By US stocks opened higher on Wednesday as strong quarterly results from SpaceX and Super Micro Computer supported investor appetite for artificial intelligence-related stocks, while a weaker outlook from Netflix weighed on the streaming company’s shares.
The Nasdaq Composite advanced 0.57%, reflecting strength in technology and semiconductor stocks.
The Dow Jones Industrial Average fell 38 points, or 0.07%, while the S&P 500 gained 0.20%.
Investors continued to assess corporate earnings for signs of whether heavy spending on AI infrastructure can deliver sustainable profits.
Concerns about debt-backed investments in data centres and rising oil prices have recently increased volatility across equity markets.
SpaceX and Super Micro boost AI stocks
SpaceX shares surged 8.8% in trading after the company reported its first profit as a public company and revenue growth of 161% in the third quarter.
The rocket and space technology firm also attracted attention after Elon Musk said a potential merger with Tesla would be a good idea.
Tesla shares rose 2.3% ahead of its quarterly results, scheduled for release after the market close.
The two companies have formed special committees to discuss a possible merger, according to the supplied reports.
Super Micro Computer gained 14% after the AI server maker forecast quarterly revenue and profit margins above Wall Street expectations.
The outlook suggested that demand for AI infrastructure remained resilient despite recent concerns about the profitability of the sector.
Other server manufacturers also advanced, with Hewlett Packard Enterprise rising 4.4% and Dell Technologies gaining 7%.
CoreWeave, a data centre operator that has been at the centre of concerns about AI-related debt, fell 0.37%.
Semiconductor stocks also moved higher.
Nvidia gained 1.5%, Intel rose 0.7%, and Advanced Micro Devices added 2.7%. However, the Philadelphia Semiconductor Index has recorded eight consecutive sessions of declines, its longest losing streak in 18 years.
Netflix falls as investors assess earnings
Netflix shares dropped more than 4.8% in trading after the streaming company issued a weaker-than-expected fourth-quarter profit forecast.
Its full-year revenue outlook also fell short of analysts’ expectations, while the company lowered its advertising revenue guidance.
The decline came days after Netflix laid off 6% of its workforce, adding to investor scrutiny of its growth outlook and operating decisions.
The contrasting performances of SpaceX, Super Micro and Netflix highlighted the market’s sensitivity to company-specific earnings and forecasts.
Investors are looking for evidence that AI-related spending can translate into stronger financial results rather than simply increasing capital requirements.
Meta Platforms is also scheduled to report results after the closing bell on Wednesday.
Its performance could provide further insight into AI investment plans and the potential returns from its technology development.
Oil prices and inflation remain in focus
Elevated energy prices continued to pose a challenge for investors. Brent crude futures traded near $108 a barrel, while US West Texas Intermediate crude futures fell 0.48% to $97.39.
Recent economic data indicated that inflationary pressures had spread beyond energy products, strengthening the case for another Federal Reserve interest rate increase.
However, markets expected the central bank to hold rates steady ahead of the November 3 midterm elections.
Defensive sectors have attracted investor interest amid the uncertainty, helping the Dow outperform the S&P 500 and Nasdaq in recent sessions.
The Dow rose nearly 530 points on Tuesday, supported by gains in 3M after the industrial company raised its full-year profit forecast.
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