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Magnificent 7 Earnings Preview: Meta & Tesla Take Center Stage This Week
Third-quarter earnings season heats up this week as Magnificent Seven giants Meta Platforms (META - Free Report) ) and Tesla (TSLA - Free Report) ) prepare to release their quarterly results on Wednesday, October 21, after the market closes.
Both reports could serve as important catalysts for the broader technology sector following the recent market pullback, as investors increasingly scrutinize lofty AI investments, profitability, and earnings growth.
While Meta looks to justify its massive artificial intelligence spending through continued advertising growth, Tesla faces pressure to turn stronger-than-expected vehicle deliveries into improved financial performance.
Meta's Q3 Earnings: AI Spending Takes Center Stage
Meta enters its Q3 report with encouraging revenue expectations, supported by AI-powered advertising tools and continued engagement across Facebook, Instagram, and WhatsApp.
Based on Zacks estimates, Meta's Q3 revenue is expected to rise more than 23% year over year to $63.24 billion, although earnings are projected to decline nearly 10% to $6.54 per share.
Most recently, Meta's Q2 revenue surged 28% to $60.8 billion, supported by a 14% increase in advertising impressions and a 12% rise in the average price per ad. That said, Wall Street will be particularly interested in Meta's ability to balance this strong advertising momentum against rapidly escalating AI infrastructure investments.
Meta previously projected 2026 capital expenditures (CapEx) of $130-$145 billion, reflecting its aggressive expansion of data centers and computing infrastructure. These investments have pressured free cash flow, which totaled just $784 million in Q2 despite strong operating cash generation.
As illustrated below, Meta's CapEx has surged to nearly $90 billion over the last four quarters. With spending projected to climb even further in 2026, investors will be closely watching whether these massive AI investments can generate sustainable returns.
Beyond its quarterly results, management's commentary on AI monetization, operating margins, and anticipated 2027 CapEx could play a significant role in determining META's post-earnings performance.
Image Source: Zacks Investment Research
Tesla's Q3 Earnings: Can Strong Deliveries Boost Profitability?
Tesla faces a different challenge heading into its quarterly report, as investors look for evidence that stronger vehicle deliveries can offset pricing pressures and declining automotive profitability.
Encouragingly, Tesla delivered 486,532 vehicles during Q3, surpassing Wall Street expectations of roughly 462,000 units. However, deliveries still declined 2% from the prior-year quarter, highlighting ongoing challenges in the electric vehicle market.
The Zacks Consensus calls for Tesla's Q3 earnings to decline 12% YoY to $0.44 per share, with revenue projected to decrease 1% to $27.78 billion.
The earnings outlook underscores why vehicle delivery growth alone may not be enough to satisfy investors.
Automotive gross margins, vehicle pricing, and operating expenses will be closely watched, along with the performance of Tesla's energy business, which deployed 13.7 gigawatt-hours of energy storage products during the quarter.
Furthermore, investors will be looking for updates on Tesla's autonomous driving ambitions, Cybercab commercialization, robotaxi expansion, and Optimus humanoid robots.
Although these initiatives represent potentially significant long-term growth opportunities, Tesla's near-term financial performance remains heavily dependent on its automotive business.
Image Source: Tesla Investor Relations; chart generated by ChatGPT
Beyond Q3 Earnings:Meta's Muse AI & Tesla's Flying Roadster in Focus
Beyond their quarterly results, Meta and Tesla have recently unveiled innovative products that could also generate additional investor interest.
Meta's Muse AI Agent: Meta's recently launched Muse AI agent has emerged as one of the fastest-growing consumer AI applications, surpassing ChatGPT's initial mobile adoption rate. Notably, Muse attracted more than 5 million downloads within its first month and is nearing 9 million downloads since its September debut, highlighting strong demand for its ability to autonomously perform tasks such as booking appointments, making purchases, and managing projects.
Meta also recently unveiled its upgraded Muse Wonder AI models, further strengthening its competitive position in the rapidly expanding AI market. Investors will be eager to hear management's commentary on Muse's adoption and monetization potential, particularly as the company seeks to justify its massive AI infrastructure investments.
Tesla's Flying Roadster: Meanwhile, Tesla recently generated excitement after CEO Elon Musk unveiled its long-awaited next-generation Roadster on October 15, demonstrating extraordinary performance capabilities with technology developed alongside SpaceX (SPCX - Free Report) ).
Unveiled through a prototype, the futuristic electric sports car features rocket-inspired thrusters that enable brief flight-like maneuvers, with Tesla targeting production in 2028.
Although the Flying Roadster is unlikely to materially impact Tesla's near-term earnings, it reinforces the company's technological ambitions and could help restore enthusiasm for its long-term innovation pipeline. Investors will be watching for additional details on commercialization and production timelines during Wednesday's earnings call.
Conclusion & Final Thoughts
Meta and Tesla's upcoming earnings reports could help determine whether the Magnificent Seven can regain momentum following the broader tech selloff.
Meta appears to have the stronger near-term fundamental outlook, supported by double-digit advertising revenue growth and expanding AI monetization opportunities. However, its enormous infrastructure investments raise questions about profit margins and free cash flow.
Conversely, Tesla's stronger-than-expected vehicle deliveries offer encouragement, but declining earnings expectations and persistent automotive margin pressures make its Q3 report particularly important.
Meta stock currently lands a Zacks Rank #3 (Hold), while Tesla carries a Zacks Rank #4 (Sell), reflecting downward earnings estimate revisions.
View the Zacks #1 Rank List
Image: Bigstock
Magnificent 7 Earnings Preview: Meta & Tesla Take Center Stage This Week
Third-quarter earnings season heats up this week as Magnificent Seven giants Meta Platforms (META - Free Report) ) and Tesla (TSLA - Free Report) ) prepare to release their quarterly results on Wednesday, October 21, after the market closes.
Both reports could serve as important catalysts for the broader technology sector following the recent market pullback, as investors increasingly scrutinize lofty AI investments, profitability, and earnings growth.
While Meta looks to justify its massive artificial intelligence spending through continued advertising growth, Tesla faces pressure to turn stronger-than-expected vehicle deliveries into improved financial performance.
Meta's Q3 Earnings: AI Spending Takes Center Stage
Meta enters its Q3 report with encouraging revenue expectations, supported by AI-powered advertising tools and continued engagement across Facebook, Instagram, and WhatsApp.
Based on Zacks estimates, Meta's Q3 revenue is expected to rise more than 23% year over year to $63.24 billion, although earnings are projected to decline nearly 10% to $6.54 per share.
Most recently, Meta's Q2 revenue surged 28% to $60.8 billion, supported by a 14% increase in advertising impressions and a 12% rise in the average price per ad. That said, Wall Street will be particularly interested in Meta's ability to balance this strong advertising momentum against rapidly escalating AI infrastructure investments.
Meta previously projected 2026 capital expenditures (CapEx) of $130-$145 billion, reflecting its aggressive expansion of data centers and computing infrastructure. These investments have pressured free cash flow, which totaled just $784 million in Q2 despite strong operating cash generation.
As illustrated below, Meta's CapEx has surged to nearly $90 billion over the last four quarters. With spending projected to climb even further in 2026, investors will be closely watching whether these massive AI investments can generate sustainable returns.
Beyond its quarterly results, management's commentary on AI monetization, operating margins, and anticipated 2027 CapEx could play a significant role in determining META's post-earnings performance.
Image Source: Zacks Investment Research
Tesla's Q3 Earnings: Can Strong Deliveries Boost Profitability?
Tesla faces a different challenge heading into its quarterly report, as investors look for evidence that stronger vehicle deliveries can offset pricing pressures and declining automotive profitability.
Encouragingly, Tesla delivered 486,532 vehicles during Q3, surpassing Wall Street expectations of roughly 462,000 units. However, deliveries still declined 2% from the prior-year quarter, highlighting ongoing challenges in the electric vehicle market.
The Zacks Consensus calls for Tesla's Q3 earnings to decline 12% YoY to $0.44 per share, with revenue projected to decrease 1% to $27.78 billion.
The earnings outlook underscores why vehicle delivery growth alone may not be enough to satisfy investors.
Automotive gross margins, vehicle pricing, and operating expenses will be closely watched, along with the performance of Tesla's energy business, which deployed 13.7 gigawatt-hours of energy storage products during the quarter.
Furthermore, investors will be looking for updates on Tesla's autonomous driving ambitions, Cybercab commercialization, robotaxi expansion, and Optimus humanoid robots.
Although these initiatives represent potentially significant long-term growth opportunities, Tesla's near-term financial performance remains heavily dependent on its automotive business.
Image Source: Tesla Investor Relations; chart generated by ChatGPT
Beyond Q3 Earnings: Meta's Muse AI & Tesla's Flying Roadster in Focus
Beyond their quarterly results, Meta and Tesla have recently unveiled innovative products that could also generate additional investor interest.
Meta's Muse AI Agent: Meta's recently launched Muse AI agent has emerged as one of the fastest-growing consumer AI applications, surpassing ChatGPT's initial mobile adoption rate. Notably, Muse attracted more than 5 million downloads within its first month and is nearing 9 million downloads since its September debut, highlighting strong demand for its ability to autonomously perform tasks such as booking appointments, making purchases, and managing projects.
Meta also recently unveiled its upgraded Muse Wonder AI models, further strengthening its competitive position in the rapidly expanding AI market. Investors will be eager to hear management's commentary on Muse's adoption and monetization potential, particularly as the company seeks to justify its massive AI infrastructure investments.
Tesla's Flying Roadster: Meanwhile, Tesla recently generated excitement after CEO Elon Musk unveiled its long-awaited next-generation Roadster on October 15, demonstrating extraordinary performance capabilities with technology developed alongside SpaceX (SPCX - Free Report) ).
Unveiled through a prototype, the futuristic electric sports car features rocket-inspired thrusters that enable brief flight-like maneuvers, with Tesla targeting production in 2028.
Although the Flying Roadster is unlikely to materially impact Tesla's near-term earnings, it reinforces the company's technological ambitions and could help restore enthusiasm for its long-term innovation pipeline. Investors will be watching for additional details on commercialization and production timelines during Wednesday's earnings call.
Conclusion & Final Thoughts
Meta and Tesla's upcoming earnings reports could help determine whether the Magnificent Seven can regain momentum following the broader tech selloff.
Meta appears to have the stronger near-term fundamental outlook, supported by double-digit advertising revenue growth and expanding AI monetization opportunities. However, its enormous infrastructure investments raise questions about profit margins and free cash flow.
Conversely, Tesla's stronger-than-expected vehicle deliveries offer encouragement, but declining earnings expectations and persistent automotive margin pressures make its Q3 report particularly important.
Meta stock currently lands a Zacks Rank #3 (Hold), while Tesla carries a Zacks Rank #4 (Sell), reflecting downward earnings estimate revisions.