Asian shares rose on Wednesday as investors returned to the artificial intelligence trade, even as setbacks for Elon Musk’s SpaceX and US chipmaker AMD highlighted the risks in the sector. In Asia, Japan’s Nikkei climbed 3.6% and South Korea’s Kospi jumped 4.1%, while Brent crude fell further after slipping below $80 a barrel at Tuesday’s close.
By Wednesday, Brent, the global benchmark, was down 0.5% at 78.95 a barrel as hopes grew for a peace deal that could ease pressure on oil markets. Qatar said a draft proposal had been circulated, and US treasury secretary Scott Bessent said an agreement to reopen shipping flows could be reached
“today or tomorrow”. Axios reported that the US was hoping for a Wednesday announcement of an interim deal.
Wall Street indices had climbed to record highs on Tuesday as Caterpillar and Palantir Technologies joined other companies reporting strong profits, while crude oil prices eased. AMD fell 8.8% after hours and SpaceX lost 7.5%, amid worries that capital expenditure is using up its cashflow.
“Oh, the irony,”
said Stephen Innes, global strategist at Quintex Intel.
“Wall Street is chasing the the AI trade it just sold.”
Technology stocks are booming again after the recent sell-off, boosting global stock markets. The market has changed its mind on AI, but the risks have not gone away.
The capital expenditure numbers remain staggering. Goldman Sachs calculates that US technology investment as a share of GDP has already surpassed its late-1990s peak, while the largest cloud and computing companies’ 2026 spending plans are almost 50% higher than analysts expected only six months ago.
There is also a circularity that should not be ignored. One hyperscaler’s capex becomes a semiconductor company’s revenue, an electrical-equipment supplier’s backlog and a data-centre developer’s earnings. The infrastructure boom is producing the profits that help validate the infrastructure boom.
That can continue far longer than skeptics expect, particularly when balance sheets remain strong and demand exceeds available capacity. Eventually, however, investors will need to determine how much of the current earnings growth represents sustainable end demand and how much is the temporary consequence of everyone building simultaneously.
China adds another layer. Rapid advances from Alibaba and other Chinese model developers reinforce the argument that the technological gap is narrowing, but lower-cost models are not an uncomplicated positive for US incumbents. Cheaper inference can broaden adoption while placing pressure on pricing, proprietary-model economics and the value assigned to scarcity.
For now, investors are focused on the bullish side of cheaper AI: wider adoption, heavier compute demand and more infrastructure spending. The pressure on pricing and proprietary-model economics is a problem for another quarter.
Disbelief has given way to an upside chase. July removed leverage, punished weak hands and compressed valuations. Earnings then reminded investors that expensive infrastructure is not necessarily unproductive infrastructure.
Months were spent worrying that Big Tech was spending too much. The new fear is that investors sold just as those companies began proving why they had to spend it.
What did Sam North say about SpaceX’s results?
Sam North, market analyst for the trading platform eToro, said SpaceX had delivered a debut quarter strong enough to support a $1.75 trillion valuation. Revenue surged 92% to $7.8bn, comfortably ahead of expectations, while adjusted EBITDA of $3.5bn was roughly 70% above forecasts.
The most encouraging feature, he said, was the breadth of the beat. Connectivity produced $4.29bn, AI contributed $2.56bn and the space business generated $962m. With $100bn of cash and $47.5bn of backlog, SpaceX has the financial firepower to fund ambitions that would overwhelm almost any other company.
But the results do not remove the central risk, they raise the stakes. SpaceX still lost $541m, Starlink’s falling revenue per user shows the cost of chasing global scale, and AI and Starship will continue consuming enormous amounts of capital.
The Nvidia-backed Starmind project makes the orbital-compute vision more credible, but investors still need proof that it can become a profitable business rather than an expensive engineering experiment.
This quarter buys Musk credibility and time, but with the lock-up expiry approaching and the shares already below their IPO level, SpaceX will need to keep producing exceptional numbers to prevent its valuation from returning to Earth.
What market data is due later in the day?
Several key releases are scheduled later on Wednesday, including regional purchasing managers’ index data and US labour and services figures.
9am BST: Eurozone S&P Global services and composite PMIs for July
9.30am BST: UK S&P Global services and composite PMIs for July
1.15pm BST: US ADP employment change for July
3pm BST: US ISM services PMI for July
Key Facts
- Japan’s Nikkei rose 3.6% and South Korea’s Kospi jumped 4.1%.
- Brent crude fell 0.5% to $78.95 a barrel.
- AMD fell 8.8% after hours and SpaceX lost 7.5%.
- Sam North said SpaceX revenue surged 92% to $7.8bn and adjusted EBITDA reached $3.5bn.
- US data due later includes the ADP employment change and ISM services PMI for July.
