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Home News IBM Reports Disappointing Q3, While Tesla Sees Profits Surge Amid Demand Recovery

IBM Reports Disappointing Q3, While Tesla Sees Profits Surge Amid Demand Recovery

by Barbara

International Business Machines (IBM) fell short of analysts’ revenue expectations for the third quarter, primarily impacted by a downturn in its consulting division as businesses scaled back discretionary spending. Additionally, the company’s infrastructure segment experienced declines. Following the disappointing results, IBM’s shares dipped about 4% in extended trading, despite a notable 40% rise in stock price earlier this year, as investors had anticipated growth driven by the company’s generative AI offerings.In contrast, Tesla reported an unexpected surge in profits, indicating a rebound in demand for electric vehicles (EVs). The company announced a 17% increase in net income, reaching $2.2 billion for the third quarter, reversing two consecutive quarters of declining profits. Tesla’s revenue also rose by 7.8%, totaling $25 billion, driven by record sales of 463,000 cars, fueled by recent price cuts and attractive financing options.

The strong performance led to a 12% jump in Tesla’s shares after the announcement, helping to recover from a previous dip following Elon Musk’s less-than-stellar unveiling of the “Robotaxi” concept earlier in the month. Despite challenges such as heightened competition and fluctuating demand for EVs, Tesla continues to hold the title of the world’s most popular electric car manufacturer.

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Musk emphasized Tesla’s commitment to making electric vehicles more affordable to accelerate the transition to sustainable energy. The company reported improved manufacturing efficiencies that have reduced production costs, contributing to an increase in its operating margin from 7.6% to 10.8% year-over-year. Investors are eagerly anticipating the launch of a new lower-cost model, which Musk has pledged to expedite.

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Despite the positive quarterly results, Tesla faces significant hurdles, including ongoing investigations regarding its Full Self-Driving (FSD) and Autopilot features, which are viewed as stepping stones toward full autonomy. Regulatory challenges in Europe have also delayed approvals for such technologies until 2028. Musk remains optimistic, asserting that Tesla’s self-driving software could prove safer than human drivers within a year.

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In addition to focusing on its EV business, Musk is channeling resources into developing Optimus, a humanoid robot intended for various manual jobs, including work within Tesla’s factories. As Musk becomes a prominent supporter of Donald Trump’s presidential campaign, he has contributed $75 million to efforts aimed at re-electing the former president and is actively participating in rallies. Trump has suggested Musk could lead a “government efficiency” task force if elected, potentially influencing regulatory frameworks affecting Tesla and his other ventures, including SpaceX and X.

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As both IBM and Tesla navigate their respective challenges, the contrast in their performances highlights the complexities of the tech and automotive markets in the current economic climate.

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