Revenue of $14.6 billion, up 161% year over year, beat the $12.87 billion estimate by 13.4%; GAAP diluted EPS of $0.35 beat the $0.13 estimate.
The beat is superintelligence: SI segment revenue reached $7.6 billion, up $5 billion quarter over quarter, while space revenue of $1.8 billion grew only 6% year over year.
New guidance: Q1 2027 revenue of $33 to $37 billion, Q4 capex of $35 to $40 billion, and the $100 billion December ARR target reaffirmed.
The one thing that matters: the Q1 2027 revenue guide of $33 to $37 billion more than doubles the Q3 run rate and rests almost entirely on SI compute coming online on schedule, funded by Q4 capex of $35 to $40 billion against Q3 adjusted EBITDA of $8.8 billion.
Guidance & KPIs
Item
New guidance
Prior guidance
Q1 2027 total company revenue
$33 to $37 billion
—
Q4 2026 capital expenditures
$35 to $40 billion
—
ARR by end of 2026 (December annualized)
$100 billion (on track, previously stated goal)
$100 billion
Q4 2026 total company gross margin
more consistent with the second quarter
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Nameplate compute by end of 2026
2.5 to 3 gigawatts
—
Management commentary
CFO Bret Johnsen said new compute deployments are generating a payback of less than a year at current pricing, which management uses to frame the Q4 capex step-up.
Elon Musk said he is highly confident of an incremental 10 gigawatts of compute in 2027, about 13 gigawatts in total, with a stretch plan for 20 gigawatts of incremental power and cooling.
Musk put end-2027 annual recurring revenue at "somewhere between $500 billion and $1 trillion", an aspiration well beyond the formal $100 billion December 2026 ARR target.
On a possible Tesla combination, Musk said both companies have special committees and they have not reached agreement on terms; a Tesla vote would need 50% of all shares.
Internal compute is targeted at roughly a 50/50 split with third-party rental, which management said could shift to 60/40 either way month to month.
Quality of earnings
Connectivity margin was flattered by a one-off. The 55% connectivity gross margin includes a one-time benefit of roughly 3% from tariff refunds, and Q4 total company gross margin is guided back toward second-quarter levels.
Part of the SI growth was bought. Cursor, acquired mid-quarter, contributed $608 million of the $7 billion SI solutions and infrastructure revenue; excluding it, that line grew 192% sequentially.
Reported SI profit is depressed by deal-related equity comp. SI segment operating income was $431 million after $1.2 billion of Cursor-related stock-based compensation, against $5 billion of SI segment adjusted EBITDA.
Gotchas & watch items
$23 billion of the $60 billion Cursor purchase is retention equity to be expensed as stock-based compensation over roughly three years, so the $1.2 billion Q3 charge recurs.
Capex is accelerating faster than cash earnings: $19.6 billion in Q3, guided to $35 to $40 billion in Q4, with funding described as operating cash flow plus debt pools still under discussion.
Of the $63 billion backlog, only $17.5 billion is recognized as deferred revenue, and about $42 billion is expected to convert within the next year.
Management prefers short-term, spot-rate compute contracts, so the SI revenue base carries renewal and pricing exposure; pricing is cited as slightly above the $30 to $50 per watt range.