Tech Earnings Rollercoaster: Flat Markets, Netflix Drop, Tesla Test Ahead

Good morning investors,

Despite navigating earnings season, trade tensions, and a government shutdown, markets closed Tuesday almost exactly where they began. The S&P 500 ended perfectly flat at 0.00%, the Dow gained 0.5% to a new record above 47,000, and the Nasdaq slipped 0.2%. The extraordinary 85% earnings beat rate, the highest since 2021, validates underlying business strength even as Netflix’s decline and Tesla’s pending results inject caution into technology sentiment.

Futures trade narrowly this morning, with the S&P 500 ($SPY ( ▲ 0.07% )) up 0.1% as investors digest Netflix’s ($NFLX ( ▲ 0.13% )) 6% after-hours drop while positioning for Tesla’s ($TSLA ( ▼ 1.83% )) report tonight. The S&P’s statistical oddity of finishing exactly flat masks the Dow’s ($DIA ( ▲ 0.03% )) record gain and Nasdaq’s softness. The VIX remains subdued, reflecting calm beneath noisy headlines as the Magnificent Seven earnings parade begins with Tesla this evening.

Earnings strength remains the anchor. JPMorgan expects double-digit growth around 12%, above the 7.7% consensus, supported by the AI investment cycle, fiscal tailwinds, and a surprisingly resilient consumer. This performance continues to justify optimism even as valuations stretch.

Netflix shares fell 7% after hours following a Q3 earnings miss driven entirely by a 619 million dollar Brazilian tax expense. EPS came in at 5.87 dollars versus 6.97 dollars expected, while revenue rose 17% to 11.51 billion dollars, in line with forecasts. CFO Spence Neumann clarified that, excluding the tax charge, Netflix would have exceeded its margin guidance and does not expect any ongoing impact.

Beneath the headline, performance was strong. KPop Demon Hunters became the platform’s most-watched film ever at 325 million views, while ad revenue is on track to double this year from 1.4 billion dollars to nearly 2.9 billion dollars. Q4 guidance beat expectations, with revenue projected at 11.96 billion dollars and EPS at 5.45 dollars. The sell-off looks more emotional than rational, an overreaction to a one-time issue amid accelerating advertising momentum and continued global subscriber growth.

General Motors ($GM ( ▼ 0.04% )) extended its rally with a further 15% gain after results showed improved tariff stability and pricing power. The company now expects 500 million dollars less in tariff costs, raising EBIT to 12 to 13 billion dollars and cash flow to 10 to 11 billion dollars. The key takeaway is that pricing strength is offsetting macro noise, and consumers are still buying.

Tonight, Tesla takes center stage. Analysts expect a surge in Q3 results as US buyers rushed to capture expiring 7,500 dollar EV tax credits. The focus will be on post-credit demand, margins on cheaper Model 3 and Y versions, and updates on autonomy and robotaxi timelines. Musk’s comments on tariffs and AI integration will be closely parsed as markets weigh the company’s AI story against its automotive fundamentals.

Gold ($GLD ( ▼ 3.03% )) fell more than 5% on Tuesday, its biggest drop in over a decade, as easing US-China tensions unwound geopolitical hedges. While gold remains up more than 50% year to date above 4,100 dollars per ounce, the sell-off reinforces that risk premiums can evaporate as quickly as they build. The move highlights how sentiment, not fundamentals, often drives short-term commodity behavior.

Meta’s ($META ( ▼ 0.07% )) 27 billion dollar joint venture with Blue Owl Capital to fund the Hyperion data center in Louisiana exemplifies the staggering capital demands of the AI era. Blue Owl takes 80% ownership, contributing 7 billion dollars in cash, while Meta retains operational control and a 20% stake. The facility, roughly the size of 1,700 football fields, underscores how infrastructure scale now defines strategic advantage.

Meanwhile, Anthropic’s negotiations with Google ($GOOGL ( ▼ 1.4% )) for additional compute capacity valued in the tens of billions could represent one of the largest cloud deals in history. Anthropic, valued at 183 billion dollars and targeting 9 billion dollars in annual revenue by year-end, is racing to secure capacity before bottlenecks emerge. Compute access has become the new currency of AI dominance, where the ability to scale may prove as decisive as the quality of the models themselves.

AT&T ($T ( ▲ 0.05% )) beat subscriber expectations with 405,000 new wireless adds thanks to iPhone 17 promotions and bundled fiber plans, while Capital One’s 16 billion dollar buyback lifted sentiment. Intuitive Surgical soared 16% on record da Vinci system sales. Hilton trimmed its 2025 room revenue forecast to 1% growth from 2%, citing muted US travel demand but raised profit guidance on cost controls. Texas Instruments warned of a moderate recovery, reinforcing the uneven rebound in semiconductors amid tariff uncertainty.

Friday’s September CPI report has outsized importance given that the shutdown has frozen nearly all other data. It will guide the Fed’s October and December rate decisions, with markets still pricing in a quarter-point cut next week. Any inflation surprise could quickly alter those expectations.

Markets continue to show resilience in the face of competing crosscurrents. The 85% earnings beat rate underlines corporate strength, Netflix’s stumble looks more like noise than signal, and Tesla’s results tonight could set the tone for the rest of the tech complex. The AI infrastructure build-out, from Meta’s 27 billion dollar venture to Anthropic’s potential mega-deal with Google, highlights the scale of investment driving this market’s long-term narrative.

As October volatility continues, sophisticated investors should stay balanced but opportunistic. Overreactions to isolated issues like Netflix’s tax charge often create entry points in companies with genuine growth trajectories.

Please feel free to reach out if you would like to discuss positioning as we enter the core of earnings season.

Dan Sheehan [email protected]

This newsletter is for informational purposes only and should not be considered investment advice. Please consult with your financial advisor about your specific situation.