Table of Contents
Tesla has announced a major strategic pivot, ending production of its legacy vehicles to focus on robotics, while reports of an impending Apple foldable device are reshaping hardware roadmaps across the smartphone industry. In financial news, divergent earnings reports from Meta and Microsoft highlight the differing challenges facing the tech giants as they race to build AI infrastructure.
Key Points
- Tesla Pivot: The company will cease production of the Model S and Model X next quarter to convert its Fremont factory for Optimus robot manufacturing.
- Foldable Market Shift: Rumors of an Apple foldable are driving competitors like Samsung and Honor to develop "wider" form factors.
- Tech Earnings: Meta projects accelerating revenue growth driven by AI ads, while Microsoft faces cloud growth deceleration due to hardware shortages.
- Smartphone Dominance: Apple and Samsung models comprised the entire top 10 best-selling smartphones list for 2025.
- Autonomous Safety: Waymo released data regarding a collision with a minor, suggesting its autonomous system outperformed human reaction benchmarks.
Tesla Retires Legacy Models for "Physical AI"
In a significant restructuring of its automotive portfolio, Tesla CEO Elon Musk announced during Wednesday’s earnings call that the company will discontinue the Model S sedan and Model X SUV in the upcoming quarter. The move marks the end of the line for the Model S, which debuted in 2012 and established Tesla as a viable luxury automaker.
Tesla plans to continue supporting existing vehicles indefinitely, but the manufacturing capacity previously dedicated to these luxury EVs will undergo a radical transformation. The Fremont, California facility will be retooled to produce the Optimus robot. This decision underscores Tesla's rebranding as a "physical AI company." To support this transition, the company has committed to over $20 billion in capital expenditures this year, focusing specifically on factory capacity and AI infrastructure.
"We will offer support for the models for as long as people have the vehicles."
While the Model 3, Model Y, and Cybertruck will remain in production, the pivot suggests Tesla is betting its future growth on robotics and autonomous systems rather than expanding its premium automotive lineup. This high-stakes gamble relies on the premise that EV hardware is becoming commoditized, whereas proprietary robotics offer higher long-term value margins.
Apple Rumors Reshape Foldable Strategies
Despite Apple not yet officially announcing a foldable device, supply chain leaks suggesting the development of a "wide" foldable iPhone or iPad are already influencing competitors. Industry reports indicate that rival manufacturers are scrambling to adjust their form factors to match the anticipated Apple specification.
Samsung is reportedly developing a "Galaxy Z Widefold" featuring a 7.6-inch foldable OLED display, potentially slated for a summer release. Similarly, leaks suggest Honor may pause its small foldable launches to focus on a wider device, while Oppo’s Find N7 may also adopt this broader aspect ratio. This industry-wide shift suggests a move away from the tall, narrow aspect ratios that have defined early foldable generations, moving toward designs that offer a less claustrophobic front-screen experience.
Big Tech Earnings: A Tale of Two Constraints
The latest quarterly earnings from Meta and Microsoft illustrate the complex dynamics of the AI boom. Meta exceeded revenue expectations, with 98% of its income derived from ad sales. The company credits its generative AI models for boosting ad performance and user engagement. CEO Mark Zuckerberg signaled bullish expectations, forecasting a 30% year-over-year growth acceleration for the next quarter and promising new "agentic" shopping tools.
Conversely, Microsoft reported a deceleration in its Azure cloud business growth, which dropped from 40% to 38%. However, the company attributes this slowdown to supply constraints rather than a lack of demand. Microsoft CFO Amy Hood noted that the company’s extensive internal use of GPUs for products like Copilot has limited the capacity available to sell to external cloud customers.
"If we had more GPUs or if we didn't use any of our GPUs for internal things, we would have had revenue growth above 40%."
Smartphone Market Consolidation
New data from Counterpoint Research reveals the extent of the duopoly at the top of the smartphone market. In 2025, the iPhone 16 was the best-selling smartphone globally. The top 10 list was exclusively populated by Apple (seven models) and Samsung (three models). While these two companies account for only 19% of total annual sales volume, they capture the vast majority of the premium market share.
In response to this saturation, smaller manufacturers are adjusting their strategies. Nothing CEO Carl Pei announced the company will skip releasing a flagship phone in 2026. Citing the diminishing returns of annual flagship releases, Nothing will instead launch a value-focused "Phone 4A," focusing on the mid-range segment where component costs allow for better margins.
Safety Data Released Following Waymo Incident
Waymo has reported an incident to the National Highway Traffic Safety Administration (NHTSA) involving a collision with a minor in Santa Monica, California. On January 23, a child ran out from behind a large SUV directly into the path of a Waymo vehicle.
According to the report, the vehicle was traveling at 17 mph in a 25 mph school zone. The system detected the pedestrian and braked immediately, though contact was made, resulting in minor injuries. Waymo’s analysis claims that a human driver, given average reaction times, would have braked later and struck the child at approximately 14 mph, whereas the autonomous vehicle had nearly stopped.
The incident has triggered a standard NHTSA investigation. For context, NHTSA data from 2023 indicates that human drivers were involved in over 161,000 traffic crashes resulting in injuries to children that year, highlighting the scrutiny differential between human and autonomous incidents.
Industry Briefs
- Volvo: Chief Engineering Officer Anders Bell confirmed the automaker will continue to support Apple CarPlay and Android Auto, rejecting the trend set by GM and Tesla to block phone projection systems.
- Google: New theft deterrence features are rolling out for Android, including authentication safeguards that prevent phone locking if the same password is failed multiple times consecutively.
- OpenAI: Sources report the AI firm is exploring the creation of a social network, potentially utilizing biometrics like Face ID to guarantee a bot-free environment.
- DeepMind: The new "Alpha Genome" model has been launched to predict the effects of gene mutations, aimed at identifying causes of genetic diseases.
Looking Ahead
The industry will be closely watching Tesla's upcoming quarter to see if the removal of the Model S and X impacts the company's bottom line before robot production can scale. Meanwhile, the summer technology conference season is expected to confirm whether Samsung and other Android manufacturers can successfully pivot their foldable designs before Apple enters the market.
