SpaceX Blowout Quarter and Supermicro Guidance Lift Revive AI Trade as Treasury Yields Ease

The AI investment trade rebounded sharply on October 21 after two major catalysts emerged overnight. SpaceX reported third-quarter revenue of $14.6 billion, up 161% year over year from $5.6 billion, and swung to a net profit of $4.4 billion from a loss of $1.1 billion a year earlier. Adjusted EBITDA surged 306% to $8.8 billion, driven by growth in its Superintelligence and Starlink segments, with earnings per share of $0.35 far exceeding the FactSet consensus estimate of $0.13.

Super Micro Computer added to the momentum by raising its gross margin outlook to a range of 12.0% to 12.5%, up from a prior forecast of 10.4% to 10.8%, citing a record backlog of AI server orders. SMCI shares jumped roughly 12% in early trading, pulling peers higher, with Dell Technologies gaining nearly 5% and Hewlett Packard Enterprise rising about 3%. Lower Treasury yields on the day further supported a rotation into higher-beta technology and AI-linked names, with the S&P 500, Nasdaq, and Dow all moving higher.

In fixed income, high-yield corporate bonds showed notable year-to-date relative strength within the broader fixed income space, with the HYG and JNK ETFs outperforming investment-grade peers. Municipal bonds also drew attention as tax-loss harvesting season began, with active muni ETFs positioned as an alternative for investors selling other debt assets to capture tax benefits. Bank of England Governor Andrew Bailey said negative interest rates and fiscal policy are not effective tools when rates approach their lower bound, adding to the global debate over how central banks navigate tightening cycles.