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Elon Musk is quietly considering a mega-merger between Tesla and SpaceX. And the deal could be completed next year.
Why? It’s part of his latest initiative known as Phase 3 AI.
SpaceX reports third-quarter results after the closing bell tonight. Tesla, Meta, IBM and Lam Research follow tomorrow.
It’s one of the most important weeks of earnings season.
Over the long run, stock prices follow earnings. And right now, earnings are growing fast. S&P 500 profits are on pace to grow 29% in the third quarter, according to FactSet. That would be the third straight quarter of growth above 25%. Revenues are tracking 12.6% higher.
Only 9% of S&P 500 companies have reported so far. And history favors upside. Actual earnings growth has topped quarter-end estimates in 37 of the last 40 quarters.
The AI revolution is critical to earnings growth for the S&P 500. That’s why Nvidia, Tesla, and OpenAI are making huge investments in this new breakthrough – go here for details.
Here are the 10 reports I’m watching most closely this week.
Netflix (Nasdaq: NFLX): Tonight, after the close. Analysts expect $0.82 per share on $12.9 billion in revenue, up 11.8%. Last quarter, Netflix raised its full-year growth target to 13% to 14% and bought back a record $4.7 billion of stock.
SpaceX (Nasdaq: SPCX): Tonight, after the close, with a webcast at 4:30 p.m. ET. This is only the second report since the June IPO. Second-quarter revenue jumped 92% to $7.8 billion, led by $4.3 billion from Starlink, with a net loss of $541 million. This quarter, Wall Street expects revenue of $12.55 billion and a profit of $0.11 per share. That would be its first profitable quarter as a public company.
Intuitive Surgical (Nasdaq: ISRG): Tonight, after the close. Free cash flow jumped 71% last quarter. Analysts expect revenue of $2.88 billion, up 15%. Watch U.S. da Vinci procedure growth, which slowed to 12% from 14%.
Meta Platforms (Nasdaq: META): Wednesday, after the close. Revenue is expected to climb 23.3% to $63.2 billion. Meta’s AI ad system lifted conversions on Facebook 15.7% last quarter. Investors want to see that growth keep pace with capital spending of $130 billion to $145 billion this year.
Tesla (Nasdaq: TSLA): Wednesday, after the close. Tesla already reported 486,532 deliveries for the quarter. So, the focus is margins, cash flow and robotaxi, which now runs in seven U.S. cities. Tesla plans more than $25 billion in capital spending this year to fund that growth.
Lam Research (Nasdaq: LRCX): Wednesday, after the close. The AI buildout is driving record demand for chipmaking equipment. Revenue is expected to surge 52.5% to $8.1 billion. Management has raised its industry spending outlook three calls in a row, to the low $150 billion range.
IBM (NYSE: IBM): Wednesday, after the close. Several large deals slipped out of the second quarter. Management said a third to 40% of them closed in the first three weeks of the new quarter. Confirmation would support its 4% to 5% revenue growth guidance.
Nokia (NYSE: NOK): Thursday, before the U.S. open. AI and cloud sales more than doubled last quarter as data center orders piled up. Wall Street expects $0.08 per share on $5.8 billion in revenue. The key question is whether management raises its profit outlook.
Procter & Gamble (NYSE: PG): Thursday, before the open. This is the cleanest read on the American consumer this week. Analysts expect $1.89 per share on about $22.7 billion in sales. Management already warned that cost pressures would be concentrated in the first half of its fiscal year, so the bar is low.
Bloom Energy (NYSE: BE): Thursday, after the close. Bloom’s fuel cells have become a go-to power source for AI data centers. Revenue is expected to jump 106% to $1.07 billion. Last quarter, Bloom raised its full-year outlook for the third straight time, and Brookfield expanded its financing commitment to $25 billion.
Earnings drive stock prices over time. That’s why it’s critical to pay close attention to individual stocks – and the market as a whole.
With S&P 500 profits growing nearly 30%, the backdrop for this week’s reports is strong.
I’m expecting some major news from SpaceX and Tesla this week. In fact, Elon could shock investors with an announcement.
Check this out before the earnings reports.
Ian Wyatt
Editor, Daily Profit