Results from SpaceX and Super Micro far exceeded forecasts, rekindling AI optimism and driving Nasdaq 100 futures higher. Attention now turns to Meta’s forthcoming earnings.

Better-than-expected AI company earnings are restoring confidence in the sector after last week's sell-off, with Nasdaq futures recovering following a flat close on Tuesday.

Brent's position above $110 a barrel has not halted the improvement in sentiment. Attacks around the Strait of Hormuz have raised fears over supply, and U.S. data suggest crude stocks have fallen again. More expensive oil is also intensifying inflation concerns. Should interest rates consequently remain higher for longer, technology shares could face pressure, although solid earnings are currently supporting sentiment.

SpaceX rallies as results far exceed forecasts

A strong Q3 performance, with earnings and revenue substantially ahead of expectations across SpaceX's divisions, has sent its shares 8% higher in pre-market trading.

An almost twofold rise in subscriber numbers helped drive a 69% revenue increase at Starlink, the company's satellite internet service. Its rocket division recorded year-on-year revenue growth of 6%. Revenue increased tenfold at Superintelligence, SpaceX's AI division, which comprises the data centre rental business and Grok chatbot.

From a loss of $1.1 billion in the equivalent period a year earlier, SpaceX moved to Q3 net income of $4.4 billion. Wall Street had estimated revenue of $12.87 billion; the reported figure was substantially higher at $14.6 billion. EPS also exceeded expectations by more than twofold, reaching $0.35 against a forecast of $0.15.

Data centre capacity rental agreements with Anthropic, Google and Reflection AI together represent $28 billion in annual revenue. These deals, reflected in the results, illustrate the scale of SpaceX's growth in the data centre market.

The expense of building data centres makes borrowing costs an important consideration, and cheap funding is not available to every company. Investor doubts about CoreWeave's capacity to repay its debt drove its bond yields above 15% last week. At around 7%, SpaceX's bond yields give it a marked financing advantage. A cash position of $90 billion further strengthens its ability to expand as rivals face more costly borrowing.

The expiry of lock-up restrictions is also on investors' radar. Restrictions affecting around 35% of SpaceX shares will lapse over the next few days, freeing investors and company insiders to sell their holdings. If some decide to realise profits, the share price could become more volatile while confidence in AI stocks remains fragile.

Super Micro gains as revenue guidance rises

Forecast-beating results have driven a 16% rise in Super Micro Computer shares. The company now anticipates quarterly revenue between $18.5 billion and $19.5 billion, compared with its considerably lower previous guidance of $14.5 billion to $15.5 billion.

Some confidence in AI-related shares has returned on the back of these results. Investors were unnerved last week by valuations, the expense of financing AI infrastructure development and uncertainty over returns from heavy spending. Semiconductor stocks lost 12%, with the Nasdaq finishing the week down 3%.

Due after today's U.S. market close, Meta Platforms' results are the next focus. Investors want further confirmation that AI demand is producing earnings growth.

Encouraging as the latest figures are, concerns about expenditure and funding persist. Oil's rise presents an additional challenge: if inflation proves persistent, interest rates could remain higher, raising the cost of the next phase of AI expansion.

Nasdaq 100 technical analysis: recovery remains below resistance

Having reached a record high of 31,365, the Nasdaq 100 declined until support held around 29,200. Its subsequent rebound has yet to take it above either the 50 EMA or two descending trendline resistance levels. Despite the upturn in futures, the short-term technical picture therefore remains bearish.

A breach of 29,200 is the downside trigger sellers will watch. Below that level, attention would shift to the June 9 low at 28,200 and the 200 EMA around 28,150.

Buyers first need to recover the resistance zone at 29,830, formed by the convergence of the descending trendlines and the 50 EMA. Moving above it would clear a path towards 31,000 and then 31,350, close to the record high.