John Deere beats earnings forecasts and backs a $10 million AI farming startup
The farm equipment giant reported $1.38 billion in quarterly profit and signed a three-year deal with Reservoir, a California startup building rugged AI systems for cropland.
Key points
- John Deere posted Q3 2026 net income of $1.379 billion, or $5.10 per share, beating market expectations.
- The company raised its full-year net income guidance to a range of $4.75 billion to $5 billion.
- Deere signed a $10 million, three-year research and development deal with Reservoir, an agtech startup founded in 2024.
- Reservoir's first public event, called Ruggedize, brought together robotics and AI engineers in Salinas, California, this week.
- Production and Precision Agriculture net sales fell 6% in Q3, while the smaller Small Agriculture and Turf division grew sales by 12%.
John Deere is still making serious money, even as demand for its biggest farming machines keeps sliding. The company reported $1.379 billion in net profit for its third quarter of 2026, roughly $5.10 per share, and beat what Wall Street analysts had expected.
So why are sales down in farming?
Deere's core farm equipment business is in a rough patch right now. Farmers worldwide have been holding off on big purchases because fertiliser and fuel costs remain high, and demand from overseas buyers has softened. The company's Production and Precision Agriculture division, which covers large tractors, autonomous field machines, and precision-spraying systems, saw net sales drop 6% and profit fall 9% compared with the same period last year.
The smaller Small Agriculture and Turf division, covering compact tractors and lawn equipment, told a different story: sales up 12%, profit up 28%.
| Division | Net Sales Change | Profit Change |
|---|---|---|
| Production & Precision Agriculture | Down 6% | Down 9% |
| Small Agriculture & Turf | Up 12% | Up 28% |
| Full-year net income guidance | $4.75 bn to $5 bn | (raised) |
Deere is now guiding investors toward full-year net income of $4.75 billion to $5 billion. Raising that figure is a signal that the company believes the slump is close to bottoming out, and that a recovery is coming once farmers start replacing ageing equipment again.
When the recovery arrives, Deere wants to sell more than just metal. Autonomous driving systems, AI-guided sprayers that cut herbicide waste by targeting individual weeds, and software that connects entire fleets of machines are all higher-margin products the company is betting on.
What is the Reservoir deal, and why does it matter?
Deere announced a three-year, $10 million partnership with Reservoir, a startup it has backed since the company was founded in 2024. Reservoir builds AI and robotics systems designed to survive real farmland conditions: dust, mud, heat and rough terrain.
The deal focuses on high-value crops, think strawberries, lettuce, or wine grapes, where labour costs are high and margins are tight enough that automation can pay for itself quickly. As The Robot Report noted, Reservoir held its first public gathering, called the Ruggedize event, this week in Salinas, California. Salinas sits in one of the most productive agricultural valleys in the United States.
Deere vice president Jason Brantley said the company wants innovation "built in the field, not just in the lab." That phrase is doing real work. Farm robots have a long history of performing well in controlled demos and failing in actual fields.
Reservoir says the partnership will also lower the cost for small startups to join its technical community, connecting engineers more directly with working farms across California and Arizona.
What does this mean for farmers?
In the short term, not much changes at the farm gate. The partnership is a research deal, not a product launch. But the direction is clear: Deere is spending heavily to make sure the next wave of automation tools is tested on real dirt before it goes on sale. Growers facing shrinking labour pools may see practical, field-proven options reach the market faster as a result.
