Wall Street reacted with caution to Tesla's first-quarter update, saying stronger-than-expected margin performance was overshadowed by elevated planned capital spending and slower-than-anticipated progress on autonomous programs.
Goldman Sachs analyst Mark Delaney kept a Neutral rating and a $375 price target on the electric-vehicle maker. Delaney acknowledged margin gains and faster monetization of FSD subscriptions, which he noted are up 51% year-over-year, but he warned that large-scale robotaxi deployments "could be measured in the near-term." Delaney further cautioned that unsupervised FSD access for consumers may not arrive until late 2026.
On cash-flow implications, Delaney projected that Tesla's free cash flow would remain negative in 2026 and 2027 because of sustained elevated investment, with a recovery to positive free cash flow not expected until 2028.
Barclays analyst Dan Levy reiterated an Equal Weight rating and a $360 target, framing the quarter as notable less for current results than for the heavy investment agenda ahead. Levy described the company as in "Tesla's most consequential period of investment ever," and said that tangible proof points are still required for robotaxi scaling and for the upcoming Optimus production start. He also warned that older hardware in the installed fleet could suppress FSD take rates.
Morgan Stanley's Andrew Percoco, who maintained an Equal Weight rating and a $415 target, pointed to operational progress but limited near-term upside. Percoco observed that robotaxi miles driven have more than doubled since December, but he said that near-term gains are likely capped as key physical AI programs are proceeding more slowly than investors expected while capex and cash burn rise.
Jefferies analyst Philippe Houchois offered a relatively more constructive read, citing upbeat demand commentary and an order backlog at its strongest level in two years. Houchois highlighted Optimus production, targeted to begin in July or August, as a critical near-term milestone to watch.
The comments from these research teams collectively emphasize a trade-off emerging from the quarter: improved margin performance and growing monetization of software subscriptions on one hand, and heavier investment with stretched timelines for robotaxi commercialization and Optimus rollout on the other. Analysts differ on the timing and magnitude of downstream returns, but several concur that the next phases of investment will be pivotal for the company and its cash-flow trajectory.
Contextual note - Analysts signaled that the coming quarters will be defined by execution on capital projects and proof points for autonomous programs rather than solely by near-term margin trends.