Macquarie cuts Pony AI stock price target on higher costs By Investing.com

Pony AI reported Q1 fiscal 2026 revenue of $34.3 million, up 145% year-over-year and 17.6% sequentially, beating Bloomberg and Macquarie estimates by 59% and 58%. Gross margin improved to 16.4% from 12.7% in Q4 fiscal 2025, and the company raised its 2026 robotaxi revenue target to more than 3.5x 2025 levels and its year-end fleet target to over 3,500 units. Offset by an EPS miss of -$0.12 versus -$0.11 expected and a larger free cash flow outflow of $87 million, Macquarie still maintained an Outperform rating.

Analysis

The key signal is not the revenue beat itself, but the company’s willingness to raise fleet and revenue targets while operating losses remain stubbornly large. That tells us management is effectively choosing to buy option value on autonomy scale with cash burn, which usually benefits suppliers and infrastructure enablers before it benefits equity holders. In the near term, the market is likely to reward proof of demand capture and fleet expansion, but the valuation debate will keep compressing any upside unless unit economics improve faster than capex intensity.

Second-order winners are likely to be adjacent hardware and software layers rather than the platform name alone: sensor suppliers, embedded compute, mapping, and contract manufacturing capacity should see a longer runway if deployment targets hold. The flip side is that incremental fleet growth can pressure utilization if city-by-city expansion outruns ride demand, which would make the reported growth look more like inventory buildup in motion than a durable margin inflection. That risk matters most over the next 1-2 quarters, because cash outflow can re-rate the stock back toward financing risk even if reported revenue continues to accelerate.

Consensus appears to be underweighting how quickly a higher fleet target can force a financing or strategic partnership decision if burn does not moderate. A company with ample liquidity today can still become a capital markets story once growth is being funded at a faster rate than gross profit is compounding. The contrarian view is that the current setup is better for volatility trading than outright directional ownership: the business is improving, but the equity only works if the market starts capitalizing future scale before dilution becomes the dominant narrative.

Key Decisions for Investors

• Long PONY only on a pullback toward the post-earnings support zone, with a 2-3 month horizon; use a tight stop if cash burn remains above gross profit growth, because the stock can reprice quickly on financing concerns.
• Pair trade: long a basket of autonomy enablers (mobilize around sensor/compute exposure) versus short PONY for 1-2 quarters, expressing the view that suppliers monetize fleet growth before the platform captures durable equity value.
• Buy call spreads on PONY rather than stock for the next 3-6 months if you want upside to fleet-scale milestones; the structure benefits from a re-rating on guidance without taking full dilution risk.
• Avoid chasing after the guidance raise; wait for evidence that gross margin expansion is outpacing opex growth over the next two reporting cycles before underwriting a multi-quarter long.
• If the stock rallies sharply on momentum, consider taking profit into strength and redeploying into higher-quality AI/automation beneficiaries with less execution and capital intensity.