Tesla Inc (NASDAQ:TSLA)’s first quarter earnings report drew a generally positive, though measured, response from analysts at Bank of America and Wedbush, who highlighted stronger-than-expected automotive margins and continued investment in autonomy and artificial intelligence as central to the company’s outlook.
Bank of America highlighted upside in Tesla’s core automotive business as the primary driver of the earnings beat. The firm noted that both automotive revenue and gross margins exceeded expectations, with margins reaching 19.2%, well above forecasts. Earnings per share of $0.41 also came in ahead of consensus.
The bank pointed to continued growth in Full Self-Driving (FSD) adoption, with a record number of new subscriptions in the quarter bringing the total to about 1.28 million, or roughly 14% of Tesla’s fleet. However, it described the energy generation and storage segment as softer than expected due to timing of deployments.
On autonomy, Bank of America emphasized Tesla’s cautious approach to scaling its robotaxi network. The company is currently operating in a limited number of markets and appears to be delaying broader expansion until further safety improvements are achieved, particularly with a future FSD software update. Unsupervised FSD is expected to reach customers later this year, though no firm timeline for the next major software version was provided.
“We see autonomous vehicles spurring the next era of mobility and the most significant change agent in the Auto 2.0 landscape, offering consumers more time, safer travel, and more accessible transportation,” they wrote.
The bank also noted increased capital spending, with Tesla raising its 2026 capex guidance to $25 billion, driven by new factories and AI-related investments. It maintained a positive rating, citing what it sees as early-stage monetization opportunities in autonomy.
In addition, Bank of America pointed to Tesla’s Optimus humanoid robot program, stating that initial customer availability is expected next year, with early use cases focused on simple factory tasks.
The bank’s analysts have a ‘Buy’ rating and $460 price target on Tesla, which traded down 4% at about $373 on Thursday afternoon.
Wedbush similarly underscored Tesla’s stronger-than-expected financial performance, noting beats on both revenue and earnings alongside improving automotive margins. The firm described demand trends as stabilizing and highlighted strength across multiple segments, including services.
The firm placed greater emphasis on Tesla’s long-term positioning in artificial intelligence and autonomy. It described the company’s strategy as centered on capturing what it views as a significant AI opportunity, with FSD positioned as a core product and vehicles acting as the delivery platform.
Wedbush pointed to rising FSD subscriptions, which approached 1.3 million globally, and noted that paid robotaxi usage increased during the quarter. It expects broader rollout of unsupervised FSD by late 2026 and sees autonomy as a meaningful future revenue driver, potentially contributing more significantly by 2027.
The firm also highlighted Tesla’s expanding investment plans, describing the increase in capital expenditures to more than $25 billion as a strategic step rather than a negative.
Spending is expected to support factory expansion, AI infrastructure, chip development, and production of new vehicles such as the Cybercab and Semi, as well as the Optimus robot.
“Tesla is morphing into a physical AI stalwart..the path is here and it requires more CapEx,” Wedbush wrote.
The firm maintained an ‘Outperform’ rating and $600 price target on Tesla.