SpaceX Just Shared Great News for Artificial Intelligence (AI) Investors. Here Are 2 Stocks That Could Benefit

Space Exploration Technologies (SPCX +1.89%) reported strong third-quarter results on Oct. 20. The company’s artificial intelligence (AI) segment — dubbed Super Intelligence (SI) — was particularly impressive. SpaceX’s total revenue grew 161% year over year to $14.6 billion, while SI revenue soared 830% year over year to $7.6 billion.

Even with a $608 million contribution from an acquisition that closed in August and boosted its SI unit, this business’s growth during the period was impressive. The fact that SpaceX is experiencing such strong demand for AI is arguably a bullish sign for the broader AI industry. And for investors still looking for stocks to capitalize on the AI market, here are two that look particularly attractive following SpaceX’s third-quarter update: Nvidia (NVDA -0.59%) and CoreWeave (CRWV -2.46%).

Image source: The Motley Fool.

1. Nvidia

During the third quarter, SpaceX’s capex in its SI business was $16.4 billion, up 245.5% year over year. At least some of that money is likely landing right in Nvidia’s pockets, as SpaceX continues to expand its capacity to meet the high demand for AI compute. This isn’t just speculation either.

SpaceX’s management pointed out, among other things, that even older Nvidia systems, like the H100 GPU (graphics processing unit), are renting out at a premium compared to when they were new — the H100 launched in 2022.

That says a lot about Nvidia, and it strongly suggests that newer systems, like the company’s Vera Rubin architecture, are experiencing even higher demand. Further, SpaceX’s CEO, Elon Musk, predicted a shortage of superintelligence compute that would last for some time.

If true, this would certainly benefit Nvidia, potentially granting the company even more pricing power. The bottom line is that while some people still expect the AI bubble to burst and take Nvidia down with it, there is significant evidence that AI infrastructure spending could continue to grow unabated for the foreseeable future. SpaceX gave us more data confirming that.

Meanwhile, Nvidia remains the undisputed leader in GPUs and has significantly expanded its portfolio. The company is well-positioned to tap into the massive demand for AI compute in the medium term and could deliver outstanding returns. In short, it’s still not too late to invest in Nvidia, even after its amazing performance over the past five years.

2. CoreWeave

CoreWeave also rents out AI compute capacity through a network of data centers. Some investors are skeptical of the company’s prospects right now, but it isn’t because sales growth hasn’t been impressive. In the second quarter, CoreWeave’s revenue increased by 112.5% year over year to $2.6 billion.

CoreWeave ended the period with a revenue backlog of $104 billion, up 245.5% year over year. And that didn’t include the more than $25 billion in revenue backlog it recorded in the first few weeks of the third quarter.

However, CoreWeave is incurring significant debt to fund its AI ambitions, which is a meaningful risk investors will need to keep in mind, in addition to the company’s customer concentration.

With that said, SpaceX’s recent results and management commentary suggest that the kinds of services CoreWeave offers will remain in high demand for a while, which makes its debt-related problems much less concerning.

Consider, for instance, that Musk said that SpaceX could rent out AI compute capacity several times over if the company accepted every request. In other words, current demand significantly exceeds capacity. Also, SpaceX’s CFO, Bret Johnsen, noted that “At current pricing, new compute deployments are generating a payback of less than a year.”

These are incredibly bullish signs for CoreWeave. And they arguably justify the company spending fortunes to increase its compute capacity. The stock is a bit riskier due to the issues mentioned above. However, it could deliver outstanding returns over the next five years.