SpaceX Earnings Revive AI Trade as Meta’s Cash Flow Turns Negative

Strong results from SpaceX sparked a rebound in AI-related stocks. But funding pressure from heavy investment remained in focus after Meta posted its first negative free cash flow since going public.

On October 21, the Nasdaq Composite rose 1.05%, while the S&P 500 gained 0.58% and the Dow Jones Industrial Average added 0.69%. Nvidia climbed 2.54%, AMD rose 3.36%, and the Philadelphia Semiconductor Index rebounded 1.97%.

SpaceX jumped 7.79% a day after reporting third-quarter revenue of $14.6 billion and net income of $4.4 billion. AI-related revenue surged 830% from a year earlier to $7.6 billion. Super Micro Computer also soared 9.55% after raising its July-September revenue forecast to $18.5 billion-$19.5 billion from $14.5 billion-$15.5 billion.

Meta, which released earnings after the close, reported revenue of $64.4 billion and adjusted earnings per share of $3.83, both above market expectations. Free cash flow, however, came in at negative $2.1 billion, its first deficit since the company went public. Meta also raised the low end of its annual capital expenditure forecast to $135 billion from $130 billion.

CoreWeave, which has faced funding concerns, gave up earlier gains and fell 0.50%. Bank of America estimated capital expenditure needed for SpaceX's plan to expand computing capacity next year could total $400 billion to $800 billion.

"Investors want to see the payoff, and SpaceX's earnings release could be an early sign of that," Mark Hackett, a strategist at Nationwide, said.

Ken Griffin, founder of Citadel, said marginal pricing could fall sharply once supply exceeds demand, warning of possible oversupply.