SpaceX gave the AI trade something it badly needed on Wednesday. |
Receipts. |
The company beat on revenue, earnings and EBITDA, posted its first profit as a public company, and gave investors a cleaner answer to one of the market’s biggest questions lately: |
Can all this AI spending actually make money? |
✓ For one day, Wall Street liked the answer. |
⚡ Closing Bell:
→ Dow Jones: ▲ 0.69% to 52,856.09 › Industrials and financials helped extend the blue-chip rally.
→ S&P 500: ▲ 0.58% to 7,757.17 › Tech led as AI-linked names bounced.
→ Nasdaq: ▲ 1.05% to 26,702.86 › SpaceX, Super Micro and chip stocks did most of the lifting. |
Tesla gained 3.4% after Elon Musk said a merger with SpaceX would be “a good idea.” |
✓ Chips joined the party too. |
The semiconductor index rose about 2%, and Intel gained 1.4% after Musk said a chip-fabrication venture with the company could begin producing at scale in 2028. |
That helped cool some of the recent concern around AI infrastructure spending. |
The 10-year Treasury yield held around 5.12%, gold edged higher, and oil slipped. |
And that was really the difference on Wednesday.
For once, the AI story came with numbers instead of adjectives. |
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#TRUTH:
❗❗❗ ❝ Luck is what happens when preparation meets opportunity.❞ ~ Seneca |
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Cash Is King… |
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Tesla’s quarter came with a surprise Wall Street actually likes: |
Cash. |
The company reported $1.53 billion in free cash flow, versus expectations for a $4.92 billion burn. |
That’s a swing of more than $6 billion versus consensus. |
✓ Earnings also came in ahead of estimates. |
Adjusted EPS was $0.48 versus $0.44 expected, while adjusted EBITDA reached $3.90 billion, topping the $3.66 billion forecast. |
Revenue of $28.05 billion was basically in line. |
But capex was the bigger story. |
Tesla spent $4.73 billion in Q3, well below the $7.96 billion Wall Street expected, and cut its full-year capex guidance from $25 billion to $20 billion. |
Management also said it plans to fund that spending primarily from operating cash flow. |
That matters because the shopping list is not getting shorter. |
The money is going toward Optimus, AI compute, Cybercab and the Terafab chip plant. |
Optimus has now started production in Fremont, while active FSD subscriptions climbed to 1.74 million. |
Deliveries came in at 486,532, ahead of estimates, though still down 2% year over year. |
Tesla shares turned volatile after hours. |
So for all the robots, robotaxis and rocket-assisted Roadsters, the most interesting number in the quarter may have been the least futuristic one: |
$1.53 billion of free cash flow. |
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Old Dog, New Tricks… |
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IBM quietly put together a solid quarter. |
The company reported $17.1 billion in revenue, ahead of Wall Street’s $16.87 billion estimate. |
Adjusted earnings came in at $2.95 per share, also topping the $2.88 forecast. |
✓ Net income reached $2.19 billion, or $2.30 per share on a GAAP basis. |
Nothing particularly dramatic there. |
And that may be the point. |
While much of the market is debating whether newer AI companies can eventually turn spending into profits, IBM is still doing something decidedly old-fashioned: |
Beating estimates while already making money. |
Shares rose about 4% Wednesday. |
For a 115-year-old technology company, IBM is proving it can still learn a few new tricks. |
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Need for Speed… |
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GM has a China problem. |
Not necessarily on quality. |
On time. |
Chinese automakers can move from idea to showroom much faster, while GM’s traditional vehicle-development cycle takes roughly four to five years. |
GM wants to cut that to about two. |
✓ The shortcut is AI. |
Instead of moving through design, testing and manufacturing one step at a time, GM is using AI and virtual engineering to run more of that work in parallel. |
One example: engineers evaluated more than 300,000 battery designs virtually before building a physical prototype. |
That helped move GM’s new lithium manganese-rich battery from its first pack concept to formal approval in just one month. |
✓ GM’s scale may finally help. |
The company has decades of engineering data, component designs and manufacturing records that can be turned into digital models of vehicles and factories. |
That lets engineers test more ideas before touching the production line. |
GM’s Sterling Anderson summed it up pretty well: |
With scale comes data. |
And GM is betting that data can help make up for something Chinese rivals already have: |
Speed.
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Gains & Pains: |
Gains:
→ Super Micro Computer $SMCI ( ▲ 9.55% ) : ▲ 9.6% › Soared after boosting its fiscal first-quarter revenue outlook.
→ SpaceX SPCX ( ▲ 7.8% ) › Rallied after beating earnings expectations and posting its first profit as a public company.
→ Tesla TSLA ( ▲ 3.41% ) › Rose after Musk said a SpaceX-Tesla merger would be “a good idea.”
→ Semiconductor Index: ▲ 2.0% › Bounced as strong AI earnings eased some recent financing worries.
→ Intel INTC ( ▲ 1.39% ) › Gained after Musk said a chip-fabrication venture could begin production at scale in 2028.
→ Apple AAPL ( ▲ 1.32% ) : ▲ Record close › Finished at a new closing high as megacap tech stayed firm.
→ Meta META ( ▲ 0.47% ) › Rose ahead of earnings despite a $25 billion court ruling in New Mexico.
😬 Pains:
→ AT&T T ( ▼ 6.45% ) › Fell despite strong quarterly results as SpaceX’s mobile ambitions overshadowed the beat.
→ Netflix NFLX ( ▼ 5.31% ) › Dropped after its fourth-quarter revenue outlook came in below expectations.
→ Abbott Laboratories ABT ( ▼ 1.89% ) › Slid after announcing plans to separate its nutrition business.
→ CoreWeave CRWV ( ▼ 0.5% ) › Stayed under pressure as concerns around debt-heavy AI infrastructure names lingered. |
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Escapes: |
Devil's Den Prehistoric Spring📍Florida 🇺🇸 |
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Commodities Check : ✔️ |
→ WTI Crude: ▼ 0.7% to $97.15/barrel › Slipped as traders weighed Middle East shipping risks against signs of increased flows through the Strait of Hormuz.
→ Gold: ▲ 0.3% to $4,137.94/oz › Rebounded from a near one-week low as Treasury yields eased ahead of next week’s Fed meeting.
→ Silver: ▼ 0.4% to $57.73/oz › Fell even as gold edged higher.
→ Platinum: ▼ 0.9% to $1,633.65/oz › Weakened with the broader precious-metals complex.
→ Palladium: ▼ 0.9% to $1,092.75/oz › Extended its recent slide.
→ Wheat: ▼ 2.3% to $6.28¼/bushel › Dropped to a three-month low as harvest pressure and renewed Russia-Ukraine diplomacy weighed on prices.
→ Soybeans: ▼ 0.2% to $12.45¼/bushel › Slipped as advancing U.S. harvests outweighed renewed Chinese buying.
→ Corn: ▲ 0.3% to $4.63¼/bushel › Finished slightly higher after falling earlier in the session. |
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The stinger: |
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Disclaimer: |
This letter is not offering investment, trading, or investment advice nor is based on any individual portfolio or business operation. We are not a registered investment, stock nor commodity advisor. One should consult with their own registered advisor to discuss investment strategies that are appropriate for their business or personal goals, risk tolerance and financial situation. Information in this report and on any website is derived from a variety of source believed to be reliable however no representation is made that the information is accurate, complete or correct. These lessons, newsletter and site content is not intended nor shall not constitute or be construed as an offer or recommendation to “buy”, “sell”, “trade” or invest in any securities, commodities, futures, options or other asset referred to in said lessons, reports or newsletters. Rather, this research is intended to identify situations and circumstances that those in the trading community should be aware of to better help assess and improve their own risk management skills. |
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