Three of the most closely watched names in technology reported quarterly results this week, and the contrast in how investors responded says a lot about where Wall Street's attention is right now: spending on artificial intelligence.
Tesla reported third-quarter revenue of $28.05 billion, slightly ahead of the $27.88 billion Wall Street had expected, with adjusted earnings of $0.48 per share versus the $0.43 estimate. Free cash flow and capital spending both came in better than expected. Notably, Tesla said it was cutting its full-year capital spending plan to $20 billion from the $25 billion it had guided to three months earlier, funding the reduced spending from its own operating cash flows. Part of the reason appears to be that Tesla's Optimus humanoid robots need more development and training time before they are ready for wider real-world deployment. Tesla shares initially rose on the results before later sliding in premarket trading as broader market jitters over Middle East tensions and AI spending weighed on sentiment.
Meta reported adjusted earnings of $7.40 per share on revenue of $64.60 billion, both comfortably ahead of estimates of $5.74 per share and $63.37 billion. Even so, the stock dipped slightly in premarket trading. Much of the attention on the call centered on Muse, Meta's newer AI product, whose future revenue potential remains highly uncertain. One Deutsche Bank analyst recently estimated that Muse's 2030 revenue could fall anywhere between $2.4 billion and $36 billion, an unusually wide range that reflects how early-stage the business still is even as Meta continues to raise the lower end of its own capital spending guidance to support it.
IBM delivered what one analyst called a picture-perfect quarter on paper: revenue of $17.10 billion versus $16.82 billion expected, adjusted earnings of $2.95 per share versus $2.86 expected, and software revenue growth of 8%. CEO Arvind Krishna touted the company's progress in what IBM calls Super Intelligence, its framing for enterprise AI tools. Shares jumped as much as 7.3% in early after-hours trading, a big reversal from three months earlier when a surprise earnings warning had sent the stock reeling. But the rally faded as the call went on, with Krishna acknowledging some concern among corporate chief executives about how much is currently being spent on AI tools, and IBM's shares ultimately closed roughly 5% lower.
Together, the three reports suggest that even strong headline numbers are not enough to satisfy investors right now; the market increasingly wants clarity on how, and how profitably, all the AI spending will eventually pay off.
Investors will be watching upcoming reports from other major technology companies this earnings season for similar signs of AI spending fatigue versus continued investor enthusiasm.
Did these companies have a good quarter?
Yes, all three beat Wall Street's revenue and earnings estimates, but investors reacted cautiously because of broader questions about AI spending and payoff.
Why did Tesla cut its spending plans?
Tesla said it is reducing 2026 capital expenditure partly because its Optimus robots need more development time before wider deployment.
- Yahoo Finance: Tesla reports Q3 earnings beat, positive free cash flow
- CNBC: IBM beats on top and bottom lines as CEO Krishna touts 'Super Intelligence' traction
- The Motley Fool: Big Blue's Wild Wednesday Ride
- The Daily Upside: Meta's Muse Is Everywhere and Nowhere in Latest Earnings Result
- Benzinga: Stock Market Today, S&P 500 and Dow Futures Drop