SpaceX’s beat-and-raise quarter revives the AI trade and lifts the Nasdaq

SpaceX beat earnings estimates and raised its outlook in third-quarter results released after the market close on Tuesday^2,7. The beat and raise reinvigorated Wall Street’s enthusiasm for artificial intelligence, with the Nasdaq leading the major indices in a rally with broad participation¹. Tech stocks rose after the results².

SpaceX shares surged 8% on the quarterly report⁵. Nasdaq futures led gains before the open as results from SpaceX and Super Micro rekindled the AI trade⁴. The S&P 500 edged higher as the two companies sparked an AI rebound⁶.

The company’s AI spending has reached $16.4 billion, forcing investors into another bet on Elon Musk³. On the earnings call, Musk called talk of AI overcapacity “ridiculous”⁸. He said the AI and rocket company is “hounded relentlessly by every hyperscaler” seeking to rent its compute⁹.

Why it matters to investors

The results arrived during a nervous stretch for AI investment. Seven days earlier, Musk had posted “Yikes” on X in response to a post by venture capitalist Chamath Palihapitiya about rising yields on CoreWeave debt⁸. On the call, he rejected the idea that the industry has built too much capacity⁸. He pointed instead to demand from hyperscalers seeking to rent SpaceX’s compute⁹.

The rally spread beyond technology. The Russell 2000 posted its best day since August as small caps jumped 1.65% on falling yields¹¹. Bitcoin rose above $83,000 as SpaceX’s results and a possible merger with Tesla lifted markets¹⁰.

Not every strategist was convinced by the advance. “If you look at the breadth of the market, it’s been terrible,” Morgan Stanley strategist Mike Wilson said on Tuesday^6,11. BlackRock chief executive Larry Fink has warned about slowing data centre construction¹⁰. Some commentary framed the results as a signal to AI investors that the AI supercycle is far from over⁷.

What to watch

The scale of SpaceX’s AI spending makes its compute business a test of whether demand from hyperscalers keeps pace with outlays^3,9. Musk’s claim of relentless demand will be measured against future quarters⁹.

Investors will also weigh the results against the possible combination with Tesla, which has been cited alongside the earnings as a driver of the move in markets¹⁰. Whether the rally broadens or narrows again is the question raised by Wilson’s comments on market breadth⁶. Super Micro’s results, which joined SpaceX’s in lifting the AI trade, offer a second read on hardware demand^4,6.