Meta and Tesla Q3 2026 earnings: AI spending bill

Two of the largest companies in the S&P 500 reported third-quarter results after the close on Wednesday, October 21, 2026, and both told the same story from opposite ends: AI spending is now big enough to swing reported profits. Meta's revenue grew 26% while its free cash flow turned negative; Tesla's revenue was flat and its operating income fell 56% as spending on AI and the Optimus robot rose faster than gross profit.

In short

• Meta: revenue $64.6B (+26%), above the $63.3B consensus cited by Fortune; Q4 guidance $73–76B. Capex hit $34.9B in one quarter.
• Tesla: revenue $28.05B (flat), adjusted EPS $0.48 vs. about $0.45 expected; operating margin 2.6%, but free cash flow about +$1.5B.
• For index investors: both are top S&P 500 weights, so their spending and margins flow straight into the earnings of a plain index fund.

The numbers

Q3 2026	Meta	Tesla
Revenue	$64.60B, +26% y/y	$28.05B, vs. $28.10B a year ago
Operating income	$12.99B, −37% y/y	$718M, −56% y/y
Operating margin	20% (40% a year ago)	2.6%
Diluted EPS (GAAP)	$3.83 ($7.40 ex legal charge)	$0.22 (vs. $0.39)
Capital expenditures	$34.91B	about $4.8B (derived: operating cash flow − free cash flow)
Free cash flow	−$2.12B	about +$1.5B
Cash and investments	—	$45.4B

Meta. Ad impressions rose 10% and the average price per ad 14%, and daily active people across its apps averaged 3.64 billion in September. The 37% drop in operating income comes from a $9.89 billion legal charge tied to the August 2026 agreement with 52 state attorneys general; without it, operating income would have been about $22.9 billion, according to Fortune. Meta narrowed its 2026 capex range to $135–145 billion (from $130–145 billion), raised its 2026 expense guidance to $175–179 billion to include the charge, and bought back no shares in the first nine months of the year, versus $26.25 billion a year earlier. Shares rose as much as 5% after hours.

Meta also announced a new listed, non-voting Class C share, to be distributed as a one-time stock dividend of one Class C share per Class A and Class B share, intended to take effect in January 2027. Meta expects the Class A price to adjust as if after a two-for-one split. If you hold META, plan for a second ticker appearing in your account and your cost basis being split between the two lines.

Tesla. Automotive revenue fell 3% to $20.56 billion and energy revenue 16% to $2.88 billion, while services and other revenue rose about 33% to $4.61 billion. Deliveries were 486,532 (−2%), and the company said battery availability limited volume growth. Adjusted EPS of $0.48 beat estimates of about $0.45. The stock had closed up 3.4% at $386.47 in the regular session and slipped about 2% after hours, per Investing.com.

Why it matters for your portfolio

The practical point is concentration. Mega-cap tech companies make up a large share of the S&P 500, so an S&P 500 index fund owns a meaningful slice of this AI spending cycle whether you picked it or not. When the market rewards that spending, as it did after hours for Meta, the index benefits; if returns on the capex disappoint, the same weight works in reverse. Zuckerberg acknowledged as much on the call: "It's going to be very important to get the math on all of this to work out."

To see how much of your own result comes from a handful of large holdings, and whether you are beating a plain index once dividends and cash flows are counted, compare your portfolio against the S&P 500 using time-weighted returns — the method is explained in how to compare your portfolio to the S&P 500. For a single stock like META or TSLA, stock research puts the reported numbers and valuation in one view.

What to watch next

• Rest of earnings season: the other mega-cap tech reports over the next two weeks will show whether Meta's capex pace is typical. Our Q3 earnings season update tracks the index-level growth rate.
• October 27–28: the FOMC meeting, with the 10-year Treasury yield above 5%. Background in our Fed preview.
• January 2027: the intended effective date of Meta's Class C share structure; record and payment dates for the stock dividend have not been set yet.

This article is for information only and is not investment advice.