Tesla reported profits below expectations and increasing capital expenditure, as it looks to expand into the data center energy market.

The automotive firm reported quarterly revenue of $28.2 billion, after selling 480,000 vehicles. Operating costs increased 47 percent to $4.35bn.

"The energy business is also growing incredibly fast, and I think will be crucial for the scale-up of artificial intelligence data centers," CEO Elon Musk said in an earnings call. "We're investing a lot in growing the core business and really preparing for the future. So this is a massive capex year, but I'm confident that all the things that we're investing in will yield incredible returns."

He called the order backlog for the energy business 'robust,' adding that the company would "build based on both existing demand and future demand we expect from data center growth and overall electrification of the economy."

Musk added: "Even the hyperscalers are having trouble turning on their AI compute and finding the power, and then smoothing the power, especially for the training runs where the power cycles dramatically in a very short period of time. You can have, during a training run, the power consumption drop by 70 percent for 100 milliseconds. And you really need fast-acting, advanced power electronics to be able to smooth out these massive changes in power, especially during their training runs.

"So that's why SpaceX has bought so many Megapacks for the data centers. It's actually mostly for smoothing out the power for the training runs."

SpaceXAI (previously xAI) has deployed a number of Tesla Megapacks for its Colossus data centers, with 168 installed last year.

Tesla filed a trademark this June for a modular data center hardware system, Megapod.