SpaceX spending spree rattles investors
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Why is SpaceX’s pre‑market slump causing investor concern?
Welcome to Seeking Alpha's Wall Street Breakfast, where we cover the top news for investors every morning. Good morning. Today is Wednesday, August 5th, and I'm your host, Kim Kahn, filling in for Julie Morgan, who's presenting Wall Street Lunch this week. SpaceX is slumping in pre-market trading after its first earnings report as a public company revealed an extraordinary surge in capital spending as it accelerates investments in AI infrastructure and its Starship rocket program. Capital expenditures climbed to $18.4 billion in Q2 from $10.1 billion in Q1 and more than six times the $2.8 billion spent a year earlier. Nearly $15.8 billion was invested in the company's AI business as it expanded computing capacity and built infrastructure supporting new cloud service agreements.
How much is SpaceX spending on AI and Starship, and what does it mean for its earnings?
Additional spending went towards Starlink satellites and Starship development. The spending spree came alongside another quarter of strong operating performance. SpaceX reported revenue of $7.81 billion, up 92% year-over-year, and ahead of the $6.82 billion consensus. SpaceX is also preparing to challenge the largest U.S. wireless carriers by pairing its satellite communications network with a nationwide terrestrial mobile network. On the earnings call, President and COO Gwynne Shotwell said, the big three in the United States, AT&T, Verizon, and T-Mobile, are roughly a $600 billion a year market. I anticipate us being able to acquire quite a few of their customers because I think our service will be better.
Also in the AI trade, AMD is lower pre-market, with investors wanting more than a beat-and-raise quarter after the stock's 130% rally year-to-date.
What are analysts saying about AMD’s strong quarter and its growth outlook?
Seeking Alpha analyst Jonathan Weber said revenue and earnings growth remains strong, but AMD continues to grow at a slower pace compared to Nvidia while trading at a much higher valuation. Looking ahead, AMD expects Q3 revenue of $12.7 to $13.3 billion, with a $13 billion midpoint comfortably above the $12.51 billion consensus. Adjusted gross margin is forecast at 56%. And Big Short investor Michael Burry said he continues to believe it is possible we are near a major top and possibly a 1987-type fall, but the S&P 500 making new highs likely will bring new money into the market. Remember, the market going up on fallen volatility forces Vol targeting funds to leverage up, and brings leverage from other momentum strategies into play, he wrote on Substack.
Despite the rally, Burry said he continues to hold short positions in the iShares Semiconductor ETF, SOXX, Micron, NVIDIA, Caterpillar, Palantir, Tesla, and Applied Materials. He said he remains confident in the long-term outlook for those trades, though he would cut his losses if they moved decisively against him. All positions remain profitable, except for his bet against Nvidia.
Why does Michael Burry warn of a possible 1987‑style market crash now?
Again, shorting is not for everyone, Burry wrote. I must short. Most should not. Now here's a look at what's trending on Seeking Alpha. Samsung is unveiling its next-generation AI memory technology. Uber and Wave have secured London licenses for autonomous ride trials. And Palantir short sellers were taken to the woodshed, absorbing roughly $3 billion in losses after Tuesday's 30% rally. In pre-market trading, stock market action looks a little tired after the recent technology melt-up, with futures on the S&P 500, NASDAQ 100, and Dow pointing to a mixed open.
What are today’s top tech headlines – Samsung AI memory, autonomous rides, and Palantir short‑seller losses?
The bond market is also seeing limited moves, with the Treasury yield curve flattening slightly. On today's economic calendar, at 8.15 a.m., the July ADP employment report is out. At 9.45 a.m., S&P Global issues its July PMI composite final numbers. And at 10 a.m., the July ISM service index is out. That's all for today's Wall Street Breakfast. Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at seekingalpha.com. And for a full suite of news, analysis, ratings, and data on stocks and ETFs, go to seekingalpha.com.
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Chapters
5 chapters
1
Why is SpaceX’s pre‑market slump causing investor concern?
0:06–0:48
2
How much is SpaceX spending on AI and Starship, and what does it mean for its earnings?
0:48–1:37
3
What are analysts saying about AMD’s strong quarter and its growth outlook?
1:37–2:45
4
Why does Michael Burry warn of a possible 1987‑style market crash now?
2:45–3:17
5
What are today’s top tech headlines – Samsung AI memory, autonomous rides, and Palantir short‑seller losses?
3:17–3:53