📈 Tesla's AI5 is the Miss Worth Celebrating

Good Morning…

What looks like a profit miss to Wall Street's myopic quarterly scorekeepers is actually Tesla spending 50% more on R&D to vertically integrate its entire AI stack, from silicon to software, in a play that would make even Apple's chip team envious.

🔎 Market Trends → Wall Street ends lower on mixed earnings, US-China trade tensions

🖥️ Market Movers from Fintech.tv → [WATCH] Unlocking Value: Insights from Hub71’s Head of Value Creation

And now…

⏱️ Your daily briefing for Thursday, October 23, 2025:

MARKET BRIEF
Before the Open

Pre-Market

Fear & Greed

Markets in Review

Wall Street’s Reality Check: Trade Tensions Knock Stocks, But Bulls Still Hold the Cards

Stocks took a breather Wednesday. The Dow Jones Industrial Average (DJIA) fell 334 points (-0.7%) to 46,590, the S&P 500 slipped 0.5%, and the Nasdaq Composite lost 0.9%, as trade worries and a few weak earnings weighed on sentiment.

The Big Picture:

Markets stumbled midweek as Washington’s renewed talk of export curbs to China reignited trade anxiety. Treasury Secretary Scott Bessent’s comments about restricting software exports reminded investors that geopolitics can still rattle even a strong bull market.

At the same time, earnings season remains resilient: more than 75% of S&P 500 companies reporting so far have beaten expectations (FactSet). This is no small feat given slowing global growth and a strong dollar.

Yes, the Dow gave back some of Tuesday’s record gains — but that’s typical digestion after a big meal. The broader uptrend remains intact, supported by solid corporate balance sheets, easing inflation, and persistent consumer demand.

Oil stayed near $78 a barrel, steady as traders balanced Middle East supply concerns against slower industrial demand. Gold, after a blistering run, cooled to about $4,060 an ounce as investors locked in profits.

Market Movers:

• Semiconductors slipped after Texas Instruments (TXN) fell 5.6% on soft guidance, dragging peers ON Semiconductor (ON) and AMD (AMD) lower. The pullback may prove short-lived — chip demand linked to AI and defense remains strong.

• Netflix (NFLX) plunged 10% after a Brazilian tax dispute dented earnings. Yet revenue jumped 17% year over year — a reminder that streaming’s long game is still alive.

• Intuitive Surgical (ISRG) defied the gloom, soaring 14% on stellar earnings. Investors are betting that robotic surgery will keep expanding even in a tighter healthcare spending environment.

What They’re Saying:

“Perhaps amid better-than-expected Q3 earnings, investors remain cautious on management guidance — but fundamentals are holding up,” said Thierry Wizman of Macquarie Group.

WHAT WE’RE WATCHING
Events

There are no events scheduled for today.

Earnings Reports

• Today: T-Mobile, Intel, Intuitive, Union Pacific, Honeywell, Blackstone, Newmont, Lloyds, Norfolk Southern, Freeport

• Tomorrow: Procter & Gamble, Sanofi, HCA Healthcare, General Dynamics, Illinois Tool Works, NatWest, Eni

MARKET INSIGHTS
Leading News 

Tesla's Chip Gambit: Why Missing Earnings Might Be the Smartest Move Musk Ever Made

Why it matters:

While Wall Street frets over a 4-cent earnings miss, Tesla is executing the most audacious vertical integration play since Apple ditched Intel—building custom AI chips that could render its Nvidia dependence obsolete.

Zoom Out:

Tesla delivered $28.1 billion in Q3 revenue, beating estimates by $1.7 billion, yet the stock fell 5% after hours on $0.50 EPS versus $0.54 expected. The culprit? Operating expenses surged 50%, driven by AI and R&D spending. This is the kind of short-term thinking that creates long-term opportunity.

Energy storage revenue jumped 44% to $3.42 billion—now one-quarter of total revenue. The real story: Musk revealed Tesla's AI5 chip will be manufactured by both Samsung (Texas) and TSMC (Arizona), with an explicit goal of creating "an oversupply."

Key Insights:

• The Silicon Sovereignty Play: Tesla dropped Nvidia chips in 2019 for proprietary processors. Musk now predicts AI5 could deliver "maybe by a factor of 10" better performance per dollar. The logic is Apple-esque: designing for one customer allows "radical simplicity"—stripping out legacy GPUs and signal processors. Tesla now has computing capacity equivalent to 81,000 Nvidia H100 chips, infrastructure that took years and billions to build.

• The Margin Paradox: Net income fell 37% to $1.37 billion despite record deliveries of 497,099 vehicles. Behavioral finance teaches us investors systematically overweight near-term earnings at the expense of long-term optionality. Regulatory credit revenue fell 44% to $417 million—eliminating a high-margin crutch. The question: Is Tesla strategically sacrificing today's profitability for tomorrow's platform dominance?

• The xAI Flywheel: Musk's xAI startup bought $198.3 million of Tesla Megapacks in 2024. This creates a virtuous cycle: xAI buys Tesla energy products, Tesla gets AI training data, and excess AI5 chips "can always be put in the data center." Only 12% of Tesla's fleet uses FSD Supervised—vast monetization headroom if autonomy improves.

Market Pulse:

"Our explicit goal is to have an oversupply of AI5 chips. Nvidia has done an amazing job, but in our case, we are waiting for radical simplicity," shared Musk.

Bull’s Take:

Tesla (TSLA) just reported the kind of quarter that separates momentum traders from long-term owners. This earnings "miss" is aggressive reinvestment in custom silicon that could make Tesla the only automaker controlling its entire AI stack. With robotaxi operations expanding to 8-10 metros by year-end, the company is building multiple trillion-dollar addressable markets. The market is pricing in the EV business—not yet Tesla as chip designer, energy provider, and autonomous platform combined.

Market Stories of Note

IBM's AI Surge Meets Wall Street's Skepticism:

IBM crushed Q3 estimates with $2.65 EPS versus $2.45 expected and $16.33 billion in revenue, raised guidance, and grew its AI book of business to $9.5 billion from $7.5 billion—yet shares fell 6% after hours, demonstrating how markets punish companies for uncertainty rather than reward actual results. Infrastructure revenue jumped 17% and software rose 10%, but investors fixated on sustainability concerns despite $14 billion in projected free cash flow and a freshly approved $1.68 quarterly dividend extending a 29-year growth streak. IBM (IBM) trading at 24x forward earnings while transforming into an enterprise AI infrastructure play represents the kind of behavioral anomaly that separates disciplined long-term allocators from traders chasing momentum in extended hours.

Southwest's Reinvention Bet - Trading Peanuts for Premium Seats:

Southwest Airlines defied Wall Street's forecast of a $0.03 loss by posting an $0.11 profit in Q3 on $6.95 billion in revenue, beating estimates while abandoning its half-century identity as the industry's populist disruptor with open seating and free checked bags. The airline projects record Q4 revenue with unit revenue growth of 1-3%, though CFO Tom Doxey says the real financial impact of assigned seating won't materialize until Q1 2026 when the new product launches—early booking patterns are tracking expectations, but Southwest's profit still fell 19% year-over-year to $54 million. For contrarian investors, Southwest (LUV) presents a classic behavioral finance puzzle: Are you buying a restructuring story at its inflection point, or simply catching a falling airline that's sacrificing its competitive differentiation to chase revenue that Delta and United already capture more efficiently—a question answerable only when we see whether customers who loved Southwest's egalitarian simplicity will pay premium prices for a carrier now imitating everyone else?

CRYPTO
Fear & Greed 

Headlines

• Bitcoin Closes $107K CME Gap as Markets Eye Friday’s CPI Data (link)

• Coinbase Opens Amex Card With up to 4% Back in BTC for U.S. Coinbase One Members (link)

• The smartest wallet wins’: Industry leaders say AI and UX will drive the next wave of mainstream crypto adoption (link)