Investopedia Markets News (all except PF)

VCG / Getty Images

Increased use of Intuitive Surgical's da Vinci robots helped boost the company's quarterly results
Key Takeaways

• Intuitive Surgical, maker of the da Vinci and Ion systems, beat third-quarter profit and sales forecasts. That lifted the shares into the plus column for 2025.
• The company is "in the driver’s seat" of its market, William Blair analysts wrote.

Intuitive Surgical (ISRG) shares jumped Wednesday after the maker of robotic surgical devices posted much better-than-expected quarterly results and raised its guidance on increased use of its units.

The maker of the da Vinci and Ion systems reported third-quarter adjusted earnings per share of $2.40, $0.42 more than analysts surveyed by Visible Alpha expected. Revenue increased 23% to $2.51 billion, also above estimates. 

Intuitive sees full-year da Vinci procedure growth of 17% to 17.5%, better than its previous outlook of 15.5% to 17.0%, and gross profit margin of 67.0% to 67.5% versus an earlier prediction of 66.0% to 67.0%.

The news lifted the shares, with the stock recently up more than 14%—and back in the green for the year for the first time in months.

Why This Is Significant

Intuitive Surgical’s strong quarterly results signal robust demand for robotics and its expanding applications in health care. With procedure volumes climbing worldwide and system placements increasing, the company is benefiting from broader adoption of minimally invasive surgery technology—and its stock is back in the green for 2025.

The company said the revenue gains were driven by “growth in procedure volume, higher da Vinci system placements, and an increase in the installed base of systems.”

Intuitive "remains in the driver’s seat of a market converting to robotics," analysts at William Blair wrote. They have an "outperform" rating on the shares.

Worldwide procedures using da Vinci minimally invasive surgical devices increased 19%, while those using the Ion systems increased 52%. Placements of the da Vinci rose 13%, while Ion systems' placements declined 14%.

CFOTO / Future Publishing via Getty Images

An Optimus humanoid robot on display at a Tesla store in China this month.
Key Takeaways

• Tesla is scheduled to report third-quarter results after the closing bell on Wednesday, and is expected to say it returned to revenue growth after two quarters of declines.
• Investors will be watching for updates on Tesla's Robotaxi rollout, production plans for its Cybercab and Optimus humanoid robot, and recently unveiled low-cost models.
• Options pricing suggests Tesla stock could approach a record high in the days after Wednesday's report.

Tesla (TSLA) is slated to kick off Magnificent Seven earnings when it reports third-quarter results after the closing bell on Wednesday. 

The electric car maker, which topped quarterly delivery estimates earlier this month, is expected to say it returned to revenue growth last quarter after two consecutive quarters of decline. Sales are expected to increase about 5% to $26.6 billion, while adjusted earnings are expected to decline about 25% to 54 cents a share, according to analysts estimates compiled by Visible Alpha. 

Why This Is Important

Tesla is the first of the Magnificent Seven to report third-quarter earnings this week. It's results could set the tone for the remainder of the Mag 7, all of which are valued at more than $1 trillion and, thus, have an outsized impact on the performance of the broader stock market.

“After a brutal few quarters we are finally starting to see stable demand trends for Tesla,” wrote Wedbush analyst and noted Tesla bull Dan Ives in a note on Sunday. Investors, he said, will be looking for comments on Tesla’s Robotaxi rollout, the production trajectory for its Cybercab and Optimus humanoid robot, and an upcoming shareholder meeting where investors will vote on CEO Elon Musk’s potentially $1 trillion pay package and a shareholder proposal to invest directly in Musk’s AI startup, xAI.

Tesla has had a chaotic year, but it started on a positive note, with the stock riding high on optimism about the incoming Trump administration and Musk’s sway within it. That optimism began fading in February as President Trump implemented sweeping tariffs and consumers protested Musk’s political activities. Since Musk left the administration in May, Tesla has launched its first Robotaxi service in Austin, Texas, and unveiled long-awaited low-cost models.

The chaos of this year was reflected in Tesla’s stock. Shares fell 45% between the start of the year and early April, when President Trump’s “Liberation Day” tariffs rattled markets. The stock has since recovered—aided by tariff pauses, the Federal Reserve’s interest rate cuts, and optimism about the company's AI efforts—and is up about 8% since the start of the year as of midday Wednesday.

Traders expect Tesla shares to move about 6.4% in either direction by the end of the week, according to options pricing data. A move of that magnitude would put shares at about $471, their second-highest closing price on record, or at about $414. 

"If Tesla can not only beat EPS expectations... but also impress by matching last quarter’s beat of 3% or better, that would move the stock higher, as the trend of upside surprises is growing," said Brian Mulberry, Senior Client Portfolio Manager at Zacks Investment Management.

For Wedbush's Ives, while the third quarter results and the outlook Tesla provides are important, they "take a backseat to the broader and important AI initiatives at Tesla.”

Ives has a $600 price target on Tesla stock, which is the highest among Wall Street analysts. “We continue to believe Tesla could reach a $2 trillion market cap early 2026 in a bull case scenario,” he added.

Tesla shares were down 2% at around $434 in recent trading. The company's market capitalization stands at around $1.4 trillion.

Kent Nishimura / Bloomberg via Getty Images

Federal Reserve Chair Jerome Powell has said the central bank is facing a particularly challenging dilemma.
Key Takeaways

• The next Federal Reserve policy committee meeting is scheduled for Oct. 28 and 29.
  
• The Fed is widely expected to cut the fed funds rate by a quarter of a percentage point to a range of 3.75% to 4%.
  
• Fed officials are cutting rates because they're concerned about signs of weakness in the labor market, and want to lower borrowing costs to encourage hiring.
  

The Federal Reserve's policy committee meets next on Oct. 28 and 29, and policymakers are widely expected to cut the central bank's key interest rate to lower borrowing costs and prevent the shaky job market from collapsing.

What To Expect From The October Meeting

Investors expect the Federal Open Market Committee to reduce the fed funds rate by a quarter of a percentage point to a range of 3.75% to 4%, according to the CME Group's FedWatch tool, which forecasts rate changes based on fed funds futures trading data. That would mark the lowest level for the fed funds rate since December 2022. The Fed cut the key rate in September for the first time since December 2024.

On Tuesday, financial markets were pricing in a 97% chance of a quarter-point cut according to the FedWatch tool. Economists at Deutsche Bank led by Amy Yang called the October cut a "done deal" in a commentary Tuesday.

Fed officials have said they're cutting interest rates to boost the economy and prevent a surge of unemployment. Job growth nearly came to a halt this summer as tariffs pushed up prices and squeezed consumer budgets.

What This Means For Your Finances

If the Fed lowers its key rate as expected, interest costs on many kinds of short-term debt would fall. That includes credit cards, car loans, and anything tied to bank prime rates, which are often set at a certain percentage above the fed funds rate. On the other hand, returns on CDs and high-yield savings accounts would also decrease, and inflation could rise further.

What The Fed Is Watching

The Fed is tasked by Congress with a dual mandate to keep inflation low and employment high using the fed funds rate, which is the interest rate banks charge to borrow money from one another. The fed funds rate affects borrowing costs on short-term loans like credit cards and car loans, and indirectly influences longer-term loans like 30-year mortgages.

When inflation is high, the Fed raises the rate to discourage borrowing and cool down the economy, allowing supply and demand to rebalance. When the job market weakens, the Fed cuts interest rates to encourage business and give a boost to hiring.

Currently, the economy is facing a rare situation where inflation and the job market are worsening at the same time, posing a dilemma for the Fed as to which problem to tackle first. Officials have been split on what approach to take. Some have advocated for further rate cuts in the coming months, while others view inflation as a greater threat and would like to keep rates higher for longer.

How is employment? Recent reports indicate the job market is slowing down. The country actually lost jobs in June, the first month of losses in more than four years, and added a mere 22,000 in August. Meanwhile, more people are filing for unemployment insurance, and more people are staying on unemployment for longer.

The next monthly official payrolls report from the Bureau of Labor Statistics, covering September, could shed more light on the matter. That report was due Oct. 3 but has been delayed by the government shutdown.

How is inflation? The Fed's preferred measure of inflation, "core" Personal Consumption Expenditures (excluding food and energy), rose 2.9% over 12 months in August, according to the Bureau of Economic Analysis. That figure leaves the Fed on course for a rate cut.

The Fed is scheduled to see one more major inflation report, on September's Consumer Price Index, on Oct. 24, just before the meeting.

Inflation has accelerated in recent months, getting farther away from the Fed's goal of a 2% annual rate. Most Fed officials, with the notable exception of Trump appointee Stephen Miran, have said Trump's tariffs are pushing up consumer prices and are responsible for most of the inflation increase.

What else is happening? The government has been shut down since Oct. 1, due to a standoff over health care policy, and that has delayed all kinds of federal economic data. Statistical agencies may publish the reports after the government re-opens, but as the standoff continues, the Fed is flying blind.

Will The Supreme Court Help Trump Take Over The Fed?

A major question hanging over the Fed this year is whether Fed Governor Lisa Cook will remain on the 12-person voting committee. President Donald Trump has attempted to oust Cook, citing unproven allegations of mortgage fraud, and install his own nominee in her place as he pressures the Fed to dramatically lower interest rates.

Cook sued to stop her firing and the case has gone all the way to the Supreme Court, which has ordered that she be allowed to remain on the job at least until the court hears oral arguments in January. Cook had been appointed to a 14-year term as a Fed leader by former President Joe Biden.

Cook's removal could be a major milestone in Trump's efforts to remake the Fed, which is an independent agency outside direct control of the White House.

What Fed Officials Are Saying

In recent speeches, Fed policymakers have highlighted the risks to their dual mandate, and several have advocated a cautious approach to rate cuts in the coming months. Fed officials are currently in a "blackout" period during which they avoid discussing monetary policy, but have made their thoughts known before the moratorium started this week.

“I could support a path with an additional reduction in the policy rate if there are further risks to the labor market that emerge, and provided that the risk to persistence of inflation above target is contained and provided that inflation expectations remain anchored," St. Louis Fed president Alberto Musalem said at an event last week. "It's important that we follow a balanced approach; that we tread with caution."

Fed governor Christopher Waller said he would consider cutting interest rates at a slower pace than he had anticipated when he last made economic projections at the Fed's September meeting, if economic growth continued to charge ahead.

"What I would want to avoid is rekindling inflationary pressure by moving too quickly and squandering the significant progress we have made taming inflation," Waller said at an event last week, according to prepared remarks.

Stephen Miran, Trump's newest appointee to the Fed's board of governors, remained the Fed's lone advocate for steep rate cuts. In an interview on Bloomberg TV last month, Miran said Trump's economic policies would help reduce inflation, particularly his immigration crackdown, which Miran said would lower demand for housing and subsequently lower rent inflation.

How The Federal Reserve Works

The Federal Open Market Committee (FOMC) is the body that sets the fed funds rate for the Federal Reserve System, the United States' central bank. It holds eight regularly scheduled meetings each year, which are not open to the public. The Fed's use of interest rates to influence the economy is called monetary policy.

The FOMC consists of 12 voting members: the seven board governors, the Federal Reserve Bank of New York president, and four other regional bank presidents who serve rotating one-year terms.

At each FOMC meeting, the committee members discuss economic and financial conditions and decide whether and how much to change the fed funds rate. The FOMC issues a public statement about its decision at 2 p.m. on Wednesday when the meeting concludes. The Fed chair, currently Jerome Powell, typically hosts a press conference afterwards to explain the decision.

Marek Antoni Iwanczuk / NurPhoto / Getty Images

Shares of Google parent Alphabet have added roughly a third of their value in 2025
Key Takeaways

• Google is reportedly in talks with Anthropic for a cloud computing deal worth tens of billions of dollars.
• OpenAI rival Anthropic recently raised $13 billion, giving it a valuation of $183 billion.

Google could soon be closing in on a cloud computing deal with AI startup Anthropic worth tens of billions of dollars.

The proposal under consideration would allow OpenAI rival and Claude chatbot maker Anthropic access to Google’s tensor processing units, which are chips designed to speed up machine learning workloads, Bloomberg reported.

Anthropic and Alphabet did not respond to Investopedia's requests for comment in time for publication.

Why This News Is Significant

The reported talks between Anthropic and Google highlight the competition and deals needed to power AI. This potential expansion in the partnership with Claude creator Anthropic could help further Google’s role in the AI cloud infrastructure market against Amazon, Microsoft, and other rivals.

The talks are in the early stages and details could change, the report noted.

Last month, Anthropic announced it had raised $13 billion in funding from a large group of investors, giving it a valuation of $183 billion. It said the money will expand its capacity to "meet growing enterprise demand, deepen our safety research, and support international expansion as we continue building reliable, interpretable, and steerable AI systems.”

Shares of Google parent Alphabet (GOOGL) were up about 1% in recent trading. They've added roughly a third of their value in 2025 so far.

Krisztian Bocsi / Bloomberg / Getty Images

Affluent travelers are filling rooms at high-end brands such as Waldorf Astoria and Conrad, helping offset weaker demand elsewhere.
Key Takeaways

• Hilton boosted its earnings outlook after posting stronger-than-expected quarterly results.
• Demand remains strong at higher-end properties such as LXR, Conrad, and Waldorf Astoria.
  

Not everyone is scaling back on discretionary spending.

Aided by gains in its luxury brands, Hilton Worldwide Holdings (HLT) reported better-than-expected third-quarter results. Hilton stock was among the top gainers in the S&P 500 Wednesday morning, up 5% recently and trading near an all-time high.

The McLean, Va.-based company posted adjusted earnings of $2.11 per share on revenue that rose almost 9% year-over-year to $3.12 billion. Analysts polled by Visible Alpha had expected $2.06 and $3.01 billion, respectively.

Why This Is Significant

Hilton’s strong quarter shows luxury travel is still booming even as other spending slows. Affluent travelers are filling rooms at high-end brands such as Waldorf Astoria and Conrad, helping offset weaker demand elsewhere.

Revenue per available room (RevPAR), an important measure of hotel performance, rose at luxury brands LXR, Conrad and Waldorf Astoria by 6.4%, 2.6%, and 1.7%, respectively—indicating a continued interest in travel among more affluent consumers.

Overall, system-wide RevPAR decreased 1.1%, slightly worse than expected. The drop was due to "modest occupancy" and declines in daily rates, Hilton said. That figure in the U.S. fell by 2.3% but was buoyed by a 9.9% increase in Africa and the Middle East.

Hilton now sees full-year RevPAR from flat to up 1% versus the prior projection of flat to up 2%, but lifted its adjusted EPS guidance to a range of $7.97 to $8.06 from $7.83 to $8.00.

"We remain optimistic that in the U.S., lower interest rates, a more favorable regulatory environment, certainty on tax policy and a significant investment cycle will accelerate economic growth and travel demand," CEO Christopher Nassetta said.

Hilton shares had gained about 8% so far this year coming into today's session.

Michael Reaves / Getty Images

Shares of DraftKings have taken a hit in 2025 in the face of growing competition
Key Takeaways

• DraftKings said it's expanding into prediction markets with its acquisition of Railbird Technologies.
• Shares of DraftKings climbed Wednesday following the news, though they remained in negative territory for 2025.

DraftKings (DKNG) is expanding into the booming prediction markets business.

The online sports betting operator said Tuesday it is buying Railbird Technologies, which it said would support the company's plans to offer regulated event contracts. Financial considerations of the deal were not disclosed.

Co-founder and CEO Jason Robins said the addition of Railbird “positions us to win in this incremental space.”

Why This Is Significant

Online prediction markets like Kalshi and Polymarket have surged in popularity this year as they've expanded into new markets, with sports betting representing a major driver of growth. That's also pitted them against more heavily regulated online sports betting operators like DraftKings, and the move to buy Railbird could help it compete in the space.

With the purchase, DraftKings said it plans to launch "DraftKings Predictions" in the coming months, a mobile app allowing customers to trade regulated event contracts "on real-world outcomes across finance, culture, and entertainment.”

The move could help DraftKings compete more directly with offerings from prediction market operators Kalshi and Polymarket, which have seen their popularity and valuations soar this year.

Shares of DraftKings were up 2% in recent trading following the news, though they remained down about 8% for 2025.

CORRECTION: This article has been updated to reflect DraftKings announced the acquisition on Tuesday.

Kyle Grillot / Bloomberg via Getty Images

OpenAI CEO Sam Altman warned in a recent podcast that he expects "some really bad stuff to happen" because of AI.
Key Takeaways

• OpenAI CEO Sam Altman recently warned that “some really bad stuff” is coming with AI—especially deepfakes and other “really strange or scary moments.”
• OpenAI’s new video app Sora 2 quickly claimed the top spot of Apple's App Store in the days after its launch late last month, showing how quickly deepfake-style tech is going mainstream.
• Altman said he hopes society learns how to build guardrails before the tech gets even more powerful.

Sam Altman, CEO of the OpenAI, the company behind ChatGPT, is providing unexpectedly stark warnings about the effects of his own products and those like them.

"I expect some really bad stuff to happen because of the technology," he said in a recent interview on the a16z podcast from the venture capital firm Andreessen Horowitz.

The warning isn't hypothetical. Videos made by OpenAI's new version of Sora, released late last month by invitation only, were quickly seen on social media as the app quickly climbed to number one on Apple's (AAPL) U.S. App Store. Social media soon included Sora-authored deepfakes featuring Martin Luther King Jr. and other public figures, including Altman himself, who was depicted as engaged in various forms of criminal activity. (OpenAI later blocked users from making Martin Luther King Jr. videos on Sora.)

But if Altman truly expects "really bad stuff to happen," why is his company seemingly helping to accelerate its arrival?

Why This Matters To You

AI-generated deepfakes may be indistinguishable from real videos, which may make it difficult to trust what you see on social media. You may lose trust in the news footage or financial advice videos you see on the platforms faster than tech companies and regulators can build safeguards. Scammers are already using similar tools to create fake videos for use in fraud. Use caution and always question the content you see on social media before taking it as truth.

Altman: We Must 'Co-Evolve' With AI

Altman's rationale for going ahead with this public release is that society needs a test drive.

"Very soon the world is going to have to contend with incredible video models that can deepfake anyone or kind of show anything you want," he said on the podcast.

Rather than perfecting the technology behind closed doors, he argues society and AI must "co-evolve"—that "you can't just drop the thing at the end." His theory: Give people early exposure so communities can build norms and guardrails before these tools become even more powerful.

The stakes include losing what we've long taken as evidence of the truth—videos of events have helped change world history. But the upside, according to Altman, is that we'll be better prepared when even more sophisticated tools arrive.

Warning

Holocaust-denial videos created with Sora 2 collected hundreds of thousands of likes on Instagram within days of the app's launch, according to the Global Coalition Against Hate and Extremism. The organization argues that OpenAI's usage policies—which lack specific prohibitions against hate speech—have helped enable extremist content to flourish online.

What Altman Says Comes Next

Altman’s warning wasn’t just about fake videos. It was about what happens when so many of us outsource our decisions to algorithms few people understand.

“I do still think there are going to be some really strange or scary moments,” he said, stressing that just because AI hasn’t yet caused a catastrophic event “doesn’t mean it never will.”

"Billions of people talking to the same brain" could create "weird, societal-scale things," he said. Put another way, it could lead to unexpected chain reactions, causing consequential shifts in information, politics, and communal trust that ripple faster than anyone can control.

Despite these broad shifts affecting us all, Altman argued against regulations for this technology.

“Most regulation probably has a lot of downside,” he said. Though Altman also said he supports "very careful safety testing" for what he called “extremely superhuman” models.

"I think we'll develop some guardrails around it as a society," he said.

Source: TradingView.com
Key Takeaways

• Netflix shares tumbled in premarket trading Wednesday after the streaming giant's third-quarter earnings came in short of Wall Street expectations, with the company citing a charge related to a tax issue in Brazil.
• The stock price looks set to tumble toward the lower trendline of a descending triangle.
• Investors should watch key support levels on the Netflix chart around $1,065 and $942, while also monitoring critical overhead areas near $1,265 and $1,341.

Netflix (NFLX) shares tumbled in premarket trading Wednesday after the streaming giant 's third-quarter earnings came in short of Wall Street expectations.

The company posted earnings per share of $5.87, compared with the $6.92 EPS that analysts tracked by Visible Alpha had anticipated. Executives said an unplanned charge tied to an "ongoing dispute with Brazilian tax authorities" weighed on profitability in the quarter. Revenue rose 17% from the year-earlier period to $11.51 billion, in line with analysts' estimates, and Netflix projected another 17% increase in the fourth quarter, driven by membership growth, pricing adjustments and increased ad revenue.

Netflix shares were down more than 7% at around $1,150 in recent premarket trading. Through yesterday's close, the stock had risen 40% since the start of the year, far outpacing the 15% gain of the benchmark S&P 500 index over the period.

Below, we take a closer look at the Netflix chart and use technical analysis to identify key price levels that investors will likely be watching.

Descending Triangle in Focus

After hitting their record high in late June, Netflix shares have consolidated within a descending triangle, a bearish chart pattern that signals a potential move lower.

Indeed, the stock looks set to tumble toward the pattern’s lower trendline following the streamer’s weaker-than-expected earnings report, reinforcing a downward bias.

Let’s point out two key support levels to watch on the Netflix chart amid the possibility for further weakness and also identify overhead areas worth monitoring during future recovery efforts.

Key Support Levels to Watch

A decisive volume-backed breakdown below the descending triangle could see the shares initially test a key support level around $1,065. This area on the chart may attract buying interest near the stock’s prominent February swing high.

Further downside could see a more-significant drop to the $942 level. Investors may seek buying opportunities in this location near last December’s peak, which also closely aligns with a series of corresponding price action on the chart between January and April.

It’s worth noting this area also sits in the same neighborhood as a bearish measured move target that calculates the width of the descending triangle near its widest section in points and deducts that amount from the pattern’s lower trendline.

Critical Overhead Areas Worth Monitoring

Recovery efforts in the stock back toward the descending triangle’s upper trendline could see the shares test the $1,265 area. The price may run into overhead resistance at this level near a trendline that connects peaks on the chart in June and September.

Finally, buying above this area could propel a bullish move to around $1,341. Investors who have bought Netflix shares during its consolidation period in recent months may decide to lock in profits around the stock’s all-time high.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

News of the day for Oct. 22, 2025

Joe Lamberti / Bloomberg / Getty Images

Tesla will be the first of the Magnificent Seven major tech companies to release its quarterly results.

Stock futures are holding steady this morning as quarterly earnings reports continue to roll in and the government shutdown begins its fourth week; gold futures are losing ground for the second straight day after hitting a series of record highs; Tesla (TSLA) is due to release its quarterly results later today as investors look for updates on low-cost models, robotaxis and the Optimus humanoid robot; Netflix (NFLX) shares are falling after the streaming giant's earnings came in short of Wall Street expectations; and DraftKings (DKNG) shares are surging as its acquisition of Railbird provides the sports betting app with an entry into the predictions market. Here's what you need to know today.

1. Stock Futures Flat After Dow Hits Record High

Stock futures are little changed after the Dow Jones Industrial Average hit a new record high Tuesday, boosted by big gains for a couple of blue chip companies that reported strong quarterly results. The earnings calendar is busy again this morning, but the big release is scheduled for after the closing bell, when Tesla (TSLA) is due to report. Futures tied to the Dow and the benchmark S&P 500 were hovering near unchanged in recent trading, while Nasdaq futures slipped 0.2%. Bitcoin (BTCUSD) was at $107,900, down from a high on Tuesday of around $114,000. The yield on the 10-year Treasury note, which can affect mortgage rates and other consumer loans, was at 3.94%, down from 3.96% at yesterday's close and trading at its lowest levels since early April.

2. Gold Continues Sliding as Investors Leave Safe Haven Assets

Gold continues to lose ground after the precious metal recorded its steepest one-day decline in a dozen years on Tuesday. Gold futures were down 1.4% at $4,055 an ounce in recent trading, after dropping nearly 6% on Tuesday. Investors are anticipating an end to the U.S. government shutdown and a potential U.S. trade deal with China, both of which could help calm the market uncertainty that pushed gold to a series of record highs recently as investors turned to safe-haven assets. Silver futures, which also have been trading at record highs, were down this morning after a steep decline yesterday.

3. Tesla Set to Kick Off Mag 7 Earnings Season

Tesla (TSLA) is scheduled to report third-quarter results after markets close today, the first of the Magnificent Seven major technology companies to release results this earnings cycle. Tesla vehicle deliveries in the quarter topped analysts' expectations, and Wall Street will be looking for further details on consumer demand and the rollout of low-cost models. Investors will also be eager to hear updates on full-self driving software, robotaxis and humanoid robot Optimus, as the company leans into its AI transformation. Analysts surveyed by Visible Alpha expect Tesla to report revenue of $26.6 billion and net income of $1.5 billion. Options pricing suggests traders expect Tesla shares to make a big move after the earnings report. The stock, which gained 33% over the past three months, was little changed in premarket trading.

4. Netflix Shares Drop as Brazilian Taxes Undercut Earnings

Netflix (NFLX) shares are falling after the streaming giant’s quarterly income came in below analysts' expectations amid a tax dispute in Brazil. The company reported earnings per share of $5.87 and revenue of $11.51 billion, lower than the EPS of $6.92 on revenue of $11.52 billion that analysts tracked by Visible Alpha anticipated. Netflix officials said that a charge related to a 10% Brazilian tax on certain payments was not in its forecast and affected its bottom line. “Our operating income would have exceeded our forecast absent the Brazilian tax matter,” Co-CEO Gregory Peters said on a conference call. Shares of Netflix were down more than 7% ahead of the opening bell.

5. DraftKings Stock Rises as Railbird Acquisition Provides Entry Into Predictions Market

DraftKings (DKNG) shares are higher after the firm announced it would acquire Railbird Technologies, providing an opportunity for the sports betting app to enter the lucrative predictions market. The move comes as prediction markets, which aren't subject to the same types of regulation as sports betting, have boomed this year, with companies such as Kalshi and Polymarket attracting significant investor interest. “We are excited about the additional opportunity that prediction markets could represent for our business,” said DraftKings CEO Jason Robins in a release. Shares of DraftKings were up more than 3% in recent premarket trading.

Alice Morgan / Investopedia

Tesla will kick off Mag 7 third-quarter earnings with its report, scheduled for Wednesday afternoon.
Key Takeaways

• Nvidia is the only Magnificent Seven company that is expected to be a top 5 contributor to S&P 500 earnings growth this earnings season, according to a recent FactSet analysis.
• This time last year, four companies in the Mag 7 were in the top ten contributors to the S&P 500's aggregate profit growth.
• The gap between growth at the Mag 7 and the rest of the S&P 500 index has already shrunk, and is expected to narrow further over the next year.

The Magnificent Seven have been the stars of the S&P 500 for the past several years, but the group’s period of exceptional earnings growth may be nearing an end. 

Only one of the Magnificent Seven—AI chip giant Nvidia (NVDA)—is expected to be among the top five contributors to S&P 500 earnings growth in the third quarter, according to John Butters, Vice President and Senior Earnings Analyst at FactSet Research. This time last year, two of the Mag 7—Nvidia and Alphabet (GOOG)—were expected to be in the top five, and two more—Amazon (AMZN) and Meta Platforms (META)—were expected to make the top 10.

This year, the four other companies expected to contribute the most to index-level profit growth are Eli Lilly (LLY), Intel (INTC), Boeing (BA), and Micron (MU). Eli Lilly, Intel, and Boeing are all benefiting from easy comparisons against last year. Nvidia and Micron, on the other hand, were top contributors to growth last year and are expected to report earnings growth of 53% and 157%, respectively, underscoring how significant artificial intelligence demand has become to S&P 500 companies.

Why This Is Important

Their exceptionally strong earnings growth was one of the main reasons that Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta and Tesla were dubbed the "Magnificent Seven" in 2023. Their growth fueled much of the stock market's gains over the past few years. As their growth slows, the profitability of other S&P 500 companies counts for more when investors forecast the index's future value.

Mag 7 Growth Has Moderated, But Remains Better than Most

Artificial intelligence will also be the focus when the Magnificent Seven report earnings, starting with Tesla (TSLA) after markets close on Wednesday. Microsoft (MSFT), Alphabet and Meta Platforms will report exactly a week later, followed by Apple (AAPL) and Amazon next Thursday.

According to analysts surveyed by FactSet, the Mag 7’s earnings grew an estimated 14.9% last quarter, more than twice as fast as the so-called “Other 493” (6.7%). That gap would be larger without Tesla, which is expected to report its fourth straight quarter of contraction as it contends with inflation and high borrowing costs that have put a new car out of reach for many consumers. 

The only other company that is expected to report earnings declined since last year is Amazon, where profit likely fell by less than 1%, according to analyst estimates compiled by Visible Alpha. The rest of the Mag 7 companies with earnings in the next two weeks are expected to say their profits grew between 1% (Alphabet) and 10% (Microsoft) last quarter.

The “Other 493” are expected to continue to close the earnings gap over the next year. The Mag 7’s earnings growth is expected to hold steady around 15% through the first quarter of 2026, while the rest of the index’s growth rate is forecast to accelerate to 11% in the first quarter of 2026 and eventually reach 14.6% in the third quarter of next year, according to FactSet Research.

That said, the Mag 7 could outperform expectations as they did in the second quarter when earnings grew nearly 27%, easily outpacing Wall Street’s forecast for 14%.