Why are US stock futures down? Meta, Tesla earnings and AI concerns in focus
US stock futures fell late Wednesday as investors assessed third-quarter results from major technology companies Meta Platforms and Tesla. While Meta shares rose after reporting stronger-than-expected revenue, Tesla shares fell despite beating analysts’ expectations for earnings and revenue.
Dow Jones Industrial Average futures slipped 0.3%, or around 170 points. S&P 500 futures fell 0.5%, while Nasdaq-100 futures dropped 0.7%.
The decline came after Wall Street ended Wednesday’s regular session on a positive note. The S&P 500 recorded its third straight day of gains, while the Dow Jones Industrial Average jumped 360 points. The Nasdaq Composite closed 1% higher, helped by gains in SpaceX and Tesla during regular trading.
Investors are now watching whether heavy spending on artificial intelligence (AI) can deliver enough returns to support high valuations across the technology sector.
Tesla shares fall despite earnings and revenue beat
Tesla shares fell more than 3% in extended trading on Wednesday, even after the electric vehicle maker reported third-quarter earnings and revenue above analysts’ expectations.
The company reported adjusted earnings of 48 cents per share, compared with analysts’ estimates of 45 cents per share. Revenue stood at $28.05 billion, ahead of the expected $27.92 billion, reported Investing.com.
However, Tesla also cut its capital expenditure forecast for 2026 by a fifth and reported an unexpected cash surplus in the third quarter after spending less on its artificial intelligence (AI) and robotics plans than Wall Street had expected.
The company now expects capital expenditure, or money spent on long-term assets and projects, to total around $20 billion in 2026, down from its earlier forecast of more than $25 billion. Tesla did not say which areas would see lower spending.
In the third quarter ended September 30, Tesla spent $4.7 billion on capital expenditure, double the amount spent in the same period last year but below analysts’ expectations of $7.5 billion, according to LSEG data.
Tesla reported free cash flow of $1.53 billion for the quarter, against analysts’ expectations of a $4.92 billion cash burn.
The shares initially rose 2% in after-hours trading after the company reported positive free cash flow, higher gross margin and revenue above market expectations. However, the stock later reversed course and fell more than 3%.
Investors remain concerned about whether Tesla’s spending on AI, robotaxis and robotics will generate enough returns to justify the investment. While lower spending has helped the company preserve cash, it has also raised questions about whether Tesla is investing enough to deliver on its growth plans.
Meta shares rise as revenue jumps 26%
Meta shares rose more than 2% in extended trading after reporting stronger-than-expected revenue and giving a positive outlook for the current quarter.
The company reported earnings of $3.83 per share, beating analysts’ estimates of $3.57. Revenue increased 26% from a year earlier to $64.6 billion, above the market estimate of $63.34 billion, reported Investing.com.
Growth in advertising and higher engagement across Meta’s platforms supported its quarterly performance. However, a large legal settlement added to the company’s costs during the quarter.
Wall Street ends higher after SpaceX and Super Micro results
Before futures turned lower in evening trading, US stocks had ended Wednesday’s regular session on a positive note. SpaceX shares surged after the company reported its first profit as a publicly traded company. Investors also considered the possibility of a closer relationship between Elon Musk’s SpaceX and Tesla
Super Micro Computer also supported market sentiment with its results. There was also attention on Nvidia’s US supply chain agreements. The chipmaker announced plans to expand its global manufacturing capacity to meet growing demand for its accelerated computing products and full-stack AI factory platform.
The Nasdaq Composite rose 1.1% during the regular session. The S&P 500 gained 0.6%, while the Dow Jones Industrial Average ended the day 0.7% higher.
Oil prices and Fed rate outlook remain in focus
Investors are also keeping an eye on rising oil prices and the outlook for US interest rates.
Brent crude traded above $110 a barrel during Asian trading on Thursday amid geopolitical uncertainty. Higher oil prices could add to inflation pressures, making it more difficult for the Federal Reserve to decide when to cut interest rates.
Concerns about US inflation have already raised questions about the central bank’s policy outlook ahead of its meeting next week.
Higher interest rates can pressure stock prices, especially in the technology sector, by reducing the present value of expected future earnings.
Investors await more earnings and US jobs data
Investors will turn their attention to more company results on Thursday, with Procter & Gamble, Lockheed Martin, Valero Energy and Honeywell among the companies scheduled to report earnings.
The economic calendar will also be in focus, with the US weekly initial jobless claims data due on Thursday morning.
The figures could provide fresh clues about the health of the US labour market and influence expectations for the Federal Reserve’s interest-rate decisions.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.