TSLAMETAHeader

The price of the future: what Meta and Tesla's earnings reveal

Equities 5 minutes to read

Key takeaways

  • Meta's advertising engine is funding its AI ambitions, but rising spending raises the bar for future returns.

  • Tesla's profits remain under pressure, as investors weigh today's car business against tomorrow's robots and autonomous driving.

  • The real question is not who spends more, but who can turn investment into lasting profits.


Some companies invest in the future. Others seem determined to build several futures at once.

Meta and Tesla delivered their third-quarter earnings on 21 October 2026, offering investors two fascinating examples of this ambition.

Meta, the company behind Facebook and Instagram, is using its profitable advertising business to finance an artificial intelligence empire. Tesla, best known for electric cars, increasingly wants to become a leader in autonomous driving, robotics and AI.

Both are spending heavily. But their financial foundations, and the evidence supporting their ambitions, look rather different.

Meta: the money machine meets the spending machine

Meta's advertising business remains remarkably strong.

Revenue jumped 26% to 64.6 billion USD, helped by more advertisements and higher prices. AI is already improving recommendations and helping advertisers reach potential customers more effectively.

That matters. Meta is not simply hoping AI will eventually generate revenue. Parts of its investment are already improving the business that pays the bills. But those bills are getting considerably larger.

Meta now expects capital expenditure, mainly spending on infrastructure such as data centres and chips, of 135 billion to 145 billion USD in 2026. Its quarterly free cash flow, the money remaining after investment spending, turned negative at 2.1 billion USD.

A large legal charge also distorted reported profits. Excluding a 9.9 billion USD settlement-related expense, operating profit reached approximately 22.9 billion USD, representing a healthy 35% margin.

Meanwhile, its new AI assistant, Muse, has attracted more than 10 million registered users. The challenge now is turning engagement into profitable revenue.

Meta's proposed new non-voting share class adds another consideration: the company could raise capital while preserving Mark Zuckerberg's control.

The investor lesson: a profitable core business can finance ambitious projects, but growing revenue does not automatically translate into growing cash for shareholders.

Tesla: the future looks exciting, the present less so

Tesla's numbers tell a different story.

Revenue remained broadly flat at 28 billion USD, while reported net profit dropped around 43% to 787 million USD. The company delivered approximately 487,000 vehicles, demonstrating resilient demand. Yet operating profit fell 56%, highlighting the pressure from investment costs and the challenges facing its automotive business.

There were encouraging signs. Gross margins improved and Tesla generated 1.5 billion USD in free cash flow, despite quarterly capital expenditure more than doubling to 4.7 billion USD.

Tesla also reduced its expected full-year investment spending from 25 billion to 20 billion USD. But the investment story increasingly extends beyond cars. Autonomous taxis, Optimus humanoid robots and AI software could eventually create new revenue streams with different economics from manufacturing vehicles.

Meanwhile, Elon Musk confirmed that Tesla and SpaceX are exploring a potential merger. That creates another strategic question: would combining the businesses unlock valuable opportunities or increase complexity?

The investor lesson: Tesla's valuation increasingly depends on businesses whose future profitability remains difficult to measure. Progress in technology matters, but commercial adoption matters more.

Different businesses, surprisingly similar risks

Meta faces the risk that AI infrastructure costs grow faster than the profits they generate. Advertising growth, operating margins and free cash flow are useful early warning signs.

Tesla faces weaker vehicle profitability, execution challenges in autonomous driving and uncertainty around future investment requirements. Investors can monitor vehicle margins, commercial robotaxi adoption and cash generation.

Both companies also face a familiar risk: expectations. Even excellent products can disappoint shareholders when valuations already assume exceptional future success.

Investor playbook: follow the money

  • Separate today's profits from tomorrow's promises. Understand which businesses generate cash and which still consume it.
  • Watch spending efficiency. Rising investment becomes more convincing when revenue, margins and cash flow improve.
  • Consider expectations. Strong companies can still deliver disappointing returns when investors pay too much for future growth.
  • Mind concentration. Several technology holdings may depend on the same assumptions about AI adoption and spending.

The future still needs to pay the bills

Meta and Tesla are pursuing different versions of the future, but their earnings reveal a common challenge.

Meta has a powerful advertising engine generating substantial profits while its AI ambitions consume increasingly large amounts of capital. Tesla has an established automotive business, but much of its investment appeal increasingly rests on technologies that have yet to demonstrate their full commercial potential.

Neither approach guarantees success or failure.

For investors, the distinction matters because innovation and shareholder returns are not always the same thing. The most important question is rarely whether a company's vision sounds exciting. Both certainly do. It is whether that vision eventually produces more cash than it costs to build. The future may capture imaginations. But only profits can reward investors.

Disclaimer

Confidentiality and Usage:
You may not reproduce, distribute, or transmit this material or any portion thereof without prior written permission from Saxo.

Nature of Information:
The information provided herein is based on current market conditions and analysts' opinions, which may reflect personal views of the author, and are subject to change without notice. This material does not include a record of any trading prices, or an offer of, or solicitation for, or endorsement to enter into any transaction in any investment product. Any forecast on the economy, markets and economic trends of the markets provided is not necessarily indicative of the future or likely performance of the investment product subject of this material.

Responsibility and Liability:
Saxo accepts no liability for any use that may be made of these comments or for any consequences that arise from such use. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

The information provided in this material is solely for information only. It is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Accordingly, it should not be relied on or treated as a substitute for specific advice concerning specific situations of any person. Please seek advice from a financial adviser regarding the suitability of any investment product taking into account your specific investment objectives, financial situation or particular needs before you make a commitment to purchase an investment product. In the event that you choose not to seek advice from a financial adviser, you should consider whether any investment product mentioned in this publication is suitable for you.

Notwithstanding the above, insofar as any information provided herein contains research analyses or reports concerning any investment product authored by any foreign research house and is issued or promulgated to a person in Singapore who is not an accredited investor, expert investor, and/or institutional investor, Saxo Capital Market Pte. Ltd. accepts legal responsibility for the contents of this material to the extent required by law. Recipients of such material are to contact Saxo Capital Markets Pte. Ltd. in respect of any matters arising from, or in connection with, this material.

Risk Disclosure:
Trading in investment products involve significant risk, including the risk of losing your entire investment. Historical returns are not a guarantee of future returns. Prices can both rise and fall, and there is a risk that you will not get back the money you invested.

Conflicts of interest:
The author may hold positions in the investment products mentioned. The author does not own positions in the underlying investment product exceeding 0.5% of its market capitalisation, save as otherwise declared. The author is not permitted to trade the mentioned investment products within the first 24 hours after the publication of this article.

Saxo maintains partnerships with companies that compensate Saxo for promotional activities conducted on its platform. Additionally, Saxo has agreements with certain partners who provide retrocession contingent upon clients purchasing specific investment products offered by these partners. While Saxo receives compensation from these partnerships, all content is conducted with the intention of providing clients with valuable options and information.

Publication details:
If any listed companies are the subject of the material, the content has not been submitted to the companies in question prior to publication.

Please refer to our full disclaimer and notification on non-independent investment research for more details.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Saxo is part of the J. Safra Sarasin Group.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.