Wall Street is about to sit a pop quiz, and the whole class is sweating. This earnings week AI selloff is a stress test for the AI trade, and the first exam arrives Tuesday. Meta, Tesla and newly public SpaceX all report between Oct. 20 and Oct. 21, just as the AI rally shows its first real cracks.
Futures reopen Sunday evening, and nobody knows which way they’ll point.
The stakes are not small. According to TheStreet, Meta is worth about $1.8 trillion, Tesla $1.4 trillion and SpaceX $1.9 trillion. That is a lot of market value riding on three reports in two days.
Why the AI stock selloff has investors on edge
First, the damage. Investor’s Business Daily says the stock market had an ugly week, capped by fierce selling Friday. The Nasdaq fell 4.48% on AI debt and chip worries, according to FXEmpire. The Dow slipped 0.67% to close at 52,002.41. We covered the slide as it unfolded in our look at how Nvidia, AMD and CoreWeave sank as the AI trade hit a wall.
The pain was concentrated, too. Reuters reported sharp declines in semiconductor and tech hardware shares, Dell included. The worry is financing, not demand. Micron, ASML, TSMC and Anthropic recently impressed with results or guidance, Schwab noted, and stocks fell anyway.
Good news, meet the shrug.
Even bonds were jumpy. The 10-year Treasury yield swung from a peak near 5.33% to a low of 5.05% in 24 hours, per Schwab. That is a wild ride for the supposedly boring corner of the market.
Meta, Tesla and SpaceX earnings: the calendar
Here is the schedule that matters:
- Tuesday, Oct. 20: SpaceX reports after the close, with a live audio-only webcast at 3:30 p.m. CT, according to Drive Tesla. Netflix, GE Aerospace and GM also report.
- Wednesday, Oct. 21: Meta reports after the close, with its call at 4:30 p.m. ET, per its press release. Tesla’s webcast follows at 5:30 p.m. ET, according to its SEC filing.
- Thursday, Oct. 22: Both stocks react at the open.
Some calendars still list Oct. 28 for Meta and Tesla. Those look stale, because the companies’ own notices say Oct. 21. (When the company and the calendar disagree, go with the company.)
What Wall Street expects this tech earnings week
Analysts do not agree on Meta. Estimates run from $5.94 to $6.76 a share on roughly $63.3 billion in revenue, depending on the tracker. Tesla, for its part, is expected to earn about $0.45 a share on $27.9 billion in revenue, per MarketBeat. A year ago it posted $0.50 a share on $28.10 billion.
SpaceX is the wild card. It has been public for only a few months and has already been rough on holders. It was down almost 9% for the week as of Friday morning. Tesla, meanwhile, rose about 3% early Friday after unveiling a redesigned Roadster.
Here’s the thing: this AI trade earnings test is about the spending
So what are investors really grading? Not just this quarter’s profit. They want proof that AI spending pays off, which is why this earnings week AI selloff matters well beyond three tickers. If you hold index funds, our explainer on what the Nasdaq slide means for your 401(k) shows why.
Goldman Sachs expects five AI hyperscalers, Meta among them, to lift combined capital spending to about $1.2 trillion next year. That is a staggering bill. Kevin Shea of BNY Wealth put the test plainly: “One of the most important takeaways of earnings season is whether or not the profitability of the hyperscalers can grow faster than the pace of their capex.”
If Meta shows profits outrunning its spending, the dip could look like a buying opportunity. If not, the jitters get louder.
One more wrinkle: the Federal Reserve is in its blackout period this week, so there will be no central-bank soothing. Rising yields were already rattling traders, as we saw when the Dow dropped more than 500 points on bond yields.
This week, earnings will do all the talking. Sunday night’s futures will give the first hint of whether Wall Street is listening.
