Step Aside, Banks. Tesla and Netflix Earnings Are the Real Tests
2 min
Forget banks—third-quarter earnings season doesn’t start until Wednesday, when Netflix and Tesla report.
Since Alcoa’s (ticker: AA) abdication, the kickoff of earnings season has been assigned to the U.S.’s big banks, including JPMorgan Chase (JPM) and Citigroup (C), which reported earnings on Friday. This despite the fact that some large, prominent companies, including PepsiCo (PEP) and Delta Air Lines (DAL), disclosed their results earlier in the week.
Don’t expect the overall market to care too much about how the banks do. The S&P 500 financials sector, which includes banks and insurers but also Visa (V) and Mastercard (MA), totals 12.7% of the index’s market value. Its earnings contribution is expected to be larger, at 17.4% of third-quarter earnings, according to data from Refinitiv. But these days, the banks are less a reflection of the U.S. economy than they are of monetary and regulatory policy, which take up a good portion of their earnings calls.
No, earnings season doesn’t really get started until Wednesday, when the first of the large technology-oriented stocks that have driven the S&P 500 this year are set to report. That would be Tesla (TSLA) and Netflix (NFLX), followed by Alphabet (GOOGL), Microsoft (MSFT), Meta Platforms (META), Amazon.com (AMZN) next week, and then Apple (AAPL) on Nov. 2. Nvidia’s (NVDA) fiscal third quarter doesn’t end until Oct. 31, and it will report in late November.
The Magnificent Eight punch well above their fundamental weight, thanks to premium valuation multiples. The group makes up roughly 30% of the S&P 500’s market capitalisation but is expected to contribute just 10% of the index’s third-quarter sales and 16% of earnings, according to Refinitiv. Hits and misses from their results will prompt outsize moves in the index.
Take Meta, which Wall Street analysts expect to report $8.0 billion in earnings for the third quarter, up 120% from the same period last year. That’s nearly a full percentage-point contribution to the S&P 500’s overall expected earnings growth in the quarter.
Nvidia is responsible for another 1.5 percentage point of expected growth, Amazon for 0.6 point, and Alphabet and Microsoft for 0.5 point each. With growth rates like those, how well the biggest companies on the market do could meaningfully swing overall S&P 500’s earnings growth one way or another.
There’s a slim margin for error: Analysts are predicting 1.3% year-over-year earnings growth from the S&P 500 in the third quarter, per Refinitiv. The biggest expected individual detractors from the index’s year-over-year earnings growth are Exxon Mobil (XOM)—a 1.9-percentage-point drag—and Pfizer (PFE), a 1.5-point drag.
That’s before considering the potential impact to investor sentiment from Big Tech’s results. In a year dominated by macro themes, the enthusiasm around artificial intelligence has been one of the greatest bullish drivers of the stock market. Nvidia’s results are showing the benefit already, while other companies are more likely to be merely talking up the technology’s transformative potential.
Hype can only go so far—eventually even Microsoft, Meta, and Alphabet will need to show that their AI investments are yielding a positive return. The third quarter of 2023 is still early innings in the AI revolution, but signs of progress will be cheered by investors, and may be necessary to justify many of the Magnificent Eight’s huge rallies this year.
Third-quarter earnings season may have officially kicked off, but the real action has yet to begin.
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The pandemic-fuelled love affair with casual footwear is fading, with Bank of America warning the downturn shows no sign of easing.
The pandemic-fuelled love affair with casual footwear is fading, with Bank of America warning the downturn shows no sign of easing.
2 minThe boom in casual footware ushered in by the pandemic has ended, a potential problem for companies such as Adidas that benefited from the shift to less formal clothing, Bank of America says.
The casual footwear business has been on the ropes since mid-2023 as people began returning to office.
Analyst Thierry Cota wrote that while most downcycles have lasted one to two years over the past two decades or so, the current one is different.
It “shows no sign of abating” and there is “no turning point in sight,” he said.
Adidas and Nike alone account for almost 60% of revenue in the casual footwear industry, Cota estimated, so the sector’s slower growth could be especially painful for them as opposed to brands that have a stronger performance-shoe segment. Adidas may just have it worse than Nike.
Cota downgraded Adidas stock to Underperform from Buy on Tuesday and slashed his target for the stock price to €160 (about $187) from €213. He doesn’t have a rating for Nike stock.
Shares of Adidas listed on the German stock exchange fell 4.5% Tuesday to €162.25. Nike stock was down 1.2%.
Adidas didn’t immediately respond to a request for comment.
Cota sees trouble for Adidas both in the short and long term.
Adidas’ lifestyle segment, which includes the Gazelles and Sambas brands, has been one of the company’s fastest-growing business, but there are signs growth is waning.
Lifestyle sales increased at a 10% annual pace in Adidas’ third quarter, down from 13% in the second quarter.
The analyst now predicts Adidas’ organic sales will grow by a 5% annual rate starting in 2027, down from his prior forecast of 7.5%.
The slower revenue growth will likewise weigh on profitability, Cota said, predicting that margins on earnings before interest and taxes will decline back toward the company’s long-term average after several quarters of outperforming. That could result in a cut to earnings per share.
Adidas stock had a rough 2025. Shares shed 33% in the past 12 months, weighed down by investor concerns over how tariffs, slowing demand, and increased competition would affect revenue growth.
Nike stock fell 9% throughout the period, reflecting both the company’s struggles with demand and optimism over a turnaround plan CEO Elliott Hill rolled out in late 2024.
Investors’ confidence has faded following Nike’s December earnings report, which suggested that a sustained recovery is still several quarters away. Just how many remains anyone’s guess.
But if Adidas’ challenges continue, as Cota believes they will, it could open up some space for Nike to claw back any market share it lost to its rival.
Investors should keep in mind, however, that the field has grown increasingly crowded in the past five years. Upstarts such as On Holding and Hoka also present a formidable challenge to the sector’s legacy brands.
Shares of On and Deckers Outdoor , Hoka’s parent company, fell 11% and 48%, respectively, in 2025, but analysts are upbeat about both companies’ fundamentals as the new year begins.
The battle of the sneakers is just getting started.
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