The Nasdaq Composite increased by 0.7% on Wednesday, bolstered by strong performance from SpaceX and Tesla. The S&P 500 rose by 0.3%, while the Dow Jones Industrial Average added 56 points, or 0.1%. SpaceX shares jumped 9% after the company reported a 161% revenue growth in the third quarter, amounting to $14.58 billion. In light of this success, Elon Musk indicated that SpaceX and Tesla have established special committees to explore a potential merger. Tesla shares were also positive, gaining over 3% ahead of its quarterly earnings report.
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SpaceX's artificial intelligence division experienced a ninefold increase, reigniting interest in tech investments. Notable chip manufacturers such as Advanced Micro Devices and Nvidia each rose nearly 2%, while Broadcom increased by about 1%. The VanEck Semiconductor ETF saw more than a 1% rise as investors looked for further insights into the AI sector, with Meta Platforms set to release earnings later in the day.
Concerns surrounding the sustainability of AI investments have impacted market sentiment, particularly regarding debt-backed funding and infrastructure demands. However, according to Christian Mueller-Glissmann of Goldman Sachs Research, favorable earnings could support equities as the year concludes, despite expected volatility from AI concerns, geopolitical tensions, and the upcoming midterm elections.
Netflix underperformed, with shares decreasing over 5% after the company’s full-year revenue forecast fell short of expectations, leading to a reduction in ad revenue guidance.
United Airlines shares rose more than 4% despite providing a weaker-than-expected fourth-quarter profit outlook, attributed to rising fuel costs, while reporting record revenues of $17.9 billion, a 17% year-over-year increase. The carrier anticipates adjusted earnings of 50 cents to $1.50 per share, compared to the $1.76 analysts had projected.
Brady Gerstner, CEO of Altimeter Capital, expressed uncertainty about future demand for computing power, stating no one can predict the market's state in 12 months, despite optimism surrounding AI. Profitability concerns linger in the AI sector, which some analysts believe may not justify extensive capital expenditures given the proliferation of open-source models.
In other corporate news, CME Group shares gained nearly 1% after exceeding third-quarter earnings and revenue expectations, while Thermo Fisher saw its shares rise over 1% after also posting better-than-expected results.