Barclays reaffirmed its Equalweight rating on Tesla on Wednesday, remaining cautious after the stock’s recent decline and flagging the potential for capital spending to overshoot earlier guidance.
Analyst Dan Levy said the decline appears to reflect limited visible progress on key long-term growth drivers — its autonomy projects — with upcoming results pressured by higher capital expenditure on those very same autonomy targets.
Levy wrote that Tesla‘s stock has been weak, attributing this to “seemingly little progress disclosed on Robotaxi/FSD and Optimus.”
While the recent underperformance could suggest potential upside if results exceed low expectations, Barclays maintains a “more tempered view into the print.”
Levy warned that any indication of rising capital spending besides the over $20 billion already announced — and therefore further pressure on free cash flow — could be viewed negatively by investors.
Barclays follows UBS’s cautious note on Tuesday, in which analyst Joseph Spak also flagged high capital spending as a concern for investors.
The firm dropped its Sell rating on the company, three months after downgrading it.
Spak said it now sees a more balanced mix of risks and long-term opportunities, as the stock fell 25% during the first quarter.
UBS maintains a Neutral rating on Tesla, with a price target of $352, which is broadly aligned with the current share price — after the company dropped below $400 per share in early February.
Stock Performance
Barclays reaffirmed its price target of $360 for Tesla — essentially in line with the stock’s closing price of $364.20 on Tuesday.
This implies a slight downside of about 1.1% from the last close.
As of press time, Tesla was trading 1.7% higher at $370 on Wednesday.
After reaching an all-time high of $498.83 on December 22 and closing 2025 at $449.72, Tesla shares have dropped by over $100 since the beginning of the year.
Although the stock has been trending lower over the past four months, the most significant declines occurred at the start of the year — following weaker-than-expected delivery figures at the end of 2025 — and again in late March.
That second drop was driven by a combination of factors, including the escalation of the NHTSA investigation into FSD, first-quarter delivery figures missing consensus on both auto and energy, and geopolitical concerns related to the Middle East conflict.
As a result, the stock fell to its lowest level in over seven months.
However, shares have rebounded modestly over the past four days, supported by positive developments around FSD progress in Europe and easing geopolitical tensions in the Middle East.
Terafab and AI5
According to Barclays analyst Dan Levy, the firm has highlighted during Tesla‘s fourth quarter earnings call that “the end of Model S/X production marked a symbolic baton pass for Tesla from automotive to Physical AI.”
The company has put autonomy, including the Robotaxi service, the Full Self-Driving software and humanoid robots as its “core growth focus for the years to come.”
Part of that transition came from Tesla‘s Terafab — a facility planned for the North Campus of Giga Texas, that would consolidate chip design, lithography, fabrication, memory production, advanced packaging, and testing under one roof.
Levy had already commented on the announcement in late March, when he warned that the chip factory could require capital expenditure far exceeding the bank’s own bull-case estimate of $50 billion.
When speaking about the project at the unveiling event in Austin, Musk said that “we either build the Terafab or we don’t have the chips, and we need the chips, so we build the Terafab.”
Musk announced on Wednesday that Tesla has completed the design of its next-generation AI5 chip, a critical step in the company’s ambitions to build custom silicon for its autonomous driving and robotics programmes.
The Terafab project is a joint venture between Tesla, SpaceX, and xAI — which SpaceX acquired in an all-stock deal in February.
Tesla‘s most bullish analyst, Wedbush’s Daniel Ives, wrote last month that the Terafab represents the beginning of a path that will culminate in a merger between the company and SpaceX, predicting the combination will take place “likely in 2027.”
CapEx
On Wednesday, he noted that “these developments are reminders of the exciting growth opportunity ahead for Tesla, further strengthening the “meme” element of the stock.”
However, “alongside the questions of how Tesla will execute on Terafab and solar build out, we believe a key question is how much incremental capex Tesla will need to incur for these projects,” Levy reiterated.
According to the analyst, the Terafab factory could “cost in the mid-single digit trillion $ if fully built out.”
The analyst said the project is likely to increase spending.
“While we don’t expect Tesla capex to exponentially increase, we nevertheless expect a further step in capex from the elevated $20bn+ figure Tesla talked to on the last call,” Levy wrote.
On the latest earnings call, Tesla announced it would more than double capital expenditures to over $20 billion in 2026.
The figures mark a 135% increase from the $8.5 billion invested in 2025 and the largest annual outlay in the company’s history.
By then, Tesla also said it was investing $2 billion in xAI.
The company is scheduled to report its first-quarter financial results on April 22.
