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Shares fall as SpaceX ramps up AI and Starship spending. (0:17) AMD delivers another strong quarter but investors want faster growth. (1:28) Michael Burry warns markets could be nearing a major peak. (2:00)
SpaceX (SPCX) is slumping in premarket trading after its first earnings report as a public company revealed an extraordinary surge in capital spending as it accelerates investments in AI infrastructure and its Starship rocket program.
Capital expenditures climbed to $18.4B in Q2 from $10.1B in Q1 and more than six times the $2.8B spent a year earlier. Nearly $15.8B was invested in the company’s AI business as it expanded computing capacity and built infrastructure supporting new cloud services agreements. Additional spending went toward Starlink satellites and Starship development.
The spending spree came alongside another quarter of strong operating performance. SpaceX reported revenue of $7.81B, up 92% year over year and ahead of the $6.82B Wall Street consensus.
SpaceX is also preparing to challenge the largest U.S. wireless carriers by pairing its satellite communications network with a nationwide terrestrial mobile network.
On the earnings call, President and COO Gwynne Shotwell said: “The big three in the United States, AT&T (T), Verizon (VZ) and T-Mobile (TMUS), are roughly a $600B-a-year market. I anticipate us being able to acquire quite a few of their customers because I think our service will be better.”
Also in the AI trade, AMD (AMD) is lower in premarket trading, with investors wanting more than a beat-and-raise quarter after the stock’s 130% rally year to date.
SA analyst Jonathan Weber said revenue and earnings growth remained strong, but AMD “continues to grow at a slower pace compared to Nvidia (NVDA) while trading at a much higher valuation.”
Looking ahead, AMD expects Q3 revenue of $12.7B to $13.3B, with the $13B midpoint comfortably above the $12.51B consensus. Adjusted gross margin is forecast at 56%.
And “Big Short” investor Michael Burry said he continues to believe “it is possible we are near a major top, and possible a 1987-type fall, but the S&P 500 (SP500) making new highs likely will bring new money into the market.”
“Remember, the market going up on falling volatility forces vol-targeting funds to leverage up, and brings leverage from other momentum strategies into play,” he wrote on Substack.
Despite the rally, Burry said he continues to hold short positions in the iShares Semiconductor ETF (SOXX), Micron (MU), Nvidia (NVDA), Caterpillar (CAT), Palantir (PLTR), Tesla (TSLA) and Applied Materials (AMAT).
He said he remains confident in the long-term outlook for those trades, though he would cut his losses if they moved decisively against him. All remain profitable except for his bet against Nvidia.
“Again, shorting is not for everyone,” Burry wrote. “I must short. Most should not.”
Now here’s what’s trending on Seeking Alpha:
Samsung is unveiling its next-generation AI memory technology.
Uber (UBER) and Wayve have secured London licenses for autonomous ride trials.
And Palantir (PLTR) short sellers were taken to the woodshed, absorbing roughly $3B in losses after Tuesday’s 30% rally.
In premarket trading
Stock market action looks a little tired after the recent technology melt-up, with futures on the S&P 500 (SPX), Nasdaq 100 (US100:IND) and Dow (INDU) pointing to a mixed open.
The bond market is also seeing limited moves, with the Treasury yield curve flattening slightly.
On the economic calendar
- 8:15 a.m. July ADP Employment Report
- 9:45 a.m. S&P Global July PMI Composite Final
- 10:00 a.m. July ISM Services Index
