1. Tesla Expects to Shift Gears in 2027
Tesla (TSLA -1.71%) stock still slid more than 4% in early morning trading after revenue from electric vehicles (EV) fell 3% in the third quarter. That’s one mistake the market repeats quarter after quarter. The company isn’t losing sleep over near-term auto margins because it is busy building a physical artificial intelligence (AI) and energy ecosystem. Wednesday’s report reminded investors the pivot is underway.
- The operational reality: Operating profit plunged 56%, but Tesla beat adjusted earnings per share estimates of $0.48 as non-car businesses and software monetization continue to carry the weight. Active Full Self-Driving subscriptions jumped 67% year over year to 1.74 million. Free cash flow fell 62% in Q3 as Tesla spent on Cybercab, Optimus, and the Texas Terafab chip plant.
- How to play the next five years: If you’re still sizing up Tesla as a standard carmaker, you’re missing the plot. Backed by $45.4 billion in cash liquidity and $1.5 billion in free cash flow, Tesla can easily self-fund its $20 billion capex this year. Elon’s targeting Robotaxi revenue in Q2 2027, Terafab test chips by mid-year, and Optimus rollouts by year-end. Some of those are ambitious targets, but they’re arriving. That’s the long-term Tesla bet, not EVs.
2. Meta Accelerates, IBM Adapts
Two very different tech giants topped third-quarter expectations: Meta (META -7.26%), betting big on AI assistants, and IBM (IBM -0.76%), leaning on software to offset a shrinking hardware business.
- Meta’s Muse moment: Remember the worry that Meta’s AI spending would never pay off? Muse could be the first real answer. The AI assistant helped deliver Meta’s best month on Wall Street since 2022. Revenue rose 26%, and Q4 guidance beat estimates. The key to long-term growth is how quickly Meta can translate its AI capEx into user engagement and ad revenue. The stock, recommended by both Team Rule Breakers and Team Hidden Gems, was largely unmoved this morning.
- IBM’s mainframe comeback: IBM’s mainframe hardware sales are still shrinking, but software grew 8%. Importantly, mainframe sales fell far less than last quarter, a sign that demand could be stabilizing. IBM held its revenue growth guidance but raised its free cash flow target. This isn’t a flashy growth stock, but its shift to high-margin recurring software makes its cash flows solid and reliable. The Hidden Gems rec fell around 5% before market open.
3. Buy in Thirds as AI Stocks Slip?
The AI sell-off isn’t done yet. Nasdaq futures dipped 1.6% in pre-market trading today. Last week the S&P 500 lost nearly 2%, logging its worst week since June as technology fell almost 8%. Chip stocks are now down nearly 15% in three weeks. China’s benchmark CSI 300 index, meanwhile, officially entered bear-market territory on Thursday, showing this global tech hangover is far from over.
- The AI overweight: By Bianco Research’s count in early October, 41 AI-related companies make up nearly 49% of the S&P 500 index. Bianco points out that market concentration hasn't been this extreme since 19th-century railroad stocks ruled the world. A drop in AI stocks can drag the whole index down, and that’s what’s happening now.
- Splitting the bet: When markets get chaotic, it’s time to plan, not panic. Motley Fool co-founder David Gardner calls buying in thirds “an incredibly effective win-win way to get invested in any volatile stock that’s trading high.” Split a sum into three purchases, a month or quarter apart. While Vanguard research finds lump sums win about two-thirds of the time, we believe this is a small cost to pay if it gets you invested at all.
4. Three Earnings to Watch Today
Three very different companies report after the close today, and two ride AI data center demand. Comfort Systems USA (FIX -8.78%) and Bloom Energy (BE -9.07%) both sell into it. Kinsale Capital (KNSL +3.18%) is a specialty insurer working through a softer property market. All are recommended by Team Hidden Gems.
- Comfort Systems’ data center dependence: Technology customers supplied most of its first-half revenue, so any slowdown will draw attention. Investors will also look for updates to its full-year same-store growth outlook and its progress toward its year-end modular production target.
- Bloom’s Oracle question: Oracle (ORCL -2.67%) sent a force majeure notice in September on a large New Mexico data center project. That’s a clause letting a party pause contract duties. Investors will want to know if it affects Bloom’s delivery pipeline. Another test is whether validations from hyperscalers, the giant cloud companies, turn into firm orders. Bloom is also a Team Rule Breakers recommendation.
- Kinsale’s property squeeze: Management has suggested that property comparisons will become easier late in 2026, which would mark the end of a stretch of declining volume. A Georgia Supreme Court review of a $140 million judgment also matters, though management says reserves already cover it.
5. Corning: Innovate, and Demand Will Find You
Team Rule Breakers
Our five-year price target for Corning (GLW -8.23%) is $355. Shares are around $145 today, implying an annual return of nearly 20%. Corning has delivered for members before. Team Rule Breakers first recommended Corning in Stock Advisor on August 19, 2011, at $9.83. That easily broke through any “glass” ceilings and has soared nearly 1,400% to date. That’s impressive, but this fiber optic cable and mobile device glass manufacturer Top Dog is restless! Its top line and profitability have accelerated meaningfully in recent quarters, catalyzed by the following drivers:
- Revenue visibility: Corning has announced five multi-billion, multi-year supply deals in the first 10 months of 2026, with behemoth data center and telecom customers Nvidia (NVDA -3.97%),Meta,and Amazon (AMZN -3.86%), AT&T (T +2.90%), and Verizon (NYSE:VN).
- Faster GPUs equal higher sales: Because new generations of GPUs require a higher density of fibers, Corning expects that its data center business will outpace the growth rate of the GPU market for the foreseeable future.
- Technical prowess is lifting profits: Corning has stretched beyond its traditional mastery of fiber optic cable to help Nvidia and other customers transmit information within and between GPUs using photonics (i.e. light). Management expects that its new photonics platform will go from zero dollars in annual revenue today to $10 billion by 2030. For perspective, the company will book just over $19 billion in total revenue this year.
Corning’s R&D muscle has enabled this fundamental innovation shift into photonics that should widen its operating margins within the next four years. CEO Wendell Weeks recently predicted that Corning would achieve an annual growth rate of 19% through 2030, “while growing earnings faster than sales, with significantly higher returns on invested capital and substantially more free cash flow.” Corning remains a Buy in Stock Advisor. We wouldn’t bet against Week’s predictions.
6. Today’s Question!
Tesla today is a bet on the future. When you evaluate a company, do you price it on what it makes today, or what it could become tomorrow?
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