Topline
Meta edged past Tesla in market value Wednesday—not because Meta’s stock rose, but because Tesla’s fell harder—setting up Meta’s earnings report later this month as a test of whether the tech giant’s big spending on artificial intelligence is paying off.
Meta shares topped Tesla’s market value by more than $50 million.
Photo illustration by Cheng Xin/Getty Images
Key Facts
Meta’s total market value crossed above Tesla’s on Wednesday, with Meta shares trading at $605.16 as of 1:25 p.m. EDT—giving the company a market value of over $1.5 trillion.
Meta shares were down 1.7% on the day even as the milestone was reached, while Tesla’s stock slid over 2.3%, handing Meta the lead in market value by default rather than through any gain of its own.
Meta has traded between $520.26 and $796.25 since last July and is now roughly around the middle of that range, well below the peak it reached last year.
BNP Paribas analyst Nick Jones told Benzinga that Meta investors looking toward the company’s earnings report this month will likely focus on how much the company is spending to build AI products and whether a planned cloud computing business—selling spare computing power to outside companies—can become a meaningful new revenue source.
What To Watch For
Meta’s next earnings report on July 29 will allow management to address how much it plans to spend on AI infrastructure in the second half of the year and whether its fledgling cloud computing business has any paying customers yet. Tesla will also face its own test on July 22, when the carmaker’s latest earnings will be published.
Big Number
12.3%. That is how much Tesla shares have fallen since the start of the year, when they traded around the $438 mark. Meta shares have dropped 8.5% in that same period.
Key Background
Meta’s stock has dropped close to 25% from the all-time high of $796.25 it reached in August. A global tech rout gripped the market last month amid concerns a massive spike in AI spending may not translate to proportional revenue. Companies like Tesla, Nvidia, Intel, AMD and Broadcom suffered losses. However, some optimism remains around the industry. Erste Group upgraded Meta on Tuesday while Wells Fargo raised its price target to $767 on July 2, citing another quarter of robust ad growth. Tesla’s slide, meanwhile, has its own critics, with analysts at Seeking Alpha pointing to four consecutive years of stagnant vehicle sales and growing competition from Chinese electric-vehicle makers as reasons the stock’s valuation looks hard to justify. Tesla shares have fallen roughly 21% since they recorded an all-time high in December.
Further Reading
Global Tech Rout—Nvidia, Tesla, More—Hits Markets: Here’s What Fueled The Selloff (Forbes)