to leave a comment.
Nvidia stock up 3.4%... SpaceX down 13.6%, AMD down 7%
Elon Musk, CEO of SpaceX, announced that he would only use Nvidia chips in the future, leading Nvidia's stock price to continue its upward trend for five consecutive trading days.
According to U.S. economic media outlets such as MarketWatch on the 5th (local time), Musk stated in SpaceX's earnings conference call the previous day, "Going forward, we have decided to build an exclusive relationship based on Nvidia," adding, "Because we believe the Vera Rubin architecture is the best architecture."
He continued, "We place great importance on close cooperation and partnership with Nvidia on multiple levels," adding, "We understand that we will receive a significantly large portion of Nvidia's Graphics Processing Unit (GPU) volume next year."
This announcement to unify SpaceX's AI infrastructure with Nvidia contradicts previous statements that it planned to use both Nvidia and AMD chips.
On this day, SpaceX announced in its earnings statement that "computing capacity expanded to 1.4 gigawatts (GW) in this second quarter."
Musk expects the computing capacity to expand to 2 GW by the end of this year and to reach 10 GW of actual operational capacity by the end of 2027.
The partnership with Nvidia was not limited to ground data centers.
Musk unveiled the space AI satellite 'Starmind' today, introducing it as "virtually an optimized Vera Rubin NVL72 computer."
Each satellite will be equipped with Nvidia's Rubin GPU and Vera CPU, enabling data center-class AI computations in low Earth orbit, with the first satellite scheduled for launch in 2027.
In response to this news, Wall Street interpreted it as a strong demand signal for Nvidia, and Nvidia's stock price rose 3.4% that day, marking its fifth consecutive trading day of gains. The cumulative increase over five days reached 15.4%. In contrast, AMD's stock price fell 7.0%.
Ben Reitzes, an analyst at Melius Research, reaffirmed his target price of $400 and a buy rating, stating, "Even if SpaceX executes only 2-3 GW of its planned computing capacity expansion roadmap, it could generate approximately $100 billion (about 143 trillion won) in additional revenue for Nvidia."
Chris Caso, an analyst at Wolfe Research, also stated, "Considering that Nvidia's revenue per GW installed could reach $35 billion, SpaceX alone could exceed the $160 billion (about 228 trillion won) increase in Nvidia's data center segment revenue that Wall Street expects next year."
He assessed that "amid market concerns about the sustainability of AI spending, this statement provides a basis for continued spending growth," and that the consensus (average market forecast) is overly conservative given contracts with OpenAI, Anthropic, and others.
Unlike Nvidia, SpaceX's stock price plummeted by 13.6% as concerns about capital expenditure (CapEx) burden emerged ahead of the release of a large volume of lock-up shares following its initial public offering (IPO).
In particular, forecasts that SpaceX's capital expenditure for next year would be much higher than market expectations fueled the stock price decline.
Alexander Potter, an analyst at Piper Sandler, projected that SpaceX's capital expenditure next year would increase to approximately $65 billion (about 92.6 trillion won). This is $17 billion (about 24.2 trillion won) higher than his original estimate.
Potter lowered his target price from the previous $156 to $140 and maintained a 'neutral' rating.
SpaceX announced in its earnings report that capital expenditure surged from $10.1 billion in Q1 to $18.4 billion in Q2, with AI-related capital expenditure increasing from $7.7 billion to $15.8 billion.
The company stated that capital expenditure for Q3 and Q4 would remain similar to Q2 levels.
Newsletter
Get key news delivered to your email every morning
to leave a comment.