3 Stocks to Buy Following SpaceX's First Earnings Call

Whether you love him or hate him, Elon Musk is one of the most influential executives in the world today. Not surprisingly, his first earnings call with SpaceX (NASDAQ: SPCX) was a highly anticipated event. While, as expected, he made some bold predictions and promises, there were a few clear non-SpaceX winners from the company's earnings call.

Nvidia

The first big winner is Nvidia (NASDAQ: NVDA). Just before releasing its earnings report, SpaceX announced that it was teaming up with Nvidia to design the compute payload for its Starmind AI satellite. This will be SpaceX's first big test for its planned data center-in-space ambitions, and it will use both Nvidia's graphics processing units (GPUs) and central processing units (CPUs).

Elon Musk. Image source: Getty Images.

A prototype of the satellite is scheduled to be delivered early next year, with plans for mass production later in 2027. Meanwhile, Musk said the satellite would basically be an optimized Vera Rubin NVL72 computer and that it plans to use it both in orbit and on the ground.

More importantly, though, Musk declared on SpaceX's conference call that the company would use Nvidia's chips exclusively going forward. He said that Vera Rubin is the best architecture, and that Nvidia has the best AI computer.

While SpaceX isn't yet spending the same amount on AI infrastructure capital expenditure (capex) as the five big hyperscalers -- Amazon, Alphabet, Microsoft, Meta Platforms, and Oracle -- it could be in the next few years. After all, the $15.8 billion it spent on just AI capex alone ($18.4 billion in total) in the second quarter was not chump change.

Overall, the SpaceX news is a nice positive for Nvidia, and with the stock trading at a forward price-to-earnings (P/E) ratio of just 17 times fiscal 2028 analyst estimates, it's just another reason to buy this AI stock leader.

The memory makers

When discussing memory on the call, Musk gave a short and simple reason why these stocks likely have a long runway of growth in front of them. The SpaceX CEO said:

Then look at the rate at which logic and memory is being produced. And one must always consider a limiting factor here. The limiting factor currently is memory. The memory output is increasing by around 20% per year. Now normally, that would be fantastically fast and amazing for any large, mature industry. But ask yourself: is the demand increasing by 20% a year. No, the demand is increasing by 200% a year, maybe higher. So, if you've got demand increasing much faster than supply, then Economics 101 would suggest that the price increases; it does not decrease.

Simply put, DRAM is currently very supply-constrained, and given the pace of demand versus supply, this situation is only going to get worse, and prices will continue to rise. That is great news for memory makers, especially SK Hynix (NASDAQ: SKHY) and Micron (NASDAQ: MU), which together with conglomerate Samsung have an oligopoly on the DRAM (dynamic random-access memory) space.

SK Hynix is the biggest direct beneficiary from this. Demand for high-bandwidth memory (HBM), which gets packaged with GPUs to reduce latency, is the leading driver of DRAM demand. SK Hynix, meanwhile, is the main HBM provider to Nvidia and holds an over-50% market share. It also just signed a massive multiyear $500 billion deal to supply and co-develop next-generation memory specifically for Nvidia's Vera Rubin architecture. With its stock trading at a forward P/E of around 5 times, the longer this memory cycle lasts, the cheaper its stock looks.

Micron, meanwhile, is perhaps the biggest indirect beneficiary. With the big three DRAM makers focused on HBM, prices for ordinary DRAM and NAND (flash) have actually been rising faster than HBM prices. As such, trailing a bit in HBM has actually benefited the company, and current market conditions likely mean this will continue. With a similar valuation to SK Hynix, the stock looks more attractive the longer this memory supercycle lasts.

Geoffrey Seiler has positions in Alphabet, Amazon, and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Micron Technology, Microsoft, Nvidia, and Oracle. The Motley Fool has a disclosure policy.