Chris Neiger, The Motley Fool
5 min read
Artificial intelligence (AI) stocks are stumbling lately as shareholders scrutinize tech companies’ latest quarterly results. What they’re looking for are signs of life from the monumental investments the companies are making in AI infrastructure.
Not all of them are finding it.
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Space Exploration Technologies (NASDAQ: SPCX) investors initially seemed enthused by the company’s AI revenue surging 830% in the third quarter. It was an impressive gain and indicates that SpaceX’s spending — as high as it is — could potentially be worth the costs. But shareholders quickly pivoted back to their skepticism, and it’s kept SpaceX’s stock below its initial IPO price months after its debut.
So, can SpaceX overcome the current AI trade sell-off? Here’s why SpaceX shareholders are facing an uphill battle right now.
What’s causing the AI sell-off right now?
Many AI stocks have stumbled over the past couple of months as investors have questioned whether the massive ramp-up in data center infrastructure investments will pay off over the long run.
And there are mixed messages about whether it’s working. Microsoft recently reported that its Azure cloud revenue for Q1 of fiscal 2027 (ended Sept. 30), which includes AI sales, rose 48% to $33.1 billion. And management said Azure revenue will increase by up to 50% this quarter. That comes after Azure’s annual sales topped $100 billion for the first time in fiscal 2026.
Accelerating Azure sales is a good indicator that Microsoft’s capital expenditures — which were $45 billion in the first quarter — are paying off.
But other AI stocks haven’t fared as well. Investors punished Alphabet after its recent third-quarter results (ended Sept. 30), as its capital expenditures reached $51.3 billion and the company missed analysts’ estimates for consensus sales and earnings. Alphabet stock fell about 10% the day after its Q3 results were released.
In short, investors are looking very closely at whether capex is paying off, and if they think a company is missing the market, they’re not very forgiving.
How SpaceX is weathering the AI storm
It’ll come as no surprise to tech investors following the AI market that SpaceX shares have been a disappointment since the company’s IPO back in June. They’re down about 5% from their opening price of $150, as of this writing.
