AvaTrade: SpaceX’s AI Decision Reshapes the Competitive Landscape of the Chip Industry

AvaTrade has pointed to investors’ concern over rising AI spending as the reason SpaceX shares fell this week, after the company’s first-ever earnings report revealed spending had jumped to more than six times last year’s level. While quarterly revenue nearly doubled year-on-year to $7.8bn, spending ballooned to $18.3bn – more than six times last year’s level – with the bulk of the increase going towards AI.

Commenting on SpaceX’s quarterly earnings report and the market’s reaction, as well as the company’s AI strategy outlined on its earnings call, Kate Leaman, chief market analyst at AvaTrade, said: “SpaceX’s first earnings report as a public company was always going to be scrutinised closely and the market’s reaction shows why. Revenue nearly doubled to $7.8 billion, which on its own would normally be cause for celebration. But spending ballooned to $18.3 billion, more than six times what it was a year ago, and investors clearly weren’t prepared for the scale of that AI build-out. The stock fell by almost double digits in the hours that followed – a sharp reminder that for newly public companies, the market judges capital discipline as closely as growth.

“The bigger signal for global markets came from Musk’s comments on the earnings call: SpaceX will build its AI computing infrastructure exclusively on Nvidia hardware moving forwards, rather than splitting spend across chipmakers. That single line moved the wider tech sector, lifting Nvidia shares, while AMD dropped roughly 7% – even though AMD had reported its own quarterly beat that same day.

“It’s a reminder that AI infrastructure spending is now concentrated enough that one company’s chip decision can swing billions in market value elsewhere, regardless of how a competitor’s own numbers look. For SpaceX specifically, it also raises the real question for the next few quarters: whether this spending translates into commercial AI revenue, or whether investors will keep discounting the stock every time the capex line grows faster than the topline.”