Tesla Bets Big on AI With $2 Billion xAI Investment as Revenue Beats Estimates
GeokHub
Dateline: New York, Jan. 28, 2026 Tesla said on Wednesday it will invest $2 billion in Chief Executive Elon Musk’s artificial intelligence startup xAI, reinforcing its strategic shift away from a pure electric vehicle maker toward an AI and robotics-driven company, even as vehicle deliveries weakened.
The company also confirmed that production plans for its Cybercab robotaxi remain on track for later this year, offering reassurance to investors after repeated delays in Tesla’s autonomous vehicle ambitions.
Shares rose about 3.5% in after-hours trading before paring gains to around 1.8% after Tesla disclosed sharply higher capital spending plans.
AI Pivot Central to Tesla’s Valuation
Musk’s long-stated vision of transforming Tesla into an AI powerhouse is critical to its roughly $1.5 trillion valuation, analysts say. Tesla’s investment in xAI was widely expected, with investors anticipating synergies between Tesla’s self-driving software, robotics efforts and xAI’s rapidly advancing models.
“With Tesla’s legacy EV business slowing, investors get exposure to the scorching-hot AI boom,” said Andrew Rocco, a strategist at Zacks Investment Research.
Chief Financial Officer Vaibhav Taneja said Tesla’s capital expenditures will exceed $20 billion in 2026, more than double last year’s spending, driven by investments in robotaxis, humanoid robots, factories and AI infrastructure.
Cybercab and Robotics Plans Face High Bar
Tesla reiterated that its purpose-built Cybercab robotaxi, designed without a steering wheel or pedals, remains on schedule for production this year. However, Musk acknowledged that scaling production of both the Cybercab and Tesla’s humanoid robot Optimus will be slow initially, with meaningful robot volumes not expected until late 2026.
Musk said Tesla aims to deploy fully autonomous vehicles across a significant portion of the United States by the end of this year, though he has previously missed similar targets.
Analysts say investor focus is shifting away from vehicle deliveries toward tangible progress on autonomy and rollout metrics.
“Tesla is entering a transition phase,” said Thomas Monteiro of Investing.com. “Investors are being asked to underwrite future AI-driven revenue before auto sales recover.”
Core EV Business Under Pressure
Tesla’s automotive business continues to face mounting challenges from increased competition, aggressive pricing by rivals and the expiration of U.S. electric vehicle tax incentives. Musk also acknowledged that his political views have alienated some potential buyers.
During a post-earnings call, Musk said Tesla will stop selling its Model S and Model X, once flagship vehicles, freeing up factory space for robot and AI-related production.
Tesla’s revenue fell about 3% to $94.83 billion in 2025, marking its first annual revenue decline. However, fourth-quarter adjusted earnings per share of 50 cents beat Wall Street expectations of 45 cents.
Despite lower sales, Tesla’s automotive gross margin excluding regulatory credits rose to 17.9%, exceeding analyst forecasts.
Energy Business a Bright Spot
Tesla’s energy generation and storage division delivered strong results, with quarterly revenue rising 25.5% to a record $3.84 billion, fueled by growing demand for grid-scale batteries supporting renewable energy and power stability.
Chip Shortage Risks Loom
Musk warned of a looming global memory chip shortage, driven by surging AI infrastructure investments, which could constrain Tesla’s growth in coming years. He said Tesla may consider building its own chip manufacturing facility to reduce supply-chain risk.
“If we don’t do that, we’re going to be fundamentally limited,” Musk said, citing potential geopolitical risks.
