This One Word On SpaceX’s First Earnings Call Cost It 11%, And Sent Nvidia Higher

SpaceX (SPCX) stock closed down about 14% on Wednesday, while Nvidia (NVDA) rose and Advanced Micro Devices (AMD) fell. All three moves traced back to one word Elon Musk used on SpaceX’s first earnings call.

That word was “exclusively.” Musk said SpaceX would build its artificial intelligence (AI) systems only on Nvidia chips from now on. The promise handed Nvidia a huge customer and shut its rivals out.

The One Word That Repriced the Chip Trade

Tuesday was Musk’s first earnings call as the head of a public company. He used it to name Nvidia as SpaceX’s only AI chip supplier.

“Going forward, we have decided to build exclusively on Nvidia, because we think the Vera Rubin architecture is the best architecture”

Via, Yahoo Finance

Vera Rubin is Nvidia’s next chip platform. Musk said SpaceX would run it on the ground and in space through Starmind, a plan to fly data-center computers on satellites from next year. The new Nvidia satellite deal made SpaceX one of Nvidia’s biggest customers.

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The choice matters because it locks out rivals. It hands Nvidia pricing power and takes business away from AMD, which had counted SpaceX among the customers running on its AI chips.

SpaceX Beat on Earnings and Fell Anyway

The same promise that lifted Nvidia worked against SpaceX. Building only on Nvidia ties the company to one supplier and its prices, with no rival to bargain against.

The results were not the problem. Revenue rose 92% from a year earlier to $7.8 billion, and adjusted profit, a measure known as EBITDA, reached $3.5 billion. The AI unit grew fastest, with sales up 247%.

Even so, the strong debut earnings did nothing for the stock. Investors read the exclusive deal as a bigger spending promise, not more income.

Capital spending already hit $18.37 billion in the quarter, and about $15.8 billion of that went to AI computing. Its filed results show $14.1 billion of AI cloud sales under contract, less than it spent on AI in the same three months.

By tying itself to one vendor, SpaceX locked in that rising bill without locking in the revenue to match. The chipmakers Musk named, however, read the same deal very differently.

Nvidia Rose While AMD Fell on a Record Quarter

The word split the chip market in two. Nvidia closed up about 3.4%, because it had just locked in one of the industry’s biggest buyers.

AMD went the other way. It fell about 6% even after a record quarter, with data-center revenue up 107% from a year earlier.

The drop had a clear cause. Exclusivity stripped away work AMD already held, and its record quarter got repriced against the lost deal.

AMD chief executive Lisa Su played down the setback the same day. She called SpaceX an incredible business and said AMD stayed proud to work with it, according to CNBC.

The market still disagreed. A record quarter could not offset the loss of a high-profile customer to a direct rival, a shift in AMD sentiment traders had watched for weeks.

The Selloff Started Before the Earnings

The bigger story is that SPCX was falling long before the call.

It hit bottom in late July, about a week before a major share unlock, then climbed more than 15% into the call. Wednesday’s drop mostly gave back that bounce.

So the pressure comes from supply, not the results. About 911.5 million insider shares became free to trade on Thursday, the first batch from the lock-up, the period after an IPO when early investors cannot sell.

That unlock lifts the shares available to the public from under 5% to about 12%. Musk’s own stake of roughly 6.4 billion shares stays locked until June 2027, so the founder is not selling. The share unlock overhang had weighed on the price for weeks.

Options traders leaned bearish on the SpaceX stock despite the exclusivity comment. SpaceX’s put-call ratio by volume, which compares bearish bets to bullish ones, rose to 1.16 on Wednesday from 0.87 on the day of the call.

However, open interest held at 0.92, so no large bearish position has built up yet.

Wall Street cannot agree on what that exclusive bet is worth. Targets for SpaceX run from $75 at Phillip Securities to $800 at Raymond James. On the same call, JPMorgan raised its target to $240 while Piper Sandler cut its own to $140. Bulls see the all-Nvidia buildout as the road to huge profit, while bears see a single-supplier bill with no clear ceiling.

So the coming days will test a single word. If the drop was about supply, the stock should steady once Thursday’s unlock clears. If it keeps falling, the market has decided that building exclusively on Nvidia costs SpaceX more than it gains.

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