Wall Street opened flat on Thursday as weak earnings from Tesla and IBM hurt investor sentiments. Growing trade tensions between the US and China also added to market worries.
In the early hours of trading, Dow Jones Industrial Average fell 14.50 points (0.04%) to 46,570.06. The S&P 500 rose 6.03 points (0.09%) to 6,705.15, and the Nasdaq Composite went up 6.99 points (0.07%) to 22,755.88.
Tesla reported record quarterly revenue of $28.1 billion, up 12% from last year, due to record electric vehicle deliveries of nearly 497,000 cars as many customers rushed to buy before US EV tax credits expired.
However, despite higher sales, Tesla’s net profit fell 37% to $1.37 billion. Its adjusted earnings per share were $0.50, below analysts’ forecast of $0.54.
The company’s gross margin dropped to 18%, hurt by fewer regulatory credit sales (down 44%) and price cuts on new “Standard” versions of the Model 3 and Y.
Operating income also fell 40% to $1.6 billion, as competition increased and costs rose. CEO Elon Musk said Tesla will keep focusing on robots and AI and hinted at new Robotaxi trials in Texas, Florida, and Arizona later this year.
IBM, meanwhile, had a strong quarter that beat expectations. Its revenue rose 9% to $16.3 billion, and adjusted earnings per share were $2.65, higher than the expected $2.45.
Net income jumped to $1.74 billion, compared to a loss in the same period last year. Growth came from strong demand for AI and hybrid cloud services.
Software revenue grew 10% to $7.21 billion, and mainframe sales rose 17% with the launch of new AI-focused hardware.
IBM also raised its full-year outlook, now expecting over 5% revenue growth and about $14 billion in free cash flow, showing confidence in its AI business.