U.S. Futures Slide as Meta and Tesla Beat Earnings but AI Spending Fears Linger

Key points

• Dow Jones futures dropped 0.3%, S&P 500 futures fell 0.5%, and Nasdaq-100 futures declined 0.7% late Wednesday.
• Meta Platforms shares gained 2% in extended trading after reporting third-quarter revenue of $64.60 billion, exceeding the $63.37 billion consensus estimate.
• Tesla reported third-quarter revenue of $28.05 billion and adjusted earnings of 48 cents per share, both beating analyst expectations, but shares fell 3% in extended trading.
• IBM shares swung wildly after hours, ending down more than 3% despite beating third-quarter earnings estimates at $2.95 per share.
• Southwest Airlines cut its 2026 profit forecast to $2.60-$2.85 per share, citing higher fuel prices, becoming the third carrier to trim guidance this month.
• The Bank of Korea held its policy rate at 3% on Thursday, with inflation remaining at 2.9% in September, above its 2% target for 13 consecutive months.

Background

Recent archive coverage indicates a volatile period for tech stocks, with Tesla previously showing improved operational efficiency and positive free cash flow in Q3 2026, countering earlier fears of margin compression. Netflix also reported strong Q3 profits despite stock declines, while Super Micro Computer saw a 13.6% surge on raised AI server revenue forecasts, highlighting the ongoing market focus on AI infrastructure demand.

How outlets are covering it

CNBC emphasized the mixed reaction to Meta and Tesla earnings, noting that while both companies beat estimates, Tesla shares fell due to concerns over AI spending, while Meta’s stock rose on controlled capital expenditure. Yahoo Finance’s data reflected similar pre-market declines, with Meta and Tesla showing modest gains in regular trading but broader market weakness. Analysts cited by CNBC, such as Dan Ives, highlighted that Meta’s AI investment is 'paying off in the core,' while others noted that the pause in South Korea’s rate hikes signals persistent inflation pressures despite resilient semiconductor exports.

Why it matters

The divergence in stock reactions to strong earnings highlights investor caution regarding AI capital expenditure and its long-term profitability. The broader market’s sensitivity to these factors, combined with inflationary pressures in Asia, suggests that future market movements will depend on how companies balance AI investment with core business performance and cost management.

What to watch

Investors will focus on upcoming earnings from Procter & Gamble, Lockheed Martin, Valero Energy, and Honeywell, as well as weekly initial jobless claims data. The Bank of Korea’s rate decision and South Korea’s housing supply initiatives may also influence regional market sentiment, while U.S. futures will likely react to further tech earnings and AI-related developments.