Actuals vs. estimates

Revenue — actual sourced from API Ninjas, not the company release

EPS — actual sourced from API Ninjas, not the company release

Verdict

• Revenue of $28.05 billion was a fractional miss against the $28.06 billion estimate (-0.04%); EPS of $0.48 beat the $0.45 estimate by 7.0%.
• Capex guidance was revised to approximately $20 billion for 2026, with management saying spending is coming in a little lower than anticipated; $30 billion of new borrowing capacity was secured with no draws planned this calendar year.
• Margins stepped up across all three segments: automotive excluding credits 18.1% from 16.3%, energy 33.1% from 20.4%, services and other 15.9% from 14.1%.
• The one thing that matters: the margin step-up leans on items that will not repeat. Energy margin gained 12.7 points largely on tariff refunds and warranty true-downs, and a roughly $290 million Bitcoin gain against a $142 million SpaceX mark sat below the operating line, so the EPS beat is not a clean read on run-rate profitability.

Guidance & KPIs

Management commentary

• Demand is running ahead of production: management cited the highest automotive backlog in four years and two consecutive quarters of deliveries above 480K, with deliveries constrained primarily by production.
• Energy demand from data centers is strong; Megapacks are almost sold out for 2027, and management expects further ASP and margin improvement.
• Cybercab launched in Austin, with unsupervised miles up 8x in the quarter; a Dallas launch is planned next month and the first customer vehicles could join the Robotaxi fleet around Q2 2027.
• Terafab capital needs are in the tens of billions through early 2028 and north of $100 billion long term, with the SpaceX versus Tesla cost split still undecided; capex is set to become noticeable in the tens of billions in 2028.
• On Optimus, Musk said "I do want to temper expectations that we still have a lot to get through", with the AI 5 chip expected in volume around April 2027.

Quality of earnings

• Energy margin is flattered by one-offs. Gross margin rose to 33.1% from 20.4% on 13.7 GWh of deployments, and management attributed the sequential improvement primarily to tariff refunds recognized in the quarter and vendor-reimbursed warranty true-downs.
• Net income carries a non-operating mark-to-market tailwind. An approximately $290 million Bitcoin gain more than offset a $142 million reduction in the SpaceX holding, a net gain of roughly $148 million that does not come from the operating business.
• Automotive margin improvement is mix, not pricing. Automotive margin excluding credits rose to 18.1% from 16.3%, attributed to a higher APAC delivery mix, while commodity and interest-rate costs were partly offset by adjusted financing programs.

Gotchas & watch items

• Operating expenses keep rising sequentially on AI compute depreciation, chip development and ramp costs for Optimus, Megapack 3 and Semi, and management guided that this continues until those products are commercialized.
• The 75% North America paid FSD sign-up rate is measured at delivery, while every car ships with a month of free FSD; churn and retention metrics on the 1.7 million paid base were not disclosed.
• Robotaxi is not yet at its $0.30 per mile cost goal, and management said it would not move the needle this quarter, becoming noticeable around Q2 2027.
• Optimus external deliveries are not expected until around the end of 2027, with the hand design still changing and a 20,000-units-a-week rate at least a year away.

Last quarter's watch items: what happened

• No watch items on file from a prior quarter - this is the first tracked quarter for this company.

Next quarter: the 2-3 things that matter

• Energy gross margin holding up without tariff refunds and warranty true-downs Baseline: Energy gross margin 33.1% in Q3 2026, up from 20.4% in Q2 Confirms: Energy gross margin stays near or above 30% with no further one-time refunds cited Breaks: Energy gross margin falls back toward the low-20s once refunds stop Check in: Q4 2026. Source: CFO opening remarks on the Q3 2026 call
• Automotive margin excluding credits sustaining without APAC mix tailwind Baseline: Automotive gross margin excluding credits 18.1%, up from 16.3% Confirms: Margin holds at or above 18% as production ramps across factories Breaks: Margin slips back below 17% as mix normalizes or commodity costs bite Check in: Q4 2026. Source: CFO opening remarks on the Q3 2026 call
• Full-year capex landing at the revised level Baseline: 2026 capex guided to approximately $20 billion; no draws planned on the $30 billion facilities this year Confirms: Full-year capex near $20 billion and facilities undrawn at year end Breaks: Capex well above $20 billion or a draw on the new facilities in Q4 Check in: Q4 2026. Source: CFO opening remarks on the Q3 2026 call