SpaceX leads the Nasdaq-100 after its AI results
Chipmakers and server stocks rallied , while communication services stocks were the day's biggest losers as Netflix and AT&T fell.
Key takeaways
SpaceX shares jumped 7.8% to $159.31 on Wednesday, Oct. 21, after the company swung to a $4.4 billion third-quarter profit, beat revenue forecasts, and revealed that it and Tesla have formed board committees to explore a possible merger. The rocketmaker was the largest contributor to the Nasdaq-100's gain for the day.
The rally spread to chip and server stocks. Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100, rose 1.1%. Communication stocks, in contrast, fell during Tuesday's trading.
The S&P 500 rose 0.6% to 7,757.17, moving closer to its Oct. 6 record. The Nasdaq Composite gained 1.1% to 26,702.86, and the Dow Jones Industrial Average added 0.7% to 52,856.09.
The 10-year Treasury yield rose to 5.15%, and Brent crude futures traded near $110 a barrel after Saudi Arabia’s state news agency reported an attack on an Aramco oil field.
Meta Platforms and Tesla reported after the close. Meta beat revenue forecasts, raised its fourth-quarter outlook to $73 billion to $76 billion and announced a 2-for-1 stock split; its shares rose 3.58% in after-hours trading as of 5:22 p.m. ET. Meta is the largest holding in the State Street Communication Services Select Sector SPDR ETF (XLC).
Tesla’s adjusted earnings of 48 cents a share topped estimates, though its shares slipped 0.6% after hours at 5:22 p.m. ET.
Invesco QQQ Trust, Series 1 QQQ rose 1.1%. State Street SPDR S&P 500 ETF SPY rose 0.5%.
SpaceX's AI results led the gain
SpaceX, about 2.7% of QQQ, added roughly 0.2 percentage point to the fund’s gain, about as much as Nvidia, a holding three times its size. Nvidia rose 2.5% for the day.
SpaceX added more than Nvidia
On Tuesday the company reported third-quarter revenue of $14.6 billion, up 161% from $5.6 billion a year earlier, according to its earnings release. The release said the jump was fueled by Super Intelligence, the name it now uses for the segment it previously reported as artificial intelligence, and by connectivity. CNBC said that business is now the largest, with revenue of $7.56 billion, up ninefold from $813 million a year earlier.
Reuters reported that the Nasdaq gained on Wednesday after the SpaceX and Super Micro Computer results improved appetite for stocks tied to artificial intelligence.
VanEck Semiconductor ETF SMH gained 1.9%. State Street Technology Select Sector SPDR ETF XLK gained 1.7%, the best of the 11 funds that track the S&P 500's sectors. Advanced Micro Devices rose 3.4%.
Super Micro Computer rose 9.5%. On Tuesday the server maker said revenue for the quarter ended Sept. 30 is now estimated at $18.5 billion to $19.5 billion, above the $14.5 billion to $15.5 billion it had forecast, in its update. It cited demand for AI platforms.
"Do I think it would be a good idea? Yes," Elon Musk, chief executive of SpaceX and Tesla, said of a merger on Tuesday's call with analysts, the BBC reported.
He said a combination would make sense for the work each company is doing on chips, artificial intelligence and software.
Special committees at both companies had been formed to examine a deal, and he said one could not be assumed.
Tesla rose 3.4% in Wednesday's regular session, before its own results.
Communication services fell on Netflix and AT&T
AT&T fell 6.4% even though revenue and adjusted earnings despite beating revenue and adjusted earnings forecasts and raising its 2026 profit outlook. Verizon and T-Mobile also fell about 3%, as SpaceX's Starlink Mobile takes shape as a potential competitor to these telecom giants.
State Street Communication Services Select Sector SPDR ETF XLC fell 1.1%, the worst of those 11. Seven finished higher.
Technology led; communications finished last
Netflix fell 5.3% and hit a 52-week low.
In a letter to shareholders on Tuesday, the company cut its 2026 advertising forecast to about $2.7 billion from about $3 billion. It said some advertising tools were rolling out more slowly than it had expected.
It set its full-year revenue forecast at $51.1 billion, which the letter said was 0.2% below the midpoint of its prior range. Reuters said the forecast failed to impress.
Third-quarter revenue rose 12% to $12.9 billion, in line with its forecast.
"We delivered our Q3 forecast and expect to deliver on our full year 2026 guidance," the letter said.
AT&T fell 6.4% after reporting before the open. Revenue was $32.3 billion, up 5.3% from a year earlier, the company said in its release.
It was the largest drag on XLC.
Alphabet's Class A shares fell 1.6%. Meta Platforms, 22.6% of XLC and its largest holding, rose 0.5% and did not offset the declines.
Netflix was also the biggest drag on QQQ.
Thursday tests the rally on three fronts: whether Meta’s and Tesla’s after-hours gains hold at the open, how SpaceX absorbs its lockup release, and whether Brent stays near $110.
QQQ is still down over five sessions
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