is structurally healthy and takes away the near-term bear case based on margin collapse. It will cost $25 billion in capital expenditures to make the AI shift, which will hurt free cash flow until 2026.

Long-term, Optimus and Cybercab will still drive value, but Musk's comments on the call pushed both timelines further to the right. If you hold for a long time, nothing in Q1 changes the premise. For short-term traders, the difference between the beat and how the stock responded after hours shows that the market was expecting a more positive direction story than Musk gave it.