Elon Musk looks to be losing his powers. SpaceX shareholders didn’t like their chief executive’s promises of huge spending to come in an AI race that only seems to be boosting hardware suppliers.

When Musk presents Tesla earnings, he often lifts the stock with bold statements about the robot-dominated future to come. But when it comes to SpaceX, his comments seemed to have the opposite effect.

The world’s richest person, who briefly became the first trillionaire, made big pledges alongside SpaceX’s earnings late Tuesday—chief among them that the rockets-telecoms-AI conglomerate could generate $1 trillion in revenue as soon as 2029. But it was surging capital expenditure that was the market focus and which spooked investors.

Musk is hardly alone in his huge spending. Alphabet, Microsoft, Amazon, Meta, and Oracle are committed to a cumulative $800 billion in capex this year alone. However, those companies already have huge cashflows to fund their outlays. Meanwhile, SpaceX’s $18.4 billion quarterly capex is more than double its revenue, never mind its earnings. 

Still, as the saying goes: It’s an ill wind that blows nobody any good. While Musk looked to have sunk SpaceX stock, he boosted Nvidia by announcing his company would exclusively use the chip maker’s hardware. That could help shore up Nvidia against the incursions of fast-growing rivals such as Advanced Micro Devices, shares of which dropped after earnings despite 50% revenue growth. The increased spending is also great news for data-center component companies such as Arista Networks or Astera Labs, which reported huge growth in their own earnings reports Tuesday.

The chief message from Big Tech earnings is that no one is dropping out of the spending race, whether shareholders like it or not. Like Meta’s Mark Zuckerberg, Musk is confident he can prove the doubters wrong, eventually—but he faces a struggle to convince investors that SpaceX’s part in the great AI splurge is money well spent.

—Adam Clark

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SpaceX’s inaugural earnings report is on the books. It delivered the excitement investors expected. Beyond the quarterly numbers, SpaceX management hinted at $100 billion in annual recurring revenue by the end of 2026, and CEO Elon Musk hinted at $1 trillion in annual sales by 2029. Watch this space.

• For starters, Musk’s commercial space, satellite, and AI company reported better-than-expected sales and earnings with a surprise $1.1 billion in AI earnings before interest, taxes, depreciation, and amortization. Musk’s suggested projections are well ahead of expectations.

• SpaceX also believes it can someday deliver the majority of the world’s internet service and plans a mobile communications product in 2027. That revelation put pressure on shares of T-Mobile, AT&T, and Verizon Communications. SpaceX can use its Starlink space-based broadband product to offer service.

• Musk’s prediction for $1 trillion in sales perhaps by 2029 is an incredible number considering Microsoft, Apple, and Alphabet are expected to generate a combined $1.3 trillion in 2026 sales. Wall Street currently projects $320 billion in revenue for 2030.

• A lot of the predicted revenue will come from SpaceX’s AI business. Musk estimates that AI compute can generate $30 to $50 a watt in revenue. To generate $1 trillion in sales, pricing needs to be stable and compute capacity needs to rise from about 1.4 gigawatts to 20 gigawatts.

What’s Next: SpaceX raised roughly $110 billion in recent weeks. It ended the quarter with about $100 billion in cash and almost $50 billion in business backlog. Management indicates SpaceX will continue to spend aggressively on Starship, Starlink, and AI infrastructure. It wants 10 gigawatts of AI compute by the end of 2027.

—Al Root

Advanced Micro Devices notched record quarterly revenue as data center sales more than doubled from a year ago, but the results were overshadowed by comments from Tesla and SpaceX CEO Elon Musk, who revealed his company would buy only rival Nvidia chips going forward. Shares fell 9%.

• Musk had recently said his companies would continue to buy from both chip makers. The announcement marred an otherwise solid if unspectacular second-quarter earnings report, with revenue reaching $11.5 billion, up 50%, and adjusted earnings of $1.66 a share, beating expectations.

• In the all-important data center segment, AMD’s sales were $6.7 billion, ahead of projections and up 107%, with a 31% operating margin. Revenue from PC and gaming chips was up 6%, but operating margin in that unit got slammed, down to 15% from 21% a year ago.

• AMD had long been the second choice for CPU chips behind Intel, while its GPUs were second to Nvidia. AMD’s server CPUs are now considered by many to be better than Intel’s, and the company claims to have a 40% market share, on the road to 50%.

• AMD’s recent Advancing AI conference showed off how far it had come in matching Nvidia’s Vera Rubin AI server technologically. The new AMD Helios servers combine AMD GPUs, CPUs, and networking chips, supported by maturing software. AMD is chipping away at Nvidia’s moat.

What’s Next: Helios will begin shipping to its first two big customers, Meta Platforms and OpenAI, by the end of the current quarter. Microsoft, Oracle, and Anthropic have also agreed to buy Helios servers, leading analysts to expect a sales inflection in the fourth quarter into 2027.

—Adam Levine and Liz Moyer

A possible tie-up between Bristol Myers Squibb and AstraZeneca might seem like a long shot to Wall Street skeptics, but the market’s enthusiasm around a potential deal points toward a broader trend that can’t be ignored. Mergers and acquisitions in the biopharmaceutical sector have reached a fever pitch. 

• Through early June, total capital deployed surpassed $106 billion across 201 transactions so far this year, PitchBook data show. A few things are keeping the deal train going, but the most notable factor is the looming expiration of key patents, leaving older drugs vulnerable to competition from generics and biosimilars.

• While most of this year’s deals have been relatively small, a few transactions stand out: GSK’s $10.6 billion acquisition of Nuvalent; Sun Pharmaceutical Industries’ planned $11.75 billion purchase of Organon, and Eli Lilly’s ongoing buying spree, capped off by a deal to acquire AtaiBeckley in July.

• Investors could have another one. AstraZeneca and Bristol have held early talks, according to a report, though neither company has acknowledged it publicly. An AstraZeneca spokesperson declined to comment, while Bristol Myers didn’t respond to a request from Barron’s. But it could be among the industry’s largest ever.

• Though unlikely to happen soon, if at all, the excitement around a possible merger is just the latest sign that M&A activity is heating up, and that’s good news for pharma stocks and shareholders. Large targets like Bristol Myers means valuations of industry peers reflect a takeover premium.

What’s Next: If the current M&A frenzy continues, the biopharma industry could top $250 billion in deal value this year, according to PitchBook. That compares to $201.3 billion in 2025, and would mark the strongest period since 2019.

—Mackenzie Tatananni

Food supply chain issues continue to affect restaurant chains, potentially damaging customer visits despite swift moves by management to address the issue. Chipotle Mexican Grill is only the latest example, replacing jalapeño suppliers at several Minnesota restaurants after state health officials linked the peppers to a salmonella outbreak.

• Chipotle shares fell nearly 10% on Tuesday after the disclosure, a selloff that suggests investors remain sensitive to any foodborne-illness headlines involving restaurant companies, even when the contamination may have originated with an outside supplier. In Minnesota, the outbreak has sickened at least 110 people.

• The chain said it removed the suspected peppers from every restaurant that received them and replaced them with jalapeños from other growers after learning of a possible supply-chain outbreak affecting multiple food-service companies. Minnesota officials said Chipotle fully cooperated, and they aren’t concerned about continued exposure at the chain’s restaurants.

• The cyclospora outbreak tied to iceberg lettuce served at Yum! Brands’ Taco Bell shows how quickly events can escalate. Nationwide visits to the chain fell 31% below normal in mid-July, according to Placer.ai. CFO Ranjith Roy said same-store sales were recovering after an initial 2% drop last month.

• Chipotle has its own history of food-safety problems. It was linked to an E. coli outbreak in 2015 though investigators never identified a specific ingredient. Chipotle closed dozens of restaurants in affected regions in that earlier incident and introduced a broad overhaul of food-safety procedures. 

What’s Next: BNP Paribas’ Steve McManus notes the salmonella cases are limited to Minnesota for now. But with this marking the second food-safety issue in the past month, which has already affected traffic to Chipotle, there’s likely risk for further near-term same-store sales pressure. He will be closely monitoring.

—Evie Liu and Liz Moyer

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