Tesla's AI-Related Investments Drive Operating Margin Miss, Truist Says

12:11 PM EDT, 10/22/2026 (MT Newswires) -- Tesla's (TSLA) disappointing third-quarter operating margin reflects a ramp in artificial intelligence investments that could weigh on the electric vehicle manufacturer's near-term earnings, Truist Securities said in note on Wednesday. The operating profit margin of 6.1% was 270 basis points below consensus, Truist Managing Director William Stein wrote. That figure would have been 4.7% excluding estimated tariff rebates, Stein said. Operating expenses soared 39% year-on-year to $4.78 billion in the September quarter, Tesla said late Wednesday. Elevated costs for AI projects had a meaningful drag on operating profit margin, Stein said. "We continue to believe these investments will pave the way for (Tesla's) AI transition, but they will weigh on margins and cash flow for a while," he wrote. The brokerage reiterated its hold rating on Tesla's stock with a $370 price target. Tesla continued to spend on research and development and incurred pre-production ramp costs for Optimus, Megapack 3 and the Semi truck, Chief Financial Officer Vaibhav Taneja said during the earnings call Wednesday, according to a FactSet transcript. "This trend of growing (operating expenses) would continue till we commercialize these new products," Taneja said. The company, however, reduced its 2026 capital expenditure outlook to about $20 billion from more than $25 billion previously, but expects it to rise in the coming years. "Our capex for the next few years would continue to expand as we add more Robotaxi fleet, we expand our production capacity for Optimus, install manufacturing capacity for solar, purchase additional (super intelligence) compute infrastructure, and build a semiconductor fab," Taneja said on the call. Tesla's shares fell 0.9% in Thursday trade, and have fallen 15% this year. The company reported better-than-expected third-quarter earnings on Wednesday, while revenue slipped due to weakness in the automotive and energy generation divisions. "While it initially looked like capex would make the point, this (quarter) there was a pivot," Truist's Stein said. "(Tesla) lowered its capex plans for the year, but ramped opex instead." Elon Musk, who heads both Tesla and SpaceX (SPCX), said on Tuesday that both companies had formed special committees to evaluate a potential merger. Price: 380.75, Change: -5.72, Percent Change: -1.48