Tech stocks rally, Dow jumps over 300 points; Musk ignites AI trade, Meta earnings lift shares over 3% after hours

US stocks rose across the board on Wednesday after quarterly results from space exploration company SpaceX and Super Micro Computer improved market demand for AI-related stocks. At the close, the Dow Jones Industrial Average was up 360.21 points, or 0.69%, at 52,856.09. The Nasdaq Composite rose 1.05% to 26,702.86, and the S&P 500 gained 0.58% to 7,757.17.

Meta and Tesla results released

Meta's third-quarter report showed revenue of $64.6 billion for the three months ended Sept. 30, up from $51.24 billion a year earlier and above analysts' estimate of $63.34 billion. Earnings per share were $3.83, up from $1.05 a year earlier. Free cash flow was negative $2.12 billion, compared with $10.63 billion a year earlier. The company has been spending money to develop advanced chips and data centers to compete more aggressively with OpenAI and Anthropic, weighing on its cash flow performance.

Meta expects fourth-quarter revenue of between $73 billion and $76 billion. Analysts expected $73.65 billion.

Meta expects capital expenditures this year to reach $135 billion to $145 billion, up from its previous range of $130 billion to $145 billion. Meta will issue a new class of non-voting Class C common stock in January 2027 to fund acquisitions and retain top talent while preserving CEO Mark Zuckerberg's control amid an intensifying AI race in Silicon Valley.

"Our investments are paying off, our core business is strong, and we are seeing momentum across the board," Zuckerberg said in a statement.

Tesla's third-quarter revenue also beat Wall Street expectations, as vehicle deliveries rebounded, driven in particular by high gasoline prices in Europe and growth in its energy storage units. The Austin, Texas-based automaker reported revenue of $28.05 billion for the three months ended Sept. 30, compared with an average analyst estimate of $27.88 billion and $28.1 billion a year earlier.

Tesla delivered 486,532 vehicles in the third quarter, beating Wall Street's estimate of about 461,100. Its core auto business remains in focus as global rivals keep rolling out newer and often cheaper models, while Tesla relies heavily on its aging Model 3 and Model Y. The company said cumulative deliveries topped 10 million, and Model Y is on track to be the world's best-selling vehicle this year.

Free cash flow unexpectedly turned positive at $1.53 billion, as its spending on AI and robotics came in well below analyst expectations, with third-quarter capital expenditures of $4.73 billion, below the roughly $7.5 billion expected. That compared with $5.79 billion in the second quarter and $2.25 billion a year earlier.

The market is closely watching whether Musk's push into autonomous driving and robotics is moving from promises to commercial reality. Tesla said earlier this month that its Cybercab fleet in Austin grew from fewer than 40 vehicles to more than 300 in about a month, with Dallas following closely behind. In July, Tesla launched a taxi service in Miami, Orlando and Tampa, Florida, after starting the program in Dallas and Houston in April. As of press time, the stock was slightly lower in after-hours trading.

Market overview

On the Middle East situation, CCTV News reported that the U.S. State Department confirmed on Oct. 21 local time that it had ordered the departure of non-emergency U.S. government employees and their family members from Saudi Arabia.

Concerns about the profitability of AI buildouts triggered a selloff in AI-related stocks last week, and investors are closely watching corporate earnings, especially at companies tied to AI, for clues on whether the AI spending cycle is sustainable and on the impact of rising oil prices.

Angelo Kourkafas, senior global strategist at Edward Jones, said the SpaceX news "eased some investors' concerns about AI," along with support from SMCI. While these results do not answer all investors' questions about returns on AI investment, they are a good start.

"At this stage, it's very important to focus on what affects profits. Corporate earnings matter. Inflation also matters because it affects the Fed's next move," said Adam Sarhan, director at MarketTerminal. "If the economy continues to grow without major headwinds, that will support higher earnings. In that environment, no news becomes good news because it improves the outlook for corporate profits."

Long-term U.S. Treasury yields rose, with the benchmark 10-year yield up 2.9 basis points to 5.145%, a one-week high, and the 30-year yield up 1.2 basis points to 5.437%.

[Notable stock performance]

The Philadelphia Semiconductor Index jumped nearly 2%, and AMD rose 3.36%.

Memory chip stocks performed well, with Seagate Technology up 3.22%, SK Hynix up 2.48% and SanDisk up nearly 1%.

Optical communications names were strong, with Lumentum up 3.43%, Coherent up 2.47% and Corning up 2.01%.

Among notable tech stocks, gainers outnumbered decliners, with Tesla surging 3.41%. After achieving profitability for the first time as a public company, SpaceX shares jumped nearly 8%. Musk said a merger between SpaceX and Tesla "would be a good idea," which also boosted Tesla shares. Nvidia and Apple rose more than 1%.

After AI server maker Super Micro Computer forecast quarterly revenue and margins above Wall Street expectations, its shares surged 9.55%. Peers HPE and Dell rose 3% and 5%, respectively.

Netflix plunged more than 5%. The company's full-year revenue forecast fell short of analyst estimates, and the streaming giant also cut its full-year advertising revenue guidance.

The Nasdaq Golden Dragon China Index fell more than 2%. Alibaba and JD.com dropped more than 3%.

[Commodities performance]

International oil prices diverged, with the front-month WTI contract down 0.68% at $97.15 a barrel and the front-month Brent contract up 0.03% at $108.82 a barrel.

Precious metals traded in a narrow range, with COMEX gold futures for October delivery on the New York Mercantile Exchange up 0.20% at $4,130.50 an ounce and COMEX silver futures down 0.49% at $57.42 an ounce.