SpaceX Shares Drop 10% on AI Capex Plans

On Wednesday, SpaceX's stock dropped by 10% in early trading following the release of its first earnings report, which outlined substantial investments in AI infrastructure. The company achieved quarterly revenues of $7.8 billion, surpassing analysts' predictions of $6.82 billion and marking a 92% increase compared to the previous year. Although the net loss was about $541 million, it was significantly better than the anticipated $2.12 billion loss. However, spending on AI capital expenditures nearly doubled to $16 billion, exceeding Wall Street forecasts, with plans to maintain this spending level for at least two additional quarters. Following its historic IPO in June that raised $86 billion, shares have fallen from a peak of $225 to $112. CEO Elon Musk announced intentions to boost computing capacity from 2 gigawatts to between 5 and 10 gigawatts by the end of 2027, with each gigawatt costing tens of billions, mainly for chips, and reliance on Nvidia hardware. CFO Bret Johnsen expects annual recurring revenue to surpass $100 billion by year-end, driven by cloud services. Analysts, including Melissa Otto from S&P Global, voiced concerns about the ambitious AI capex figure.