Tesla's Profit Plummets Amidst AI Investment Slowdown
Tesla faced a challenging year in 2025, with profits falling 46 percent and revenues declining year-over-year for the first time in the company's history, according to financial results published this afternoon. This downturn coincided with analysts' warnings that the rapid growth in AI-related capital expenditures (capex) that has been boosting tech stocks may be slowing down.
The electric automaker's automotive revenues fell by 11 percent to $17.7 billion, a significant drop attributed to a 16 percent decline in sales and production in the fourth quarter of 2025 compared to the previous year. However, Tesla experienced double-digit growth in its energy storage business, which increased by 25 percent to $3.8 billion, and in its services sector, which rose by 18 percent to $3.4 billion, partially offsetting the automotive revenue shortfall, according to Ars Technica.
The broader tech market, including Tesla, has seen increased investment in AI, with companies like Meta announcing potential capital expenditures of $135 billion this year, nearly double the previous amount, according to Fortune. This surge in AI investment has been a significant driver of tech stock growth, with contracts for the Nasdaq 100 up 0.22 prior to the opening bell in New York. SP 500 futures were up 0.19 this morning, too. Shares in Meta and Tesla rose in overnight trading. Meta was up 7.85 and Tesla rose 3.29. Microsoft, by contrast, declined 6.53 overnight.
However, analysts are beginning to caution that the pace of this capex growth may decelerate in the coming year, potentially impacting companies like Tesla that are heavily investing in AI technologies.
Meanwhile, the increased demand for energy to support massive AI data centers has led to interest in next-generation nuclear power plants as a potential source of electricity. These plants are considered potentially cheaper to construct and safer to operate than their predecessors, according to MIT Technology Review.
In other news, BBC One has adapted William Goldings classic 1954 novel Lord of the Flies into a new miniseries and just dropped the first trailer. The book has been adapted for film three times since its publication and also inspired the Emmy-nominated TV series Yellowjackets (renewed for its fourth and final season this year). This BBC miniseries apparently has the support of the Golding family and is expected to hew quite closely to the novel.
Additionally, the eastern half of the US experienced a significant snowstorm over the weekend, putting a strain on the power grid. One analysis found that PJM, the nation's largest grid operator, saw significant unplanned outages in plants that run on natural gas and coal.
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