Tesla’s big spending plans

Tesla plans to more than double its capex this year.

Hey Snackers, Sorry to all of those who've grown to love OpenAI's ChatGPT 4o model and its effusive praise of everything and anything you do: the company announced it's permanently shuttering the overly sycophantic model soon. Its unique ability to offer affirmation and support may seem only positive, but the chatbot's behavior has led to real-world harms. Yesterday, stocks dipped as weaker-than-expected December retail sales stoked fears of a slowing economy and Wall Street awaited today's delayed January jobs report and Friday's delayed CPI for clues into the health of the economy. The tech sector's biggest winners and losers swapped places yesterday as investors rotated back into software stocks.  HEY BIG SPENDER How the Big Tech companies are spending their huge capex budgets Despite setting records for capital expenditure in 2025, Meta, Microsoft, Amazon, and Alphabet are ratcheting up capex again this year, with analysts expecting an increase of 50% to a total of more than $600 billion in 2026. Tesla, which typically spends far less than Big Tech companies, plans to more than double its capex this year.  Alphabet spent $91.4 billion on capex last year, and forecasts $175 billion to $185 billion in 2026. Where is that money going? Well, in Alphabet's case, it's mainly looking at AI compute capacity for Google DeepMind. Tesla's going to outlay over $20 billion, specifically on "six factories, namely the refinery, LFP factories, Cybercab, Semi, a new Megafactory, the Optimus factory." According to Deutsche Bank, about $8 billion is going to compute, $4.5 billion to vehicles, $3.5 billion to Optimus, and $3.5 billion for batteries and energy. Meta, which spent $72 billion in 2025, is looking at 2026 capex guidance of $115 billion to $135 billion. That's going toward model training at Meta Compute and all the stuff you need to do it. Amazon is going from $131.8 billion to $200 billion, and it's predominantly going to AWS.  Microsoft didn't give formal guidance, so it's possible its spending this year, like its peers, will ultimately exceed analysts' expectations. Analysts put it at $116 billion this year, up from $83 billion last year.  THE TAKEAWAY So, is it possible to be a megacap Magnificent 7 titan of tech without spending a fortune? Apple's certainly trying to find out, for better or for worse. It had capex of $12.8 billion in calendar year 2025, and is looking at a 2026 calendar year capex estimate of merely $13.3 billion, per FactSet's analyst forecast. That's partly because a bunch of the time, its data center is someone else's data center, and so someone else's capex.  Read more THE POWER OF THE SUN Morgan Stanley says solar manufacturing could add as much as $50 billion in value to Tesla Tesla's recently reported move into solar manufacturing could add $25 billion to $50 billion in value to the company's energy business, Morgan Stanley writes. The bank currently values the energy business at $140 billion, so an increase of as much as $50 billion isn't anything to sneeze at, though it's also a drop in the bucket of Tesla's gargantuan $1.3 trillion market cap, or the $1 trillion opportunity Wedbush Securities analyst Dan Ives thinks is packed into Tesla's AI and autonomy efforts. Reporting on Tesla's solar ambitions knocked First Solar's shares lower last week. But Morgan Stanley writes that Tesla is unlikely to compete directly with the country's leading photovoltaic panel maker, instead pairing it with its fast-growing energy business, with much of that production for internal use. Rather than adding solar panels to an already glutted global market, Tesla could use them internally to avoid supply chain bottlenecks and meet its own growing power demands. "We believe the decision to allocate capital to adding solar capacity may be justified by the value creation and growth opportunities that having a vertically integrated solar + energy storage business can yield," the Morgan Stanley note reads. THE TAKEAWAY The bank expects Tesla to vertically integrate its solar capacity to meet data center demand, including for data centers in space. (As we've noted, the mission of Elon Musk's SpaceX has been seeming very similar to Tesla's these days.)  Notably, Morgan Stanley estimates the solar panel endeavor will cost Tesla $30 billion to $70 billion — a sum that Tesla didn't include as part of its doubled $20 billion-plus capex plan this year. Read more THE BEST THING WE READ TODAY A new rule from the Trump administration could make it easier to dismiss senior government workers The government is carving out a new job category for senior career officials whose work is policy determining, making, or advocating. Employees who fall into this category will be made exempt from long-standing job protection nets.  Even before this new change, federal employment levels have already been declining. See how government employee numbers have changed over the past two decades Snacks Shots ⛸️ Free Dance: Just 0.46 points separates the French and American teams in ice dance, with the medal event coming later today with the free dance. According to prediction markets,* both of the teams are the strongest contenders to make the podium, followed by Canada's 52% chance of medaling, then the UK.   📺 Warner Bros.: Despite Paramount sweetening its deal offer by doing everything but raising its offer, the market still thinks that it's got just a 31% chance of winning Warner Bros. Discovery, with Netflix maintaining a robust 54% chance of buying the studio.  *Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC. What else we're Snackin' In a post on X, "The Big Short" trader Michael Burry flagged a "head and shoulders" pattern in Palantir's stock chart Spotify just added more users than ever  A crypto longtimer, the CEO of Abra has a message: this is not bitcoin's "worst time ever" and advises, "When in doubt, zoom out" Meta is seemingly expanding its already gargantuan Hyperion data center site Snack Fact of the Day Tesla's 500-mile long-range Semi will cost $290,000. Wednesday January jobs report Earnings expected from McDonald's, AppLovin, T-Mobile, Shopify, Humana, Cisco, and Kraft Heinz  Was this email forwarded to you? Don't miss out on future stories — subscribe to Snacks and get your daily dose of financial news straight to your inbox.  Craving more insights in your inbox? Subscribe to Chartr and The Wrap for quality reads. 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