SpaceX shares finished up 7.8 percent after Elon Musk’s rocket and space technology firm posted its first profit as a public company. Musk said, following the report, that a merger of SpaceX and Tesla would be “a good idea,” also boosting Tesla shares.
Elsewhere in earnings, Super Micro shares jumped 9.6 percent and it was among the S&P 500’s top gainers after the AI server maker forecast quarterly revenue and profit margin above Wall Street estimates, signalling that AI demand remained resilient. The report also benefited peers HPE, which rose 3.7 percent, and Dell, which rose 5.3 percent.
The reports provided some reassurance to investors who have been worried about the sustainability of massive spending on AI buildouts and their profitability. The technology sector was hammered last week by a selloff in AI-linked stocks, with data centre operator CoreWeave at the centre of the storm.
The SpaceX news “pushes back on some of the investor worries” about AI along with some help from Super Micro, according to Angelo Kourkafas, senior global strategist at Edward Jones.
Kourkafas said the reports will not “answer all the questions investors have on returns on AI investments, but it’s a good start.”
As a result, the S&P 500 Information Technology index finished up 1.6 percent, the biggest gainer among the S&P 500’s 11 major industry sectors.
“It’s really a positive technology story for almost anyone that is somewhat involved in the artificial intelligence ecosystem,” said Marc Dizard, chief investment officer at Huntington Bank.
“The technology market reaction has been a reaffirmation that the artificial intelligence trade is still intact,” he added.
However, Dizard said sentiment can quickly shift around AI and that investors will seek reaffirmation when they monitor earnings reports from other companies.
Shares in Meta rose 3 percent in late trading after it released its quarterly results following the regular session’s close. After finishing up 3.4 percent in the regular session, Tesla shares rose another 1.6 percent following its report, which was also issued after the close.
The Dow Jones Industrial Average rose 360 points, or 0.7 percent, to 52,856, the S&P 500 gained 44 points, or 0.6 percent, to 7,757 and the Nasdaq Composite gained 278 points, or 1.1 percent, to 26,702.
Gains in the benchmark S&P 500 were limited by a 1.3 percent decline in communication services stocks. The biggest losers included telecom operators such as AT&T, which sank 6.5 percent even as it beat third-quarter revenue and profit expectations.
The SpaceX results, along with a recent wireless spectrum purchase, fanned fears that it could become a formidable competitor in telecoms, according to Dizard. T-Mobile US shares fell 2.5 percent and Verizon Communications lost 2.2 percent.
Also in communications services, Netflix shares sank 5.3 percent after the video streaming company issued a weaker-than-expected forecast for its fourth-quarter profit. Google’s parent Alphabet also declined 1.6 percent. (Reuters)