Dow Futures decline, as traders analyse earnings reports from Meta Platforms, the parent company of Facebook, and Tesla, the electric vehicle manufacturer led by Elon Musk. Meta shares experience an uptick in extended-hours trading following the tech giant’s announcement of quarterly revenue that surpassed expectations, along with strong guidance for the current quarter. Shares of Tesla decline following a reduction in the annual sales target, as certain insiders allegedly voice apprehensions regarding regulatory oversight related to a potential merger between Tesla and Musk’s aerospace company SpaceX.
Dow futures indicated a downward trajectory on Thursday. By 03:08, the S&P 500 futures contract had declined by 75 points, or 1.0%, the Nasdaq 100 futures had decreased by 510 points, or 1.7%, and Dow futures had diminished by 283 points, or 0.5%. The primary indices on Wall Street experienced an uptick in the previous session, supported by robust performance from Musk’s aerospace venture SpaceX and server manufacturer Super Micro Computer. The returns contributed to alleviating some recent apprehensions regarding the sustainability of the artificial intelligence trade; however, analysts noted that the drop in Nasdaq futures might indicate that not all investors were convinced. Concerns have enveloped the AI sector for several days, stemming from a confluence of substantial debt-driven expenditures on AI infrastructure and heightened borrowing costs. Fluctuations in stocks associated with AI have reflected changing perceptions regarding the technology, particularly following recent corporate earnings that suggest a robust demand for this emerging field.
Shares of Meta crept higher in extended-hours trading following the Instagram owner’s disclosure of third-quarter revenue that exceeded expectations. Additionally, the company announced intentions to establish a new class of nonvoting stock aimed at generating capital for its artificial intelligence initiatives. Alongside the resilience in its core advertising business, the favourable reception of Meta’s Muse AI assistant, launched in September, has contributed to enhanced returns during a period when the technology giant is allocating substantial resources into the AI competition. Expectations remain elevated that Muse will ultimately contribute an additional $28.5 billion in revenue by 2030, as projected by Truist Securities. CEO Mark Zuckerberg said in a post-earnings call that roughly a fourth of people who have set up Muse use it on “any given day,” particularly for shopping. Zuckerberg added that Meta is aiming to create a “large-scale Muse network,” even though the app has been blocked on some websites, such as Amazon.com. For the current quarter, Meta has provided guidance indicating revenue expectations between $73 billion and $76 billion, with the upper limit surpassing Wall Street projections. The firm has also refined its forecast for capital expenditures to a range of $135 billion to $145 billion. The lower bound of the forecast was previously set at $130 billion.
Shares of Tesla declined in after-hours trading, impacted by the Musk-led electric vehicle group establishing a reduced target for annual sales, aiming for 5 million units by the decade’s end, as investors considered the possibility of a significant partnership with SpaceX. Previously, Musk had indicated expectations for annual sales of 20 million vehicles. However, Musk has seemingly retreated from this objective in recent years, redirecting Tesla’s strategic emphasis toward AI and robotics. Musk indicated that the company aims to commence shipments of its Optimus humanoid robots to corporate clients by the conclusion of 2027 and detailed strategies for its autonomous taxis to emerge as a significant revenue stream. Cash flow remained positive in the third quarter, even in light of Tesla’s substantial investments in AI and robotics. Nonetheless, Tesla has forecasted that its capital expenditures for the year will amount to approximately $20 billion, a revision from an earlier estimate of $25 billion. Quarterly revenue remained unchanged, whereas net income experienced a decline of 4%, totalling $1.7 billion.
Musk’s public endorsement of a potential merger between SpaceX and Tesla has unsettled certain insiders due to the anticipated increase in regulatory scrutiny, sources reported. Insiders expressed apprehension regarding Musk’s disclosure, which could potentially raise enquiries about the adequacy of representation for Tesla’s shareholder interests, according to Reuters, referencing an individual with direct knowledge of the discussions. During SpaceX’s post-earnings call earlier this week, Musk stated that the company and Tesla had established independent committees to investigate a merger, which could potentially amount to a $3.5 trillion deal. He stated that a union would be “a good idea,” yet cautioned that a collaboration was far from guaranteed. However, his remarks raised apprehensions among insiders regarding regulatory challenges, reminiscent of Tesla’s 2016 acquisition of SolarCity – another firm owned by Musk – which led to years of legal disputes concerning his involvement in the transaction, sources indicated.
In other developments, plans for renewed strikes against Iran have been formulated by the United States and Israel, following the U.S. midterm elections. These strikes are aimed at Iran’s energy infrastructure, nuclear facilities, and missile arsenal, as reported by The New York Times on Wednesday, referencing U.S. officials and individuals informed about the discussions. Military preparations have intensified, as U.S. and Israeli forces engage in exercises over Iraq to rehearse strike manoeuvres. Concurrently, U.S. Defence Secretary Pete Hegseth met with Israeli Prime Minister Benjamin Netanyahu this week to discuss potential attacks, according to the report. Some U.S. planners contend that a three-day campaign could impose enough economic damage to compel Tehran to engage in nuclear negotiations. However, President Donald Trump has consistently delayed renewed strikes, including an operation that was scheduled for earlier this month, and has not yet authorised a new offensive.
