RBC Capital has reconfirmed an Outperform rating on Tesla Inc. and maintained a $500.00 price target, drawing attention to a marked escalation in planned capital spending. The analyst view sits within a broader range of forecasts, with InvestingPro data indicating an analyst high of $600 and a low of $130, and suggesting Tesla may be trading above its Fair Value.
According to RBC analyst Tom Narayan, Tesla intends to raise capital expenditures from roughly $9 billion in 2025 to in excess of $20 billion in 2026, and to sustain elevated investment levels in subsequent years. The firm expects that cash will be directed toward multiple strategic priorities, including the start of production at six factories this year, more computing capacity to support Optimus robot training, and capacity expansions at existing vehicle manufacturing sites.
RBC flagged Tesla's balance-sheet position as a supporting factor for the aggressive investment program. The company holds $44 billion in cash reserves and, as reported, has more cash than its $13.79 billion in debt. Tesla's current ratio stands at 2.07, indicating that its liquid assets exceed near-term liabilities and providing flexibility as it pursues the expanded capital plan. The company may also pursue bank financing and expects some portion of funding to be underpinned by recurring cash flows from businesses such as its robotaxi operations.
From a market-size perspective, Tesla remains a dominant automobile industry participant with a market capitalization of $1.43 trillion, and RBC framed the increased spending as part of its broader growth strategy. The firm noted that bullish investors see the step-up in capital expenditure as necessary to drive innovation, while the robotaxi launch schedule gives a clearer timeline that many investors have been seeking.
InvestingPro statistics included in the analysis underscore the stock's risk-reward profile: a beta of 1.84 reflecting elevated price volatility, a steep price-to-earnings ratio of 299.72, and commentary that the stock appears overvalued relative to its Fair Value. InvestingPro further notes a range of analyst sentiment and offers additional valuation perspective through its Pro Research Report and related materials.
Recent company results add context to the analyst activity. Tesla reported fourth-quarter 2025 earnings that exceeded consensus estimates, posting earnings per share of $0.50 versus an expected $0.45, and generating revenue of $24.9 billion compared with a forecast of $24.78 billion. Despite topping estimates, the company did not provide guidance for the first quarter, a point that remains an informational gap for investors.
In reaction to operational and strategic shifts, other brokerages have adjusted their views. Truist Securities trimmed its price target on Tesla to $438 from $439 and maintained a Hold rating, citing changes in Tesla's production strategy as a driver of the modest decline in its target. These developments reflect continuing analyst attention and investor interest in how Tesla balances heavy capital investment, production strategy, and near-term financial metrics.
Taken together, the RBC reiteration, InvestingPro valuation signals, the companys cash and liquidity profile, and the latest quarterly results present a layered picture: Tesla is committing large-scale resources to future growth while trading with significant volatility and at high earnings multiples.
Key points
- RBC Capital reiterated an Outperform rating with a $500 price target, emphasizing a planned capex increase to over $20 billion in 2026.
- Tesla intends to fund expansion from $44 billion in cash reserves, potential bank financing, and expected recurring cash flows from new businesses like robotaxi operations.
- InvestingPro data highlights elevated volatility (beta 1.84) and a high P/E ratio (299.72), while Tesla's market cap stands at $1.43 trillion.
Risks and uncertainties
- Valuation risk: InvestingPro indicates Tesla appears overvalued compared with Fair Value, signaling concern for equity investors and broader market participants.
- Execution and production risk: Changes in production strategy have prompted analysts such as Truist to adjust price targets, showing exposure in manufacturing and automotive supply chains.
- Guidance gap: Tesla did not provide first-quarter guidance despite reporting Q4 results that beat estimates, leaving short-term revenue and margin expectations uncertain for investors and analysts.