Key Points
SpaceX has been a highly volatile investment, which could weigh on Nvidia's future earnings reports.
In its most recent quarter, Nvidia reported $15.9 billion in other income, primarily due to investment gains.
Nvidia (NASDAQ: NVDA) invests in many promising growth companies, and one of its largest positions is in Space Exploration Technologies Corp, also known as SpaceX. When Nvidia recently filed its 13F holdings report, which identified its largest investments, SpaceX was near the top of the list, worth $21 billion as of the end of June. The only larger holding for Nvidia was in Intel, where its investment was worth close to $30 billion.
For Nvidia investors, that means they're getting indirect exposure to the top IPO of 2026 thus far. But will having so much exposure to SpaceX cause problems for the tech company later on, given how volatile the newly issued space stock has been since going public?
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SpaceX isn't the only volatile stock Nvidia has invested in
Nvidia has invested in many growth stocks, which investors may see as potentially risky and volatile. This includes CoreWeave and Nebius Group, which trade at high valuations and are closely tied to the ongoing tech investments in artificial intelligence (AI). They've been volatile investments in the past and, like SpaceX, can swing wildly due to market- and industry-specific developments. Having positions in SpaceX and other volatile stocks may introduce volatility into Nvidia's earnings due to potential investment gains and losses.
In the tech company's most recent earnings results, which ended on April 26, the company reported other income totaling $15.9 billion. While that was lower than its operating profit of $53.5 billion, that still gave its bottom line a boost of about 30%. Nvidia notes that other income was primarily attributable to unrealized gains and losses on investments. With SpaceX stock struggling after June, however, Nvidia may end up incurring a loss from its investments when it reports its next round of earnings, which go up until the end of July. At the very least, however, it's not likely to experience a similar bump up from other income.
Could this be a problem for Nvidia's stock?
When a company reports earnings, it's often the adjusted numbers that investors and analysts focus on, which strip out unusual items and investment gains and losses that don't truly reflect how the core business is doing. For a company that still generates substantial earnings, Nvidia's exposure to SpaceX and other investments is unlikely to adversely affect the AI stock.
As long as Nvidia is generating strong growth and its guidance is promising, that should be enough to ensure that it rises higher. And right now, with investments in AI remaining robust, it's unlikely that trend will end just yet; Nvidia's stock may still have a lot of room to rise higher.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Nvidia. The Motley Fool has a disclosure policy.