Nasdaq leads Wall Street gains as SpaceX, Super Micro boost AI sentiment

[NEW YORK] The tech-heavy Nasdaq led Wall Street to a higher close on Wednesday (Oct 21) after quarterly results from SpaceX and Super Micro Computer improved investor appetite for artificial intelligence-related stocks while weakness in communication services stocks capped gains.

SpaceX shares finished up 7.8 per cent 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 per cent 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, signaling that AI demand remained resilient.

The report also benefited peers HPE, which rose 3.7 per cent, and Dell, which rose 5.3 per cent.

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 center 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 per cent, the biggest gainer among the S&P 500’s 11 major industry sectors.

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“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 per cent in late trading after it released its quarterly results following the regular session’s close. After finishing up 3.4 per cent in the regular session, Tesla shares rose another 1.6 per cent following its report, which was also issued after the close.

The Dow Jones Industrial Average rose 360.21 points, or 0.69 per cent, to 52,856.09, the S&P 500 gained 44.60 points, or 0.58 per cent, to 7,757.17 and the Nasdaq Composite gained 278.04 points, or 1.05 per cent, to 26,702.86.

Within technology, one of the strongest areas was chips with a 2 per cent rally in the Philadelphia Semiconductor index, which has had a volatile month so far including an eight-session sell-off.

Gains in the benchmark S&P 500 were limited however by a 1.3 per cent decline in communication services stocks. The biggest losers included telecom operators such as AT&T, which sank 6.5 per cent 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 per cent and Verizon Communications lost 2.2 per cent.

Also in communications services, Netflix shares sank 5.3 per cent after the video streaming company issued a weaker-than-expected forecast for its fourth-quarter profit. Google’s parent Alphabet also declined 1.6 per cent.

Abbott Laboratories shares dropped 1.9 per cent after the medical device maker cut its 2026 sales growth forecast.

Advancing issues outnumbered decliners by a 1.37-to-1 ratio on the NYSE where there were 131 new highs and 221 new lows. On the Nasdaq, 2,690 stocks rose and 2,068 fell as advancing issues outnumbered decliners by a 1.3-to-1 ratio.

The S&P 500 posted 26 new 52-week highs and three new lows while the Nasdaq Composite recorded 53 new highs and 216 new lows.

On US exchanges roughly 16.11 billion shares changed hands compared with the 17.10 billion average for the last 20 sessions. REUTERS