HAPPY THURSDAY TO THE STREET
Meta (META) and Tesla (TSLA) both topped revenue estimates in their reports yesterday. But they sank anyway today, dragging the tech-heavy Nasdaq Composite down with them.
Why? Well, Meta's free cash flow went negative as it raised its capex floor to $135B. Meanwhile, Tesla's AI and robot push more than doubled its capex and gutted profits.
Lesson learned: a beat is cheap, but a $135B AI tab is not.
🟨 | US stocks were mixed today, with the DJIA managing a slight gain, despite the Nasdaq’s sharp decline, dragged lower by AI spending concerns and a rebound in oil prices.
📈 | One Notable Gainer: Spotify (SPOT) shrugged off tech weakness on upbeat Q4 revenue guidance.
📉 | One Notable Decliner: Lam Research (LRCX) sank, leading chip losses, despite fiscal Q2 guidance that edged past estimates.
— Brooks & The Street Sheet Team
MARKET SNAPSHOT
S&P 500 Heatmap. Credit: Unusual Whales
Market Movers
BLACKSTONE, TTM, SOUTHWEST
📈 | Blackstone (BX) topped Q3 profit estimates as AUM hit $1.368T.
📉 | TTM Technologies (TTMI) plunged nearly 30% after its Q4 EPS guidance midpoint missed by a penny.
📈 | Southwest Airlines (LUV) and American Airlines (AAL) rallied after earnings, despite gloomier full-year outlooks for the airlines sector.
📉 | Forgent Power Solutions (FPS) plummeted more than 20% after announcing its CFO will step down.
📈 | Procter & Gamble (PG) beat on the top and bottom lines in fiscal Q1.
Tomorrow's Trade Idea, Today
ROBOTAXI DRIVER
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Mileage May Vary
Tesla beat on earnings and revenue, then promptly stalled.
But Morgan Stanley, for one, is keeping its foot off the brake. The firm lifted its price target after yesterday’s report.
Its analysts view growth in unsupervised miles, fleet density, and safety performance as the clearest signs Tesla can scale autonomy commercially.
Fleet of Foot
Morgan Stanley left the quarter more confident in its fleet size estimates through 2027, citing the pace of progress so far.
Several other bulge brackets still see momentum too. JPMorgan (JPM) says the Robotaxi ramp is keeping pace with investor expectations, while Deutsche Bank (DB) stayed at Buy on record Megapack demand from data centers. Canaccord Genuity also reiterated Buy.
Per Deutsche, Tesla is almost sold out of Megapacks for 2027. Sounds like one of them good problems.
Bulls, Bears, Bots
Not everyone is along for the ride. Goldman Sachs (GS) remains Neutral and calls the valuation full. HSBC (HSBC) rates it Reduce, with a $157 target implying almost a whopping 60% downside. Truist (TFC) also warns AI spending will squeeze margins and cash flow for a while.
Even before today’s decline, shares were squarely in the red year to date. But if the bulls are right, investors should stop staring at the earnings report and start watching the odometer.
Do you own shares of Tesla (TSLA)?
OVERHEARD ON THE STREET
🛰️ | SpaceX (SPCX) CEO Elon Musk reportedly eased a Starlink slowdown in Ukraine after President Trump asked him to.
🎬 | Musk also invested roughly $1B in Skydance (SKYD), which faces nearly $80B in debt.
🌮 | PepsiCo (PEP) renewed its Taco Bell partnership through 2036, days after KFC defected to Coca-Cola (KO).
🤖 | Anthropic may publicly file for its IPO as soon as tomorrow, ahead of a potential November listing.
💉 | Moderna (MRNA) plunged as much as 25% intraday after an X user leaked cancer vaccine data that later proved positive.
WEDNESDAY’S POLL RESULTS
Do you own shares of Qnity Electronics (Q)?
▇▇▇▇▇▇ 🐂 Yup, I’m holding
▇▇▇▇▇▇ 🐻 Nope, not interested
▇▇▇▇▇▇ 👀 No, but I’m interested
And, in response, you said:
👀 No, but I’m interested — “I knew a predecessor company from the early aughts. Good growth business then. Looks to be good now. ”
