Technology Sector

SpaceX shares fell as much as 13% following its maiden earnings report as a public company, as runaway capital expenditure on terrestrial data centers overshadowed a revenue beat. Second-quarter revenue reached $7.8 billion, exceeding analyst expectations of $6.8 billion, while net losses narrowed to $541 million from $1 billion a year earlier. Starlink led top-line performance with revenue as its subscriber base grew. However, investors balked at the price tag of Chief Executive Elon Musk's pivot into artificial intelligence infrastructure. Capital spending jumped to $18.4 billion in the quarter, with 86%—or $15.8 billion—allocated to AI capacity. That brought first-half spending to $28.5 billion. SpaceX's AI segment, which includes the Grok chatbot models and capacity leasing to customers like Google and Anthropic, generated revenue totaling nearly $3.4 billion but posted an operating loss. Wall Street questioned whether leasing data center capacity can generate margins high enough to support the company's valuation, which topped $1.5 trillion before the drop. Adding to the selling pressure, 911.5 million insider and early-investor shares become eligible for sale on Thursday as the company's IPO lockup period expires.

Alphabet shares fell around 5% after Google stripped Demis Hassabis of daily operational control at Google DeepMind and lost a 27-year veteran Jeff Dean to an external startup. Hassabis will move to chairman of DeepMind and chief scientist at parent company Alphabet, handing daily operations and Gemini 4 model development to Koray Kavukcuoglu. Dean, Google's chief scientist and employee number 30, exited alongside senior fellow Sanjay Ghemawat and researchers Quoc Le and Oriol Vinyals to launch Discovery Loop, a public benefit corporation focused on automated scientific discovery. Google CEO Sundar Pichai held multiple meetings to keep the group before agreeing to serve as a founding investor and compute provider for the new entity. The executive exodus hits as Google's flagship Gemini 3.5 Pro model sits months past its planned June launch window. Google is absorbing these leadership losses while burning massive cash, forecasting up to $205 billion in full-year capital expenditures that drove its quarterly cash flow negative for the first time on record.

SoftBank reported a Q1 net profit of 347.3 billion Japanese yen ($2.2 billion), topping analyst estimates of 120.23 billion yen despite an 18% year-on-year decline. A 1.3 trillion yen gain on its stake in Intel drove the earnings surprise, rewarding a roughly $2 billion position SoftBank took in the chipmaker last year ahead of a massive share rally. That gain offset zero paper profits from OpenAI, which had generated nearly $20 billion in valuation markups for SoftBank in the previous quarter. The Vision Fund segment scraped together a 5.4 billion yen profit, supported by a $2.2 billion markup on TikTok parent ByteDance. Masayoshi Son is leveraging past wins to fund future commitments. SoftBank secured a $10 billion bank loan in August using its OpenAI holding as collateral. The borrowing helps fund $20 billion in pledged follow-on capital for OpenAI in late 2026, along with acquisitions of ABB's robotics business for $5.4 billion and DigitalBridge for $3.1 billion. Debt maturity timelines create immediate refinancing risks. A $40 billion bridge loan backing Son's investment pipeline expires in March 2027. Simultaneously, higher R&D expenses widened quarterly losses at SoftBank's AI computing division—which holds Arm, Ampere, and Graphcore—to 200.8 billion yen.