TSLA Stock Extends Tumble Overnight: Munster Sees Capex Blowing Past Street Estimates Next Year Too

Analyst Gene Munster sees Tesla’s 2027 Capex reaching $25 billion, above Wall Street’s $21 billion estimate.

• Musk is prioritizing faster execution across AI, Optimus, Cybercab, semiconductors, and solar.
• Capex surged to $5.79 billion, pushing free cash flow to negative $1.09 billion.
• Fiscal AI projects 2026 Capex of $25 billion and free cash flow of negative $10 billion.

Tesla Inc.’s spending surge may be only the beginning, with analysts forecasting $25 billion in 2027 capex as CEO Elon Musk prioritizes faster execution across AI, Optimus, Cybercab, semiconductors and solar manufacturing over near-term capital efficiency.

TSLA stock slid 4% in extended trading following the EV maker’s second-quarter (Q2) earnings release and conference call. Shares are also down 11% so far this month, putting Tesla on track for its worst monthly run since February. 

Tesla Capex Could Top Wall Street Forecasts

After Tesla’s second-quarter (Q2) earnings call, Munster said on X that the company’s elevated spending is aimed at scaling TeraFab, solar manufacturing, Optimus, Cybercab and Semi, which are all central to Tesla’s AI and robotics ambitions. Munster said Musk’s comments signaled a willingness to sacrifice some near-term capital efficiency to accelerate execution. “It’s okay to be a little less capital efficient if we get things done sooner, because that’s actually going to be the higher NPV outcome for the company,” Musk said on the conference call. 

“Elon’s all in on capex, as long as it’s not ‘wasteful,’” Munster said, adding that he expects 2027 capex to hit $25 billion, well above Wall Street’s estimate of $21 billion.

Tesla Spending Push Pressures Free Cash Flow 

Tesla reported Q2 adjusted earnings per share (EPS) of $0.33, missing the $0.54 consensus estimate, while revenue rose to $28.24 billion, topping expectations of $26.36 billion. Record Q2 vehicle deliveries supported the revenue beat, but lower average selling prices, declining regulatory-credit revenue and higher operating costs compressed margins. Operating income fell 57% from the previous year to $398 million, while operating margin narrowed to 1.4%.

The quarter also marked Tesla’s first negative free cash flow in two years. Capex climbed to $5.79 billion, pushing free cash flow to negative $1.09 billion, although cash and investments declined by only $1.2 billion to $43.52 billion. Musk confirmed on X that Tesla’s operating business was effectively funding its AI investments.

According to data from Fiscal AI, Tesla’s spending cycle is likely to intensify before it moderates. The forecast calls for 2026 capex of $25 billion, about triple 2025 levels, while annual free cash flow is expected to swing from positive $6.2 billion to negative $10 billion, potentially the largest cash outflow ever. Meanwhile, Tesla’s capex is projected to ease to about $18.6 billion in 2027.

Tesla Says Capex Will Keep Rising 

Musk said during the earnings call that Tesla should continue investing aggressively: “We should be spending on Capex as fast as we can without it being too wasteful.”  Tesla said that the spending will fund expansion across Robotaxi, Optimus, AI compute infrastructure, semiconductor manufacturing, solar manufacturing and factory capacity.

The EV maker also acknowledged that the sharp increase in investment was the primary reason free cash flow turned negative: “Most of the reason for it going negative is because Capex more than doubled sequentially.” The company reiterated that 2026 Capex will exceed $25 billion, with spending expected to increase further in the second half.

How Do Retail Traders Feel About TSLA?

On Stocktwits, retail sentiment for TSLA has remained ‘bullish’ in the week leading up to earnings amid a 234% jump in 24-hour message volumes.

One user said, “$TSLA The dip after earnings was expected tbh the biggest takeaway for me is that their free cash flow generation from the business is funding the majority of their CapEx investments, so the heavy CapEx year is barely eating into their $40B+ cash on hand.  And the investments they’re making now will likely produce massive returns in the future. This is what being a long-term shareholder is all about!  Looking to add shares between 330-350.”

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Another user said, “$TSLA I have zero doubt about Tesla. Historically, when it is tough for Tesla, it bounces back. We may have to wait a bit.”

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So far this year, Tesla's stock has lagged its "Magnificent Seven" peers, making it the group's second-worst performer, down about 17%. Even so, Tesla continues to command a premium valuation, trading at a forward price-to-earnings ratio of roughly 165x, by far the highest multiple among the Magnificent Seven stocks.

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