U.S. Stocks Rise as SpaceX, OpenAI Revenue Reports and Options Hedging Shape Tech Trading

SpaceX's spectrum announcement to expand Starlink's mobile capabilities sent shares of Elon Musk's company up more than 3% and telecom stocks sharply lower. Investors expect Verizon, AT&T and T-Mobile to face increased competition from SpaceX's satellite service.

OpenAI told Bloomberg it expects $70 billion or more in annualized revenue by year-end, after the Financial Times reported a smaller number, which slammed the AI trade Thursday. Nvidia-backed Firmus Grid, an AI infrastructure company, also hurt sentiment by scrapping its Australia IPO over valuation concerns. Cramer wrote that the episode is a reminder that people still figure AI as a trade, not as an investment.

The Nasdaq-100 Index declined as much as 1.8% Thursday following the FT report. As the index slid, the number of open put contracts tied to the Invesco QQQ Trust relative to calls reached 1.49, the highest since the last week of June, according to Barchart data. The ratio has been moving in favor of puts since August, despite a steady climb in big-tech stock prices that culminated in a string of all-time highs through Tuesday. On Wednesday, the two biggest options trades of the session, one in the State Street SPDR S&P 500 ETF Trust and another in Meta Platforms, were bearish.

Interpreting the options market at this point is tricky. The QQQ put/call ratio suggests selloffs would be met with support as hedges turn to profit, but the same ratio in the SPDR S&P 500 ETF Trust and the S&P 500 Index is near average. On Thursday, QQQ puts increased, but the biggest trades during regular hours were bullish. At 11 a.m. ET, someone sold almost 5,000 740-strike puts expiring in March for $15 million; at 2 p.m., someone bought 6,500 835-strike calls in the same March expiry for more than $8 million, a bet that needs a 14% rally to pay off. In extended hours, sentiment flipped. Just after 4 p.m., someone bought 15,000 680-strike puts for $16 million expiring Jan. 15, and sold the same number of 760-strike calls expiring Oct. 16, collecting $4 million. The total premium of $20 million was the highest-premium trade of the day and a starkly bearish bet.

Don Kaufman, a 15-year ThinkOrSwim Trader Group director and co-founder of TheoTrade, said neither bonds nor the OpenAI revenue report caused much damage. "The market can drop, but a more sustained selloff would likely require enough selling pressure to turn a market that absorbs downside into one that accelerates it," he said.

Cramer also flagged Delta Air Lines, which missed on everything this quarter but still made big money with little slowdown on higher prices. Premium revenue rose 18%. Delta cut guidance, citing higher fuel prices, and shares fell 2.5%.

Morgan Stanley raised Charles Schwab's price target to $141 from $136, saying Meta Platforms' Muse personal AI agent is not going to reorganize the world and Schwab won't lose deposits that pay low interest. The same bank lifted Robinhood's price target to $160 from $150. JPMorgan upgraded VF Corp, the company behind The North Face, Vans and Timberland, to hold from sell; retail analyst Matt Boss said fieldwork shows the story is turning, though CEO Bracken Darrell has taken longer than expected to fix the company. Bank of America cut its price target on buy-rated Eli Lilly and raised its target on hold-rated Johnson & Johnson ahead of earnings. Needham raised CrowdStrike's price target to $310 from $250, implying more than 15% upside, and analysts see initial migrations to the platform averaging a 40% annual recurring revenue uplift.

On Nvidia, Cramer wrote that the company's free cash flow might not be as big as thought because of its massive investments, citing a Wall Street Journal Heard on the Street column by Jonathan Weil. He said that might hurt the company's buyback, but he thinks free cash flow will be far more substantial than people realize and that Nvidia can cash in on big investments any time it wants to.