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Meta and Tesla report after the bell Wednesday, with Meta's $130-145B capex guidance and a roughly 15% Tesla earnings decline testing the AI trade.
- Meta (META) and Tesla (TSLA) report Oct. 21 after the close; calls start at 4:30 p.m. and 5:30 p.m. ET.
- Meta guides 2026 capex at $130-145B, with about $50.9B spent in the first half.
- Tesla faces lower profit alongside capex near $7.5B for the quarter, versus $2.3B a year earlier.
Lead
Meta Platforms and Tesla report third-quarter results on Wednesday, Oct. 21, and the two reports are the next test of whether heavy artificial intelligence spending is translating into earnings. Meta's full-year capital expenditure guidance of $130 billion to $145 billion is the central figure. Tesla is expected to post an earnings decline of roughly 10% to 15%, depending on the measure, as spending rises sharply. The reports arrive after a market pullback that has made investors less tolerant of large outlays without matching growth.What Are Investors Watching in Meta's Report?
Investors are watching whether Meta can justify capex that has climbed to nearly $90 billion over the last four quarters while revenue growth holds. Meta guided third-quarter revenue to $61 billion to $64 billion, and consensus sits near $63.2 billion, about 23% higher than a year earlier.
Free cash flow is the pressure point. If capex runs near the top of the $130-145 billion range, cash generation shrinks, and the market has shown it will punish that. Nasdaq Meta shares fell about 8% after the prior report even though headline earnings beat expectations.
Legal costs add a second variable. Some forecasts include a roughly $10 billion charge tied to settlements with state attorneys general, which would sharply lower reported per-share earnings and widen the gap between estimates.
Why Is Tesla's Spending Under Scrutiny?
Tesla's spending is under scrutiny because it is rising at the same time profit is falling. Consensus calls for earnings of about $0.45 a share, down from $0.50 a year earlier, on revenue near $27.9 billion, roughly flat. That combination points to margin compression from pricing and new-program costs.
Capital expenditure is expected to reach about $7.5 billion in the quarter, against $2.3 billion a year earlier. Full-year estimates are near $25 billion, directed at AI infrastructure, robotaxi development, robotics and manufacturing capacity.
Operating data gives some support. Tesla delivered 486,532 vehicles in the quarter, well above the roughly 461,000 expected, and deployed 13.7 GWh of energy storage. Volume is not the concern. The question is what the added spending yields in margins and autonomy revenue.
Strategic Context
The two companies represent different parts of the AI trade. Meta is a direct spender on data centers and models, funded by an advertising business growing above 20%. Tesla is a hardware company arguing that AI will redefine its value through autonomy and robotics, while its core auto earnings soften.
Both have seen estimates drift lower. Meta's consensus per-share estimate has fallen about 16% over 90 days, and Tesla's has been cut by roughly 18% over the same span. Lower bars raise the chance of a headline beat, but the reaction depends on guidance for next year's spending.
What Happens If the AI Trade Falters?
If either company disappoints, ai stocks broadly face pressure, because Meta's capex guidance is a reference point for the wider infrastructure buildout. Suppliers of chips, networking and power equipment depend on those budgets holding. A cut or a sign of slower returns would reverberate through the sector, while a raised outlook paired with firm revenue would support the case that spending is productive.
Tesla's result carries a narrower read-through. A margin recovery or a clearer robotaxi timeline would ease concern about its spending, while another round of lower profit and higher outlays would sharpen questions about how long investors will wait.
Outlook
Wednesday's reports will show whether AI investment is being matched by revenue and cash flow. For Meta, the key points are the capex range, 2027 spending commentary and free cash flow. For Tesla, the focus is margins, the capex path and autonomy milestones. Both reports land with expectations already reduced and positioning cautious, so guidance is likely to outweigh the headline numbers.
Mentioned tickers: META, TSLA
