Key Highlights

● Netflix reports after the close Tuesday, Oct 20, with subscriber additions in focus.

● Tesla and Meta both report after the close on Wednesday, Oct 21.

● Lam Research, Texas Instruments, IBM and SAP also report Wednesday; Western Digital follows Thursday.

● Chip stocks extended their slide as all 30 PHLX Semiconductor Index members fell Friday.

The setup

Technology stocks head into a pivotal stretch of earnings season on the back foot. The Nasdaq Composite fell 572.99 points to 26,140.03 on Friday, capping its worst week since the week ended June 26, while the S&P 500 dropped 84.62 points to 7,659.44 for its biggest weekly decline since June. The selloff was driven by a shift in investor focus from what AI can do to how it will be financed, according to market commentary.

One senior market analyst said "upcoming Big Tech earnings will still need to demonstrate that the enormous investment in AI is translating."

Netflix opens the week

Netflix (NASDAQ:NFLX) reports after the close on Tuesday, Oct 20. Analysts expect earnings of $0.82 a share on revenue of $12.87 billion, according to consensus data. The stock fell on Friday after the company named Peter Rice, formerly of Disney (NYSE:DIS), as chief content officer, replacing Bela Bajaria effective Oct 26. Netflix also plans about 1,000 job cuts, according to market reports.

Subscriber growth is in focus. M Science cut its third-quarter subscriber-addition estimate to 3.8 million from 5.1 million, below a consensus of 4.1 million, according to reports. Netflix shares have fallen sharply this year.

Tesla and Meta on Wednesday

Tesla (NASDAQ:TSLA) and Meta Platforms (NASDAQ:META) both report after the close on Wednesday, Oct 21.

Tesla's estimates vary widely. One set of consensus data shows earnings of $0.21 a share, while another lists $0.46 on revenue of $27.92 billion. The stock rallied before Friday's open after Tesla unveiled a redesigned Roadster with SpaceX-developed cold-gas thrusters, slated for production in 2028, but it reversed and closed lower. JPMorgan kept its Neutral rating and $415 price target, according to reports, and some analysts described the SpaceX tie-up as a possible "soft launch" of a Tesla-SpaceX merger.

Meta fell on Friday amid concern over debt-funded AI spending and data-center credit pressure, according to market reports. Consensus estimates for the quarter range from $6.31 a share to $6.35, with another source listing $6.77 on revenue of $63.29 billion. Investors will scrutinize Meta's capital spending plans and how it intends to pay for them.

The rest of the tech slate

Lam Research (NASDAQ:LRCX), Texas Instruments (NASDAQ:TXN), IBM (NYSE:IBM) and SAP (NYSE:SAP) also report on Wednesday. Lam reports amid a long losing streak for chip stocks: the PHLX Semiconductor Index fell on Friday with all 30 members lower, according to market data. Western Digital (NASDAQ:WDC), which tumbled on Friday amid worries about Chinese memory competition, reports Thursday. Intel (NASDAQ:INTC) follows on Oct 29.

Not everyone sees the selloff as fundamental. BofA Securities' senior software analyst said: "First of all, this is more sentiment driven. This is not about fundamentals." One market commentator took a different view: "That is a change in character, and it's another reason the leaders no longer look like a safe haven."

Big Tech's results will land days before the Federal Reserve's Oct 28 decision. The Fed raised rates a quarter point in September, and futures still price a hike by December, though October odds fell after spiking on Wednesday's hot inflation report. The 10-year Treasury yield ended the week near 5.1. Fed Chair Kevin Warsh said Friday: "I don't prejudge meetings."

Netflix, Tesla and Meta Report Cues

Housing starts on Oct 20 and University of Michigan sentiment on Oct 23 round out the week. Netflix's subscriber numbers on Tuesday, Tesla's margins and Roadster plans on Wednesday, and Meta's spending outlook will set the tone.