AI-related shares rallied in after-hours trading on Tuesday after strong preliminary results from server maker Super Micro Computer Inc. eased concerns about the outlook for spending on the technology. Dell Technologies Inc. and Hewlett Packard Enterprise Co., which both compete with Super Micro in providing computing equipment, jumped more than 5%, while neocloud companies Core Weave Inc. and Nebius Group rose more than 4%. The Van Eck Semiconductor ETF gained 2.2%, and the Invesco QQQ Trust, an ETF that tracks the Nasdaq 100, rose as much as 0.9%.
The AI trade has been under pressure this month amid worries that breakneck spending on computing infrastructure is unsustainable. The Philadelphia Stock Exchange Semiconductor Index has fallen 11% in October, putting it on pace for its worst month since July. The selloff has hit companies like Core Weave, which rents computing capacity to AI companies, particularly hard. Its shares had fallen 29% this month through Tuesday's close. Climbing Treasury yields this year have raised the cost of debt financing, which is increasingly used to support AI spending.
Super Micro said sales will be $18.5 billion to $19.5 billion in the quarter ended Sept. 30, well above the average analyst estimate of about $15 billion. Sentiment was also lifted by results from Elon Musk's SpaceX, which beat quarterly revenue and profit estimates on growth in its AI and satellite internet businesses.
Super Micro shares rose as much as 15% in postmarket trading, while SpaceX gained 5.6%.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing