Key Points
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Space Exploration Technologies’ Q3 growth rate was downright incredible.
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AMD’s revenue growth is accelerating, but it’s not on the same level as SpaceX.
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AMD (NASDAQ: AMD) and Space Exploration Technologies (NASDAQ: SPCX) are two stocks that most people wouldn’t commonly compare. AMD makes computing units and other components used in artificial intelligence (AI), while SpaceX builds and launches rockets.
While that argument may hold water on the surface, most people forget that SpaceX owns xAI, which has become a major part of its business. In fact, SpaceX’s AI business, which it calls Super Intelligence (SI), now generates the majority of SpaceX’s revenue.
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So it actually makes a lot of sense to compare AMD and SpaceX from an AI investment perspective. But which is the better buy today? Let’s take a look.
AMD and SpaceX are two different kinds of AI investments
AMD and SpaceX aren’t competitors; they’re potential partners. AMD makes graphics processing units (GPUs) and other data center components for training and running AI models. SpaceX is more of an AI application play, as its clients can either subscribe to its Grok AI model or deploy AI agents such as Grok Bots.
SpaceX could be an AMD client, but it’s choosing not to. Why? It doesn’t think it has the best technology.
During SpaceX’s Q2 earnings call, Chief Executive Officer Elon Musk had this to say about its relationship with AMD’s rival, Nvidia:
And going forward, we’ve decided to build exclusively on Nvidia because we think the Vera Rubin architecture is the best. We think it’s the best AI computer, and we greatly value our close cooperation and partnership on many levels with Nvidia. So, we’re exclusive to Nvidia.
That’s pretty definitive and closes the door on a relationship with AMD. This should also raise flags for potential AMD investors, as most of the time, the company with the best technology wins. However, there’s still an argument to be made for having cheaper products that may not be as powerful, and that’s where AMD’s products tend to land.
AMD has landed several major contracts, including some with OpenAI and Meta Platforms, just to name a few. We’ll see where this takes AMD in the future, but it’s going to have to put up some serious growth to compete with SpaceX.
AI application plays are taking center stage
During the past few years, AI infrastructure was the best way to invest in AI, and it’s still one of the best ways to gain exposure. However, AI applications (like SpaceX) are starting to take off as more businesses and people adopt AI technology. This is showing up in each company’s growth rates.
Revenue at AMD’s data center division rose 107% in Q2 to $6.7 billion. Normally, a growth rate like that would secure an easy win in a comparison; the only problem is that SpaceX’s Super Intelligence division saw its revenue explode 830% to $7.6 billion.
So after just one quarter of excellent growth, SpaceX’s AI division is now larger than AMD’s, which took years to build. That’s a huge strike against AMD, and I think this outperformance could easily continue as the AI build-out moves into a deployment phase.
Still, this could be good for AMD. As more consumers start to use AI, it will require more computing capacity. Although it may not be supplying it to SpaceX, there will be other clients that need it. This will lead to strong future growth, but it may still seriously lag behind SpaceX.
In fact, Musk now expects SpaceX to generate between $500 billion and $1 trillion in revenue next year, mostly powered by AI. Musk’s projections are known to be overoptimistic, but I think reaching that mark in a few years isn’t outside the realm of possibility.
As a result, I think SpaceX is the better buy. It just has better growth and is already bigger than AMD’s AI-focused division. It’s time to start looking at AI application plays, and SpaceX is one of the best.
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Keithen Drury has positions in Meta Platforms and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
