Tesla posted non-GAAP earnings of $0.48 a share on flat revenue of $28.05 billion, while heavier AI and robotics spending cut operating income to $718 million.

Tesla Inc. beat third-quarter profit estimates on Wednesday as margins recovered from a weak second quarter, though rising spending on artificial intelligence and robotics more than halved its operating income.

The company reported non-GAAP earnings of $0.48 a share, above the roughly $0.45 analysts expected but down from $0.50 a year earlier.

Revenue was $28.05 billion, flat year over year and in line with consensus. In the second quarter, Tesla had missed estimates with earnings of $0.33 a share.

Total gross margin rose to 19.6% from 18.0% a year earlier and 16.8% in the second quarter. Automotive gross margin excluding regulatory credits was 18.1%. Revenue from regulatory credits, once a reliable source of profit, fell 73% to $113 million.

Operating income dropped 56% to $718 million, a 2.6% operating margin. Operating expenses rose 39% to $4.78 billion, driven by research and development on AI and the Optimus humanoid robot.

GAAP net income fell 43% to $787 million, or $0.22 a share. That figure included a $288 million unrealized gain on Tesla’s bitcoin holdings and a $142 million unrealized loss on its stake in SpaceX.

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

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%.

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

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