TheChek News Flow

Tesla boosts spending plans to $25bn as Elon Musk doubles down on AI bet

CEO warns investors to expect ‘very significant’ spending increase on self-driving taxis, trucks, robots and chip factories

Tesla boosted its spending plans to $25bn this year as Elon Musk announced a substantial increase in investment for self-driving taxis, trucks, robots and a massive new chip factory to power its AI ambitions.

The new forecast came as Tesla on Wednesday reported that first-quarter profit rose 17 per cent, rebounding from a weak quarter a year earlier. The electric-car maker had previously given guidance of $20bn in capex in 2026.

Musk told investors that there would be a “very significant increase in capital expenditure” this year, which “will be well justified considering substantially increased revenue streams”.

The new forecast is nearly triple the $8.5bn Tesla invested last year.

The world’s richest man cited the huge investment plans of his Big Tech rivals, which are plotting to spend $660bn this year mainly on chips and data centres as they vie to build the most advanced AI products.

Tesla shares initially rose in after-hours trading following its earnings report but reversed course after the new spending projections — trading down 1 per cent.

Musk has pivoted Tesla away from vehicles as its sales have fallen — retiring its X SUV and S luxury sedan models — to focus on AI-powered robotics, self-driving “Cybercabs” and an electric “Semi” truck.

Tesla and SpaceX also announced a joint venture last month to build a huge “Terafab” in Austin costing tens of billions of dollars to produce chips for Musk’s autonomous vehicles, robots and orbital AI data centres.

“Tesla is working on a lot of large, ambitious products,” Musk said. “They’re all very challenging, but I think they’re going to be revolutionary.”

However, Tesla has thus far only managed a limited robotaxi experiment in a few cities in Texas and Musk said the business would not contribute meaningful revenue until at least next year.

The company has yet to launch its Optimus humanoid robot and Musk again delayed the start of production to July or August.

“It is just literally impossible to predict . . . except that I think it will be quite slow at first,” Musk said when pushed on a commercial production timeline by analysts. “Optimus will be useful outside of Tesla sometime next year.”

Tesla’s financial performance has rebounded from a low point at the beginning of last year when its sales were hammered by a customer backlash to Musk’s political activities in the early months of Donald Trump’s second administration — and the company had to shut down a number of factories to prepare for new models.

It reported first-quarter net income increased to $477mn from $409mn in 2025, still the second-worst quarterly profit figure in five years. Revenue increased 16 per cent to $22.4bn, ahead of the average analyst estimate of $22bn compiled by FactSet, as vehicle deliveries ticked up.

After stripping out losses on its cryptocurrency holdings and an 87 per cent rise in stock-based compensation to $803mn, adjusted profits rose 56 per cent to $1.5bn.

The company has issued a special pool of shares to retain existing staff and recruit others during a fierce war for AI talent in Silicon Valley.

Capex jumped 67 per cent to $2.5bn during the quarter, less than expected, but Musk’s forecast pointed to a rapid increase in spending for the rest of the year.

“Capex had a sobering effect as the price of growth just went up,” said Dec Mullarkey, managing director of asset manager SLC Management. “There are a lot of prongs to its plans. As investing ramps up this year it will soak up a lot of free cash and shock investors.”

Tesla’s strategic direction and vast capital demands have led to speculation that Musk may ultimately seek to merge Tesla with SpaceX.

SpaceX has already taken over his AI start-up xAI and social media platform X and is plotting a June public listing at a valuation of $1.75tn. Tesla invested $2bn in xAI before the merger and its equity was converted into SpaceX stock.

“Ambitious capex plans are set to create loss centres for a while,” Jefferies analyst Philippe Houchois said. This “may fuel concern about funding and raise the logic of an eventual merger with SpaceX”.

US semiconductor group has been seeking a big customer for its ‘14A’ manufacturing system

Elon Musk has said his companies will use Intel’s latest technology in their “Terafab” project, giving a boost to the US chipmaker’s manufacturing turnaround.

Intel shares rose about 3 per cent in after-hours trading on Wednesday after Musk said Tesla and SpaceX would deploy its “14A” manufacturing process in their giant semiconductor facility.

Intel has spent billions of dollars attempting to catch up to Taiwan’s TSMC to offer the most advanced chipmaking technology. But it has yet to publicly confirm it has secured any customers for its 14A technology, which is still being tested by potential Big Tech clients.

The endorsement from Musk gives Intel a much-needed vote of confidence in the new technology. Analysts say the Terafab, if completed, would eclipse the entire current global output of the chip industry.

“We plan to use Intel’s 14A process, which is state of the art and in fact not yet totally complete,” Musk told analysts on Tesla’s earnings call on Wednesday.

The technology would be “fairly mature” by the time Terafab started operating, he added, praising Intel’s team, including chief executive Lip-Bu Tan.

Intel has struggled to land external customers for its manufacturing business — including its current-generation 18A manufacturing process — since launching a vastly expensive bid to regain its status as a world-leading chipmaker.

Intel declined to comment. The US chipmaker is due to report its own earnings on Thursday.

Tan had earlier this month announced Intel was partnering with Musk on the Terafab but revealed few details.

Musk has launched the manufacturing project with the ambition to build a full suite of chips — encompassing logic, memory and packaging — for his companies, including Tesla and SpaceX. 

The memory chip market, supplied by Samsung, SK Hynix and Micron, is experiencing a particular shortage as AI infrastructure builders seek unprecedented quantities of high-bandwidth memory.

Without the Terafab, “we don’t see a path to having enough” chips for AI given “the rate at which the industry is growing”, Musk told investors on Wednesday.

SpaceX and Tesla are on an inevitable collision course

To the extent shareholders just want exposure to Elon Musk, a single security seems like the sensible end state

If rocketmaker SpaceX indeed goes public in June, as seems to be its plan, Elon Musk could be conducting quarterly earnings calls for two companies. But how long until that reverts to one?

On Wednesday afternoon, the world’s richest man hosted the first-quarter call for Tesla, his electric-vehicle maker. Sales of automobiles, which grew 16 per cent year on year, were hardly discussed. Instead, the company is focused on energy storage, robotaxis and Optimus, its “bi-pedal, autonomous humanoid robot capable of performing unsafe, repetitive or boring tasks”.

If Tesla increasingly feels like a science project, all the more reason to think its natural home is under one roof with SpaceX, which last year merged with Musk’s social network and AI company xAI. SpaceX is set to list at what could be a near-$2tn valuation. Already, Musk spreads his busy days and presumably sleepless nights across his various projects, so a Tesla-SpaceX combination might just codify reality.  

The possibly sidelined electric-vehicle business still generates serious cash flow, even if sales have moderated from historic levels and factories are being retrofitted for robot production. Selling cars drove operating cash flow of $4bn and free cash flow of $1.4bn in the quarter, enough that the company decided to spend $2bn on SpaceX stock.

That, though, is peanuts compared with the $25bn in capital expenditure that Musk and his chief financial officer warned the company would spend in total this year on semiconductor production and robot factories. Analysts were expecting $20bn, according to LSEG. A year ago, they had been forecasting just $11bn for the whole of 2026. Nonetheless, the shares hardly moved on Wednesday in after-market trading.

Even that capital expenditure is, in turn, peanuts compared with the $60bn SpaceX said this week it had offered to pay for Cursor, an AI coding tool. Should Musk not proceed with that acquisition, he has proposed instead a $10bn termination fee. Further evidence that SpaceX too is a Musk-driven moonshot, albeit with a substantive satellite and rocket business attached.

True, a merger of Tesla and SpaceX would come with conflicts that require careful handling. As a test of their directors’ gumption, the two companies are working together on a semiconductor plant in Texas called the Terafab, alongside Intel. Musk says the partnership will be reviewed by independent directors from both sides to make sure it is fair to all shareholders. Of course, the biggest of those in each case is Musk.

Non-Musk shareholders in Tesla have always given their hero a long leash. SpaceX shareholders will probably do the same, though since it is expected Musk will hold super-voting shares, what they want matters little. In valuation terms, neither company is tethered to near-term profits or cash flow. To the extent that shareholders really just want exposure to Musk, a single security seems like the sensible end state.

Nelson Peltz’s son builds first public activist stake in Intertek

Matt Peltz’s new firm Lost Coast Collective has invested in the UK testing company

Matt Peltz, the son of activist investor Nelson Peltz, has built a stake in Intertek, the FTSE 100 group that is both the target of a potential £9.7bn takeover and is also mulling a break-up.

Lost Coast Collective, the firm Peltz founded last year after stepping down as co-chief investment officer of his father’s firm Trian, has built a more than 1 per cent stake in Intertek, worth roughly £88mn, according to a public filing this week.

Peltz’s stake is disclosed as the London-listed company has emerged as a potential takeover target of EQT, the private equity firm. The Swedish group improved its offer on Wednesday to £54 a share after Intertek rejected an earlier bid. The company, which carries out safety testing and certification, said it is considering EQT’s improved proposal.

Lost Coast told the FT that it had commended Intertek’s board and management for rejecting the initial offer that was “way below intrinsic value”. It declined to comment on EQT’s improved offer.

The investment is the Florida-based hedge fund’s first to be made public since Peltz founded the firm last year, according to people familiar with the matter. Lost Coast, which was initially affiliated with Trian but is now independent, manages less than $1bn.

Peltz began buying Intertek stock last year, and the company became one of his first targets as he got Lost Coast off the ground, the people added.

He had already spoken with management and pushed for a potential break-up before Intertek announced on April 14 that it would hold a strategic review to explore separating out its energy and infrastructure business, either through a sale or demerger, the people added.

People familiar with the fund described those talks as “constructive”. Intertek declined to comment on Peltz or Lost Coast’s stake.

Two days later, Intertek confirmed that it had been approached by EQT. Intertek shares have gained about 10 per cent over the past year, after surging following the disclosure of EQT’s bid. Shares closed up at £49.81 on Wednesday in London trading on news of the improved proposal that Intertek was considering.

The stock had plunged 18 per cent in a single day in early March after disappointing forecasts for two of its key business lines.

Peltz told the company’s board of directors in March that he foresaw a host of potential deal opportunities for the company, according to a letter seen by the FT.

Peltz previously worked for nearly two decades at Trian, which has a reputation on Wall Street for hard-charging activist battles against major companies including a drawn-out proxy fight in 2024 against Walt Disney. While at Trian, the younger Peltz sat on company boards including the restaurant chain Wendy’s.

vestor Nelson Peltz: ‘I’m not trying to fire Bob Iger, I want to help him’

Trian has pursued campaigns in the UK, including at the publicly listed consumer giant Unilever, where it successfully pushed for large asset sales to create a slimmer company focused on health and personal care.

The firm has also taken a stake in the UK pest control group Rentokil, which had been struggling with the integration of its US business Terminix.

Yet the younger Peltz’s activity at Intertek comes amid a broader slowdown of activist campaigns in Europe. The region had just five campaigns in the first quarter of this year, according to data from Barclays, marking a 50 per cent year-on-year drop.

Caution by co-founder of Aspect hedge fund follows billionaire Cliff Asness’s decision to ‘surrender’ to the machines

One of the biggest names in quantitative investing has warned against handing over investment decisions to artificial intelligence, arguing that some corners of the hedge fund industry have gone too far in adopting the technology.

Martin Lueck, who was one of the three founders of quant pioneer AHL and is co-founder and president of hedge fund Aspect Capital, said that being able to understand exactly why its computer models were recommending trades was crucial for his firm.

“My starting place is I’m not going to put my name on or my company’s reputation on something [where] . . . I have no idea why it took these positions,” said Lueck, whose firm manages $9bn in assets, in an interview with the FT.

“I need to have some kind of hypothesis I can hook my hat [on]. If I’m investing my own money in it I want to know what it’s doing,” he added.

Lueck’s comments come as hedge funds and proprietary trading firms deepen their use of AI and machine learning techniques. Billionaire Cliff Asness, founder of US quant giant AQR, last year told the FT it was “surrendering more to the machines”.

Asness admitted his fund was latching on to patterns that his quant researchers sometimes could not explain, and was using machine learning to decide how much money to put into trades.

“It’s been easier that this has been a very good period for us after a very bad period,” said Asness at the time. “Odds are it will be a little harder to explain [to investors] in a bad period, but we think it’s clearly worth it.”

Lueck told the FT he had listened to Asness and found him “persuasive”, but added that one of the key reasons in 1995 that he left Man Group, which had by then acquired AHL, was to give investors more information about what was driving the trading models.

“In those days it was a black box,” he said. “There was no transparency on what these models were doing and the whole [quant] world was opaque.”

Quantitative investing has traditionally used in-depth research, often drawing on academic papers, to try to identify and explain market patterns that can then be traded by computer algorithms. Such programmes typically have rules determining how much money to invest and when to adjust leverage based on market risk.

Lueck was one of the early pioneers of making money by following market trends — a strand of quant investing that aims to profit from investor herding into or out of trades — when he co-founded AHL alongside Michael Adam and David Harding.

But the advent of more computing power and ever more sophisticated AI and machine learning techniques has tempted hedge funds to delegate more responsibility to machines.

Lueck added there are great opportunities in using large language models to assist quantitative researchers in tasks such as organising data, running tests and preparing presentations to colleagues.

But he added: “I still want the researcher to be thinking about what is it that I’m actually researching rather than here is some data, find me some relationships.”

LVMH-backed group will seek to harness influence of sports personalities to enhance portfolio companies

LVMH-backed private equity firm L Catterton is launching a $500mn fund with athletes including basketball star Kevin Durant, baseball player Mike Trout and golfer Patrick Cantlay, targeting investments in consumer companies.

The fund, a joint venture with billionaire investor Mark Patricof, aims to harness the influence of sports personalities to enhance portfolio companies’ values by endorsing their products and brands, the buyout group said.

L Catterton specialises in consumer-focused investments and has backed companies including sandal maker Birkenstock, workout club Solidcore and Indian restaurant group Dishoom. Athletes have committed more than $50mn to the fund and will invest alongside the private equity group and Patricof in a sign of how sports stars are becoming more active in business and investing beyond sponsorship.

The fund’s high-profile backers include American football quarterback Joe Burrow, baseball pitcher Logan Webb and women’s basketball star Sophie Cunningham. It also includes influencers such as former artistic gymnast Livvy Dunne.

The fund is the latest intersection of luxury, sport and capital, as disparate strands of the entertainment industry converge.

Scott Dahnke, L Catterton’s chief executive, said: “Consumer behaviour is undergoing a profound and secular shift driven by the convergence of culture, technology and media. Our proprietary research shows that athletes are among the most trusted and influential voices to emerge in this landscape.”

The fund is called Champ, an acronym of Champion Athlete Managing Partner.

It is luxury group LVMH’s latest connection to the sports and consumer industries. The company was among the biggest sponsors of the 2024 Olympic Games in Paris, using the quadrennial event to raise the profile of its products.

Subsequently, the luxury brand owner formed a 10-year partnership with Formula 1, the car-racing series. Its Louis Vuitton brand has become a prominent fixture during races, while its Moët & Chandon champagne is sprayed around the podium when drivers celebrate the results.

Separately, the Arnault family, which controls LVMH, also owns Paris FC, a French football club. Red Bull, the Austrian energy drinks group, is a minority shareholder in the team. Red Bull also owns two F1 teams.

Patricof, CEO of Patricof Co, said: “We have spent years building trust-based relationships with some of the world’s most prominent athletes, and observing that those athletes can drive better outcomes when they have skin in the game.”

Italian government’s ‘Mattei plan’ for Africa is part of Rome’s efforts to curb migration

The heir to the founder of Italian energy giant Eni has requested that the Meloni government stop using the name of his late uncle for its flagship co-operation scheme with Africa. 

Enrico Mattei, a partisan during the second world war, is revered in Italy for setting up the state company that challenged what he dubbed the “Seven Sisters”, a cartel that controlled most of the world’s oil reserves in the postwar era.

Mattei’s nephew and heir, Pietro Mattei, sent a legal notice to the Italian government this week, demanding it stop using the Mattei name for its programmes. The right-wing coalition’s approach was “the total antithesis” of Enrico Mattei’s views, in particular on migration, his nephew said.

Giorgia Meloni’s hostile attitude towards migrants stood in complete contradiction with Eni’s founder, who brought young people from abroad for training in Italy and then hired them in their home countries to work for Eni, the legal notice said.

“To use his name today to legitimise a politics that is in contradiction with the principles he represented is a grave offence to his memory,” Pietro Mattei wrote, warning that he would seek recourse to the legal authorities if the government did not cease and desist the use of his uncle’s name.

“The use of the name of Enrico Mattei for political aims that are against his values constitutes a violation of the right to historic identity and an unlawful manipulation,” he said.   

Meloni’s office did not immediately respond to a request for comment.

Her government launched the so-called Mattei plan in 2023 as a means to tackle the root causes of migration by helping African countries develop more economic opportunities for youth.

Pietro Mattei’s complaint nearly three years after the policy was launched is seen as a new sign of the erosion of Meloni’s political standing, following a failed referendum to overhaul the justice system.

“It is very embarrassing because it’s her iconic flagship programme,” said Francesco Galietti, founder of Policy Sonar, a political risk consultancy. “I am not sure they would have come to the fore if she had not lost the referendum . . . This is but another of these episodes showing that people see her weaker.” 

Enrico Mattei was known for forging strong bonds with energy-producing countries — offering them more money than the cartel — enabling them to clinch deals that eluded the established US and European players.

His death in a plane crash in Italy in 1962 is the subject of numerous conspiracy theories, including suspicions that the crash was organised by oil industry rivals bitter over how Enrico Mattei outfoxed them in the world energy markets and built Eni.

“In the aftermath of World II, Italy was in tatters and this guy with an iron will decided that the country could not do without its own oil complex,” Gallietti said. “He really quickly became a formidable challenger for the big oil sisters. He made so many sworn enemies.”

While the late oilman worked to develop Italy’s energy sovereignty in total opposition to the cartel of the Seven Sisters, Meloni’s government policy “seems to be characterised by a marked subordination to the US and its interests,” according to the letter written by Mattei’s nephew.

“It is an open contrast to the strategic independence that was the pillar of his vision.”

However, not all family members agree with the nephew’s complaint. His estranged sister, Rosangela Mattei, 77, whose son has been recruited to work for the Mattei plan, told the FT she thought her brother’s legal notice was “out of line”, adding: “I’ve even apologised.”

The two siblings have joined forces in a battle against Eni to try to recover some of their late uncle’s former property, including two valuable paintings.