SpaceX Is Heading To Profitability?

So, let's get straight to the point, because last night we saw one of the strangest earnings nights in quite some time.

Two giants reported results. SpaceX, for the first time in its history as a publicly traded company, and AMD, Nvidia's biggest competitor in AI chips.

Both beat analysts' expectations on revenue, earnings, and guidance.

Both stocks fell after the market closed.

SPACEX'S FIRST EARNINGS REPORT

In June, SpaceX went public in the largest IPO in history. It raised around $75 billion and was valued at roughly $1.1 trillion.

Yesterday, it was finally time for the company to show its cards.

And the numbers were impressive. Revenue came in at $7.81 billion, compared to analyst expectations of around $6.9 billion. That's a 92% increase in just one year. The company's loss narrowed to $541 million from $1 billion a year ago. That worked out to a loss of 9 cents per share, much better than the market had expected.

What drove the results? Starlink. The connectivity business generated $4.29 billion in revenue, up 66%, with operating profit of $1.66 billion. Starlink subscribers reached 12 million, doubling in just one year.

There is, however, one big catch. Average revenue per user fell to $66 from $85 a year ago. In other words, more customers, but each customer is paying less.

The artificial intelligence segment, created through the merger with xAI in February, grew even faster. Revenue reached $2.56 billion, up 247%, with $14.1 billion in cloud contracts. However, the division posted an operating loss of $1.26 billion.

And what about the space business? It generated $962 million in revenue while losing $542 million. Yes, you read that correctly. The rocket company is losing money on rockets.

"So if everything went so well, why did the stock fall?" you might ask.

One word: Capex, or capital expenditures.

SpaceX spent $18.4 billion in a single quarter, while analysts were expecting around $13.2 billion. During the same period last year, it spent just $2.8 billion. That's more than five times higher, with $15.8 billion of that spending going directly into artificial intelligence.

And after what we've seen in recent weeks from Alphabet, Meta, Microsoft, and Amazon, AI spending is under intense scrutiny.

What comes next? The company has a strong cushion. After its stock market debut, cash holdings surged to $93.5 billion from $24.7 billion in the previous quarter. Debt also increased, reaching $36.8 billion, while its order backlog stands at $47.5 billion.

The biggest bet remains Starship, a project that has already absorbed more than $15 billion. Management says it could reduce launch costs by as much as 99%. After the quarter ended, the 13th Starship test flight was completed successfully. On top of that, the company has secured more than $6 billion in long-term government contracts for Starshield.

There is also another factor to watch. On August 6, the first major batch of locked-up shares becomes eligible for trading, which could create additional selling pressure.

As for the stock itself, it jumped 9.4% during Tuesday's session and closed at $125.33, its best day since June 15. After earnings were released, however, it dropped as much as 8% in after-hours trading. And one more thing: it is still below its IPO price of $135.

AMD

Now let's move on to the second story, because we saw almost exactly the same thing with AMD.

Earnings per share came in at $1.66 versus expectations of $1.62. Revenue reached $11.54 billion, up 50%. Net income climbed to $2.3 billion from $872 million a year ago.

The data center business generated $6.7 billion in revenue, up 107%. In other words, it more than doubled thanks to EPYC processors and Instinct accelerators.

The rest of the business was less impressive. The Client and Gaming segment grew just 6% to $3.8 billion, with gaming revenue down 31%, while the embedded systems division increased 19% to $977 million.

For the current quarter, the company expects revenue of around $13 billion, compared with market expectations of $12.51 billion. Better than forecasts, but some analysts had been hoping for as much as $14 billion.

This is where things get even more interesting. AMD is preparing to ship its first Helios systems to Meta, OpenAI, and Oracle. It is the first fully integrated system the company has built, meaning it is now competing with Nvidia not only in chips but in complete AI infrastructure.

In July, AMD also raised its estimate for the semiconductor market to $2 trillion annually by 2028, with $1.4 trillion expected to come from AI accelerators. Just last year, the company was projecting a market of $500 billion.

And the stock? It fell 8.4% after the close, despite nearly tripling over the past year and gaining close to 130% since the start of the year. The decline also weighed slightly on Intel and Nvidia shares.