🗞 The 4 Craziest Charts From Q3 So Far

Happy Sunday! 👋 

Q3 earnings season is well under way!

As always, the Fiscal.ai team has been sifting through hundreds of reports to bring you the most exciting takeaways.

Let’s dive in!

1. Taiwan Semiconductor

Generally speaking, for a manufacturing business, 10%-15% profit margins is considered very healthy.

Well, Taiwan Semiconductor (a manufacturing business) has now generated 58% operating margins over the last 12 months.

During the 3rd quarter conference call, when asked about the long-term margin expectations for the business, Taiwan Semiconductor’s CEO had this to say:

While the debate rages on as to whether or not the semiconductor supply chain is over-earning thanks to AI-related demand, TSMC continues to take a careful approach towards capacity expansion.

According to CEO C.C. Wei, not only are they having ongoing discussions with their customers (and their customers’ customers) to ensure demand, but this quarter they began going one step further and sending their own teams of people to check on data center build-out progress.

2. SpaceX

Tuesday marked SpaceX’s second quarterly report as a public company, and suffice to say, they did not disappoint.

Total revenue grew 161% to $14.6 billion, led by the Super Intelligence segment which grew from $813 million to $7.6 billion in 12 months.

However, while “Super Intelligence” now accounts for the majority of revenue, the Connectivity (aka Starlink) segment remains the largest profit driver. Of their $2.8 billion in operating profit this quarter, ~$2.4 billion came from Connectivity.

Starlink now has 13.6 million global subscribers, which is more than triple their subscriber base from two years ago. For context, Comcast (which is the largest internet provider in the United States), currently has about 30 million residential internet customers. How long until Starlink surpasses that figure?

While the Q3 results were pretty remarkable on their own, it was perhaps the guidance that helped SpaceX add ~$200 billion in market cap the day after the report.

During the conference call Elon Musk stated “I mean, in a nutshell, what this implies for SpaceX annual recurring revenue by the end of 2027 is somewhere between $500 billion and $1 trillion.”

3. Charles Schwab & Interactive Brokers

Customer activity across the leading brokerage platforms tends to be a decent read through to overall investor sentiment. And last week, Charles Schwab and Interactive Brokers both reported relatively solid numbers, with each company reporting revenue figures roughly in line with analyst estimates.

However, there was one figure stood out above the others: Margin Loan Balances.

Charles Schwab and Interactive Brokers both reported their highest margin loan balances on record, now totaling a combined $292 billion.

To put that in perspective, during the 2021 bull market, those 2 companies combined for $139 billion in margin loan balances, or roughly 47% of the current figure. Meanwhile, interest rates are now more than double what they were in 2021.

Long story short, current investor risk appetite appears to be at record highs.

4. Meta

Meta reported its first quarter ever of negative free cash flow on Wednesday.

The social media giant has been investing heavily on capital expenditures to expand compute capacity for its own models. This quarter alone Meta spent $34 billion, compared to $19 billion spent in the same quarter a year prior.

Beyond leveraging those models to improve ad targeting, Meta had their first real consumer AI hit this quarter with the launch of Muse.

Muse has been number one in the app store almost every day since its launch and there are now more than 10 million people in North America that have set up Muse personal agents.

While they seem to finally be showing real traction with their AI initiatives, this investment cycle still poses a massive financial risk for the business. On a recent podcast interview, Chief AI Officer Alexandr Wang had this to say:

That’s all for this week. 

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