00:00Tesla just dropped earnings and there are really two stories here. First, the quarter itself. Tesla
00:05beat expectations again and the company says demand is starting to come back. They're pointed
00:10to stronger interest in Asia and South America and a rebound in North America and Europe and
00:16that's notable because recent sales data has been pretty weak. But the bigger story, spending.
00:22Tesla says it now expects to spend more than $25 billion in 2026. As soon as that 2026 CapEx
00:28guidance hit, the stock in after hours fell. To put that in context, last year it spent under $9
00:35billion. Even at its previous peak, it was around $11 billion. So this is a massive ramp and the start
00:41of a multi-year investment cycle. Where's that money going? Factories, including a new Optimus
00:47robot line in California that can produce up to a million units a year and even bigger plans in
00:52Texas targeting 10 million robots annually long term. And at the same time, Tesla's building out
00:58AI infrastructure, particularly for RoboTaxi and even moving into semiconductor manufacturing with
01:03a new chip research fab already underway. So here's the trade-off. That level of spending is expected
01:09to push free cash flow negative for the rest of this year. Even though the quarter looks solid,
01:14the focus quickly shifts to what comes next. And here's how Elon Musk puts it. This is the start
01:19of a very significant increase in investment, laying the groundwork now for what he says will be much
01:26bigger future revenue streams.
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