SpaceX Falls After First Earnings, AMD Drops Despite Data Center Growth

**Zaid Admani** (0:00)
Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Wednesday, August 5th. In today's episode, I'll tell you why I think the AI trade is making a huge comeback right now. Also get into SpaceX's very first earnings report as a public company, and why AMD stocks sold off despite a strong quarter. Then stick around to the end of the show to find out why MySpace is trying to make a comeback. We got a great show for you today.
Let's go.
We are so back, baby. Stocks kept ripping higher on Tuesday with the S&P 500 jumping 1.8% and hitting a record high for the first time since early June. The NASDAQ did even better jumping 2.6% as investors jumped back into the tech and AI trade. You know, it's kind of crazy how fast the market has jumped back into tech stocks. Literally a week ago, the market was questioning whether the AI trade was over. And now everything is just ripping. The NASDAQ has jumped 9.3% in just four trading days, adding roughly $3.5 trillion in market value. And it's not just the mega cap names driving this rally, semiconductor stocks and software companies and cloud infrastructure companies, almost everything tied to the AI trade is moving higher again. You know, I think the strong cloud growth reported by Google, Microsoft and Amazon in their earnings over the last couple of weeks, proved to the market that all this spending on data centers is starting to pay off, and these companies are probably not going to stop spending anytime soon. So I think that's giving investors confidence to jump back into the trade. And I also think this AI hedge fund situational awareness blowing up might have played a factor as well. Now, looking ahead, we have a ton of earnings to get through, a lot of which we cover on today's show. And then on Friday, the July jobs report drops, which could impact what the Fed does with interest rates moving forward. So we're going to be staying on top of all of it. If you're new here, definitely get subscribed to the podcast if you haven't already and tune in every day to stay in the loop.
Let's run through some headlines. Starting with SpaceX, SpaceX reported earnings last night, the first time as a public company. And the numbers were impressive, but the stock is still falling because of some red flags. Let's start with the numbers first. Revenues nearly doubled from a year ago to $7.8 billion, easily beating the $6.8 billion that Wall Street was expecting. And when you dig into each segment, they beat across the board. I'm talking Starlink, Rockets, AI, all of them came in higher than expected. Now the company is still losing money. They reported a loss of $541 million, but that is narrower than the $1 billion the company lost in Q2 of last year. But I think the big concern that investors were focused on was the spending. SpaceX said they spent $18.4 billion on CapEx during Q2 and $15.8 billion of that went towards AI. This CapEx spending has more than doubled from the previous quarter because SpaceX continues to build massive data centers and develop their own AI models and also work towards eventually putting data centers in space. And the company claims that all this spending is paying off because SpaceX has signed major cloud computing deals with Google and Anthropic. In fact, executives say the company is getting a payback period of less than one year on some of these AI investments. But still, the market was spooked by all the AI spending and SpaceX stock is down more than 10% this morning in reaction to the earnings. Now this being an Elon Musk company, Elon was doing Elon things on the earnings call, making some bold promises as he usually does. At one point on the call, he said that SpaceX could generate $1 trillion in annual revenue by 2030 Just for some context here, Wall Street currently expects SpaceX to make around $39 billion in revenue for this year. So making $1 trillion in revenue by 2030 seems very, very unlikely. Now, what's interesting is that usually when Elon makes big claims like that, the market eats it up. But that wasn't the case this time. And like I said, SpaceX stock is down big following the earnings report. You know, my take on the situation is that SpaceX earnings were solid. They're showing solid growth across the board and they are somewhat justifying their capex spending. The problem for SpaceX is their valuation. They're still valued at more than $1.5 trillion and a lot has to go right for the company to justify that valuation. And then the other concern when it comes to the stock is that a lockup period is ending for $100 billion worth of SpaceX stock on Friday. That's gonna double the amount of tradable shares for SpaceX and the concern is that we're gonna have a ton of insiders dumping their stock. And I think that's a big reason why the stock continues to tank. I'm just thinking back to the conversation that I had with Nicholas Owens on the podcast back in June, right after SpaceX's IPO. Nicholas is an equity analyst from The Morningstar and he made the case that SpaceX was worth around $63 a share. Now, when we recorded that conversation, SpaceX was trading north of $200 a share. These days, the stock is around $100 a share. And I wouldn't be surprised if we hit the $60 to $70 range at some point this year.