Shares of Elon Musk's SpaceX tumbled more than 13 percent on Wednesday, a day after the company reported its first quarterly earnings as a publicly traded entity.
The stock closed at $108.10, down 13.6 percent from Tuesday's close of $125.33. The sell-off was triggered by a sharp increase in capital expenditures, which surged to $18.37 billion — a six-fold jump from last year and well above the $13.2 billion analysts had forecast.
The bulk of that investment, $15.8 billion, is earmarked for artificial intelligence infrastructure, including specialized compute, storage, networking, and software systems needed to build, train, and deploy AI models at scale. SpaceX aims to expand its data center capacity from 1.4 gigawatts to 2 gigawatts by year-end.
Investors across the tech sector are increasingly questioning whether massive AI infrastructure spending will yield tangible returns. Josh Gilbert, lead analyst at trading platform eToro, noted that the same scrutiny has hit Big Tech this earnings season, with investors demanding visible returns on open-ended budgets.
"SpaceX faces that test with an added degree of difficulty because it's asking shareholders to bankroll data centres in orbit," Gilbert said. The company claims its computing power not only serves its Grok models but is also commercially sold, with $14.1 billion in cloud-services agreements already lined up.
The one bright spot was the connectivity business, where revenue jumped 66 percent year-over-year as Starlink's subscriber base doubled to 12 million, generating $1.66 billion in operating income.
The stock faces another test on Thursday when the first tranche of the post-IPO lock-up expires, potentially freeing up to 911.5 million shares, or roughly 20 percent of restricted holdings, for sale. Melissa Otto, head of Visible Alpha Research at S&P Global, warned that the stock is "likely to be volatile" once the lock-up lifts.
SpaceX's IPO was priced at $135 per share and soared to $225 within days of its June 12 debut, briefly making Musk the world's first trillionaire. However, the shares have since declined, reflecting growing investor skepticism about the company's aggressive spending plans.
Source: www.aljazeera.com