Earnings season has continued at a rapid pace, with the latest results from Advanced Micro Devices AMD and SpaceX SPCX among the most polarizing releases investors have been waiting for.
Both stocks have faced some pressure in the initial after-hours action following their releases, erasing a fair chunk of their weekly gains thus far.
AMD Earnings
Concerning headline figures, AMD reported revenue of $11.5 billion and adjusted EPS of $1.66, growing 50% and 246%, respectively. Both items reflected quarterly records for the company and a double beat relative to our consensus estimates.
Unsurprisingly, the biggest focus was on the company’s Data Center sales, the biggest sentiment driver behind the stock over recent years amid the AI frenzy. AMD’s Data Center sales came in at $6.7 billion, reflecting a huge 107% YoY growth surge and now accounting for nearly 60% of its overall sales in the quarter. AMD expects Data Center sales to accelerate in the back half of 2026, underpinning a favorable growth outlook for both earnings and sales.
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The weak action following the release is likely a reflection of results being ‘great’ and not ‘amazing’, particularly given the higher valuation multiples that the stock is trading at. That said, the reality remains that the company is witnessing strong momentum for its offerings, as shown by the reported Data Center growth, and one-off earnings reactions aren’t generally something investors with a long-term horizon should lose sleep over.
Lisa Su, CEO, stated,
‘More broadly, AI is driving a significant expansion in demand for compute across all of our markets, and our leadership portfolio and growing customer visibility position us exceptionally well to capture this expanding opportunity and deliver substantial revenue and earnings growth in the years ahead.’
SpaceX Earnings
Reflecting one of the most polarizing IPOs we’ve seen over the last decade, or maybe ever, SpaceX finally delivered its first set of highly-awaited quarterly results to the public. Shares have taken a big hit off their initial post-IPO surge, with negative action following the release.
Revenue of $7.8 billion grew 92% from the same period last year, with the company also posting a net loss of $541 million. That said, that’s a much improved figure from the $1.0 billion net loss it posted in the same quarter last year, with SpaceX also exiting the period with a $47.5 billion backlog.
Its AI segment revenue saw 250% growth to $2.56 billion, though the growth is muted by the fact that its AI CapEx similarly ballooned to $15.8 billion from $749 million in the same period last year. As we’ve seen with many post-earnings reactions amid the AI craze, the market is increasingly becoming more willing to punish huge CapEx figures.
A doubling of Starlink customers to 12 million drove 66% YoY sales growth in its Connectivity segment, with the segment also benefiting from 108% YoY growth in Enterprise and Customer revenues.
All in all, massive CapEx is a driver behind the weak reaction, though a looming share lock-up expiration coming on August 6th isn’t helping sentiment either. The stock undoubtedly reflects a highly-volatile play overall, and investors should carry a high risk-tolerance if interested in investing in the company.
Bottom Line
Both Advanced Micro Devices AMD and SpaceX SPCX have faced initial pressure following their releases, and it’s reasonable to expect continued volatility in the coming days as the market digests their results.
The AMD results were very sound from a fundamental standpoint, with the company seeing clear momentum within its Data Center and similarly forecasting continued strength in the coming periods. Long-term investors would benefit from muting the post-earnings reaction and instead focusing on the bigger picture.
SpaceX has continued to face scrutiny post-IPO given its cash-burning nature and the looming expiration of the share lock-up, and it is overall better suited for those with a high level of risk tolerance.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
