San Francisco Frontiers - Tesla reports higher profits, topping estimates 

Elon Musk's electric vehicle company reported profits of $477 million, up 17 percent from the year-ago period, while revenues jumped 16 percent to $22.4 billion.

Analysts were expected to scrutinize Tesla's aggressive spending plan on Wednesday's conference call.

Tesla had previously disclosed an uptick in car sales during the period but its earnings press release gave more color on where the sales came from.

The company is experiencing "continued growth" in Asia and South America, "while also seeing a rebound of demand in both Europe-Middle East-Africa (EMEA) and North America," it said.

Tesla said it was on track to commence "volume production" of both its Cybercab and Tesla Semi this year, while preparations for a first major factory to produce Optimus robots will begin in the second quarter.

But the results were flattering compared to particularly weak sales figures in the 2025 period when Tesla faced boycotts over Musk's leadership of a Trump administration initiative targeting government spending.

Musk left the White House later in spring 2025 but has continued to speak out on political issues.

Heading into earnings season, several analysts had expressed misgivings about Musk's plan to invest more than $20 billion in 2026 on technology ventures, a spending spree expected to result in negative cash flow for the year.

Those concerns were not directly addressed in the press release, which pledged to make "necessary investments" in order to "realize our mission of Amazing Abundance."

The outlook page in Tesla's earnings packet gave no specifics beyond pledging a "strong balance sheet." The company also avoided an annual production forecast.

Musk has said the investments will lead to stratospheric growth, helping lift Tesla's valuation to around $1.5 trillion.

- Spending leads to 'heartburn' -

Analysts at Morgan Stanley pointed out that Tesla was poised to pass 10 million miles driven on its "FSD" driver-assistance program.

"This symbolic milestone reinforces Tesla's autonomy lead, but with capex doubling and (free cash flow) turning negative, investors will need clearer evidence that unsupervised autonomy is around the corner to support the stock's valuation," said the Morgan Stanley report. It also noted that progress on Tesla's robotaxi rollout had slowed after the initial launch in Austin last year.

Although Musk's leadership at Tesla and his other companies has made him the world's richest person, he has regularly overstated the nearness of fully autonomous driving over the years.

CFRA Research analyst Garrett Nelson pointed to investor "heartburn" at Tesla's spending plans, questioning whether some of the ventures should be pared back in light of economic uncertainty tied to spiking oil prices.

"What worries investors is the fact that the company hasn't quantified the expected returns on these projects, raising concerns that Tesla is potentially acting recklessly," said Nelson, adding that more disclosure about investment return would reassure investors.

On the other side, Wedbush analyst Dan Ives has set a target price of $600 on Tesla shares, an increase of 55 percent from Wednesday's level.

Ives expects Wednesday's conference call to yield more clarity on the company's AI investments, as well as autonomous driving ventures such as FSD and the robotaxi.

"We believe the Street is at a crossroads with Tesla as the bulls and bears debate how quickly the AI era will take shape over the coming year," Ives said, adding that growth in FSD will "change the financial model/margins for Tesla looking ahead."

Shares of Tesla rose 4.1 percent in after-hours trading.

L.Lopez--SFF