"Tesla (NASDAQ:TSLA) CEO Elon Musk declared this week that the company's Optimus 3 humanoid robot will "move the needle" on US GDP, backing the claim with a $20 billion capital spending commitment focused on robotics and autonomous vehicles. Tesla is discontinuing its Model S and Model X to convert Fremont factory space for Optimus production, signaling a complete pivot from traditional automotive to what Musk calls a "physical AI company.""
"The announcement comes as Tesla reported a 61% drop in Q4 2025 profit, with net income falling to $840 million. Despite revenue headwinds, the company has built a $44.1 billion cash fortress, up 173% year-over-year, providing the runway for this robotics bet. As we discussed in today's Daily Profit newsletter, companies pivoting toward AI initiatives are reshaping their capital allocation strategies in ways that challenge traditional valuation models."
"But retail investors aren't buying it. Reddit sentiment on Tesla crashed from bullish (62-72 range) on January 22 to bearish (17-37 range) by January 28, a 45-point decline. The most-discussed thread on r/wallstreetbets challenges Musk's wealth ambitions, while r/stocks debates whether discontinuing profitable models to chase robotics is reckless. With Tesla trading at 293x earnings and losing EV market share to BYD, the market is questioning whether Optimus can justify a valuation already pricing in transformative growth."
Elon Musk announced a $20 billion capital spending plan focused on robotics and autonomous vehicles, claiming the Optimus 3 humanoid robot will significantly impact US GDP. Tesla will discontinue Model S and Model X to convert Fremont factory space for Optimus production and reposition as a "physical AI company." Q4 2025 net income fell 61% to $840 million, while cash rose to $44.1 billion, up 173% year-over-year, providing funding for the robotics bet. Musk expects public sales of Optimus by end of 2027. Retail sentiment turned sharply negative and the stock has underperformed peers amid valuation concerns and a slower robotics ramp.
Read at 24/7 Wall St.
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