Tesla Shares Reversing Trajectory As Robotics, Chipmaking Caution Overshadows Upbeat Third Quarter By Investing.com

Investing.com — Stocks turned negative in after-market trading Wednesday after cautious comments about the company’s robotics and chipmaking ambitions overshadowed positive third-quarter results.

Shares of the electric vehicle (EV) maker fell 3.1% after the close to $374.35. They had initially risen more than 1% after third-quarter profits were better than expected, while the group turned cash flow positive thanks to a slight recovery in its core automotive business.

CEO Elon Musk has largely reiterated that robotics, fully autonomous driving and the Terrafab chip manufacturing project will be Tesla’s next major growth levers.

Get more insights into Wall St’s biggest profits from InvestingPro

The electric vehicle maker’s results come a day after Musk said Tesla had each formed special committees to explore a possible merger. He is CEO of both companies and warned there was “no guarantee” a deal would ultimately be reached.

Musk did not comment on SpaceX during Tesla’s earnings call. Tesla’s net profit was hurt by a $142 million mark-to-market loss on its SpaceX stakes.

The Tesla CEO said he was “tap dancing through a minefield” when it came to a possible merger with SpaceX, and that everything he had to say about the merger was communicated during SpaceX’s earnings call earlier this week.

Musk sounded a cautious note on Tesla’s robotics plans, saying he wanted to “moderate expectations” for the company’s Optimus humanoid robot, and that there was “still a lot of work to be done in terms of the AI ​​and the robot for it to be really useful for open-ended tasks.”

Regarding the company’s robotaxi project, Musk said the service was unlikely to “shake things up this quarter” in terms of profits, and would likely show up in revenue in the second quarter of 2027.

Tesla executives also said they need more key regulatory approvals to expand the company’s robotaxi and fully autonomous driving services.

Musk also flagged significant capital requirements for Tesla’s chipmaking ambitions, primarily the Terafab project with SpaceX. He said the venture, through which Tesla plans to begin making its own AI chips in-house, would likely cost “more than $100 billion” in the long term.

Tesla’s CEO said the company has not yet resolved how expenses for Terafab will be split between Tesla and SpaceX.

Tesla shares turned negative on the earnings call, losing ground due to a lack of clarity on the SpaceX merger and caution from management over what it touted as Tesla’s next big growth levers.

Tesla’s third quarter profits exceed expectations

Tesla earned 48 cents per share on an adjusted basis on revenue of $28.05 billion for the third quarter of 2026. Analysts had expected a profit of 45 cents per share on revenue of $27.92 billion.

Tesla’s quarterly automotive gross margin excluding regulatory credit sales improved to 18.1%, up from 15.4% a year ago and up from 16.3% in the second quarter.

The electric vehicle giant’s results also come at a time when a rebound in its core auto business has failed to translate into better margins, amid increased spending to support Musk’s strategic pivot for the company into artificial intelligence and robotics. Tesla, in its July quarterly results, had reported negative free cash flow for the first time in two years, but returned to positive free cash flow of $1.53 billion in the third quarter.

Earlier this month, Tesla reported better-than-expected third-quarter deliveries, helped by a recovery in sales in Europe after a slowdown in that region a year ago. European demand helped offset weakness in the electric vehicle maker’s two largest markets, the United States and China.

The company had also last week unveiled an updated Roadster model with limited flight capability using SpaceX technology, although the vehicle is not planned for production until 2028.

Last week’s Roadster event showed off the vehicle’s ability to perform limited flight using pressurized air, running on the same technology that SpaceX uses in some of its rockets.

Investors have closely followed the company’s progress in transforming from an electric vehicle maker to a company focused on autonomous driving, artificial intelligence and robotics. The possibilities of a merger with SpaceX have long been speculated in what would be a move by Musk aimed at consolidating his corporate empire.

Musk said Tuesday that he believed there was “a lot of merit” to a possible tie-up between the world’s largest operator of rocket and satellite launchers and the second-largest electric vehicle maker. The billionaire highlighted potential synergies in “super intelligence software development, chip design, Terafab, robotics, orbiting with the Starmind constellation and connectivity.”

Tesla stock is lagging its Magnificent Seven peers in 2026, being the only member to have fallen so far this year. TSLA is down 14.1% year to date, compared to gains of 6.6% up to 26.6% for the other six companies that make up the top-tier club. The broader has also outperformed Tesla, having climbed more than 13% year to date.

Ambar Warrick contributed reporting