Nasdaq, S&P 500 futures rise, Dow slips as Big Tech earnings take center stage

Tesla’s (TSLA) quarter wasn’t great.

Margins missed estimates. Sales came in light. And Elon Musk was back to his antics on the earnings call of conveying guidance that by his own admission is “insane.”

Investors now have a choice to make on Tesla.

Do you avoid the stock because it’s a disruptive EV company that may underwhelm in the near-term as it invests in its business and Elon could fall out of favor with President Trump? Or, do you buy the stock because the company will likely have driver-less cars on the road in 2026 alongside humanoid robots in factories.

I don’t have the answer for you. But I think RBC analyst Tom Narayan makes a host of good points on how his clients are viewing the stock:

“Moonshots getting real. Tesla announced that it will have a paid unsupervised full-self driving (FSD) service in Austin this June. We expect this to be an end- to-end fleet service similar to Waymo (except will use a Tesla vehicle). We expect the car to have pedals and steering wheels and not be a cybercab. The release announced Tesla will have unsupervised FSD for its own customers as well as the robotaxi business in parts of this year. Management also indicated that there is interest from a number of major car companies to license FSD technology but would only entertain orders if volumes are high. Regarding supervised FSD, the company says it is working to launch in Europe and China this year. Regarding Optimus, Tesla now thinks it will make several thousand this year and will utilize some at company facilities. Next year once it produces version 2, it can do 10K per month as opposed to 1K per month.”

Levi’s (LEVI) was having a relatively good earnings call last night.

Considering how challenging retail was for the holidays (if your name isn’t Walmart (WMT)), to see organic sales for the Levi’s brand up 8.2% is win for that team.

But Levi’s 2025 EPS guidance of $1.20 to $1.25 was a country mile away from consensus for $1.38 a share.

While the blame is going to foreign exchange fluctuations, I think there is a large chunk that reflects what’s happening at department stores. Macy’ (M)s continues to shut a ton of stores and it’s not alone in doing so post holidays.

If these stores are closing, Levi’s loses places to sell its wares. Management has often told me they are doing big business in there own stores and online. But the unwinding of the department store space is a structural problem.

More on that here in my chat at the World Economic Forum with Ralph Lauren’s (RL) CEO Patrice Louvet.

The Fed may have stood pat on rates Wednesday, but Goldman Sachs still sees a world where rate cuts happen in 2025.

Said Goldman Sachs chief economist Jan Hatzius in a new note:

“In light of today’s message, we remain comfortable with our standing forecast that the FOMC will deliver two more 25bp cuts in June and December this year and one more in 2026. Over the course of the next few FOMC meetings, we expect year-on-year core PCE inflation to fall meaningfully and in a way that “builds [the] confidence” that Powell said he wanted to see.”

Nvidia (NVDA) isn’t having a good week.

The combination of the surprising DeepSeek news and fears of the Trump administration further cracking down on chip flow has the stock down 13% on the week.

Interestingly, that hasn’t stopped the Nvidia bulls from buying the dip.

New data out of Vanda Research shows individual investors bought $562.2 million of Nvidia shares on Monday’s rout. Self-directed traders bought $359.7 million of the stock on Tuesday.

I certainly appreciate everyone racing to read Meta’s (META) cash flow statement to see how much it’s spending on capital expenditures, mostly related to AI infrastructure build outs.

But the reality is all that matters to the Meta investment thesis — for now — is that the company is taking its new AI and applying it to sucking in more ad dollars. Meta remains an advertising led business full stop.

To that end, important point on this by Mark Zuckerberg on the earnings call last night:

“This year, the improvements of the business are going to be taking the AI methods and applying them to advertising and recommendations and feeds and things like that. So, the actual business opportunity for Meta AI and AI studio and business agents and people interacting with these AIs remains outside of 2025 for the most part,” Zuckerberg said.

Said Pivotal Research analyst Jeff Wlodarczak, “In the end we see a strong revenue growth outlook from increased usage/new products/better targeting/higher prices.”

Sounds right to me.

I was going to say something more uplifting on Microsoft’s (MSFT) results, which at first glance don’t warrant the pre-market sell-off. AI services sales surged 157%, supporting the yearslong narrative on the stock.

But the Street has a point that Azure growth was under-whelming and may not reaccelerate in the back half of the year.

“The issue was in Azure where management attributed new sales execution issues on non-AI services which saw underwhelming consumption in fiscal second quarter and a weaker outlook, where a second half re-acceleration is more uncertain. The results are indeed a setback to the second half Azure acceleration thesis,” Citi analyst Tyler Radke said.

Then Microsoft slipped this into its earnings call that I don’t think is getting the attention it deserves:

“And while we expect to be AI capacity-constrained in Q3, by the end of FY’25, we should be roughly in line with near-term demand given our significant capital investments,” said Microsoft CFO Amy Hood.

To me, it signals a potential slowing in the AI story in the back half of the year.

So not much up-lifting to say here after all. Stock probably warrants the spanking.