Tesla Inc. exceeded third-quarter profit expectations on Wednesday, with margins rebounding from a weak second quarter, though surging spending on artificial intelligence and robotics cut operating income by more than half.

The company posted non-GAAP earnings of $0.48 per share, ahead of the roughly $0.45 analysts had forecast, though below the $0.50 recorded a year earlier, according to Tesla's Q3 2026 shareholder update. Revenue came in at $28.05 billion, flat year over year and in line with consensus. The result marks a reversal from the second quarter, when Tesla missed estimates with earnings of $0.33 a share.

Margins Recover as Expenses Climb

Total gross margin rose to 19.6%, up from 18.0% a year earlier and 16.8% in the second quarter. Automotive gross margin, excluding regulatory credits, stood at 18.1%. Revenue from regulatory credits—once a dependable source of profit—fell 73% to $113 million. Regulatory credits are emissions payments other automakers make to comply with environmental rules, and they carry little in the way of direct costs, so their decline removes an outsize profit cushion.

Operating income dropped 56% to $718 million, a 2.6% operating margin, as operating expenses climbed 39% to $4.78 billion. The increase was driven by research and development on AI and the Optimus humanoid robot. The figures frame Tesla's central trade-off: near-term operating profit absorbed by long-horizon AI and robotics development, with the trajectory of that spending set to remain a focal point in Tesla's quarterly updates.

GAAP net income fell 43% to $787 million, or $0.22 per share. The result included a $288 million unrealized gain on Tesla's bitcoin holdings and a $142 million unrealized loss on its stake in SpaceX—mark-to-market moves tied to its investment holdings rather than its core auto and energy operations.

Free cash flow came to $1.53 billion, down from $3.99 billion a year earlier but an improvement from negative $1.09 billion in the second quarter. Capital expenditures reached $4.73 billion, and Tesla ended the quarter with $45.4 billion in cash and investments.

Energy Revenue Slides Despite Higher Deployments

Energy generation and storage revenue fell 16% to $2.88 billion even as deployments rose 10% to 13.7 gigawatt-hours. The segment's gross margin improved to 33%.

Tokenized Shares Track After-Hours Moves

Tokenized Tesla shares and perpetual contracts tracked the stock's after-hours movement following the earnings release, with no unusual divergence. Tokenized equities and perpetuals give crypto-market participants around-the-clock exposure to stocks, extending price discovery beyond the fixed trading sessions of traditional exchanges.

The Tesla perpetual on Hyperliquid briefly jumped to $395.32 after the release before giving back its gains to trade at $385.87, while xStocks' TSLAx changed hands at $387.88 on Kraken. Tesla shares were last trading at about $385 in after-hours trading, according to Yahoo Finance data.

Roughly 260,600 addresses hold tokenized Tesla across xStocks, Binance's bStocks, and Ondo, worth $138.8 million combined, according to Token Terminal data.