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 $4.75 billion to $5 billion.
- Deere signed a $10 million, three-year R&D deal with Reservoir, an agtech startup it has backed since 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 Small Agriculture and Turf grew sales by 12%.
John Deere's still making serious money, even as demand for its biggest farming machines keeps sliding. The company reported $1.379 billion in net profit for Q3 2026, roughly $5.10 per share, beating Wall Street expectations.
So why are sales down in farming?
Deere's core farm equipment business is in a rough patch. Farmers worldwide have been holding off on big purchases because fertiliser and fuel costs remain high, and demand from overseas buyers has softened. The Production and Precision Agriculture division, which covers large tractors and precision-spraying systems, saw net sales drop 6% and profit fall 9% year on year.
The smaller Small Agriculture and Turf division 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) |
Raising that full-year guidance signals Deere believes the slump is close to bottoming out. When the recovery arrives, it wants to sell more than just metal: autonomous driving systems, AI-guided sprayers that cut herbicide waste by targeting individual weeds, and software connecting entire fleets are the higher-margin products the company is betting on.
What is the Reservoir deal, and why does it matter?
Deere announced a $10 million, three-year 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 and rough terrain.
The deal focuses on high-value crops where labour costs are steep and margins tight enough that automation can pay for itself quickly. As The Robot Report noted, Reservoir held its first public gathering, the Ruggedize event, this week in Salinas, California, one of the most productive agricultural valleys in the United States. We first covered Reservoir on 28 August 2026.
Jason Brantley, Deere's vice president of production systems, small ag and turf, 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. It's the same pressure driving the autonomous-tractor work we reported from Agtonomy in August, and the laser-weeding approach Carbon Robotics unveiled a week later.
Reservoir says the partnership will lower the cost for small startups to join its technical community, connecting engineers with working farms across California and Arizona.
What does this mean for farmers?
In the short term, not much changes at the farm gate. This is a research deal, not a product launch. But the direction is clear: Deere's spending to make sure the next wave of automation is tested on real dirt before it goes on sale. Growers facing shrinking labour pools may see field-proven tools reach market faster because of it.
