Consider buying SpaceX (SPCE) on the recent post-earnings dip below its $135 IPO price, but expect near-term volatility as early investor lockups expire.

Watch for the formal integration of Cursor, which management projects will drive the company's AI segment to a massive $100 billion run rate by year-end.

Keep a close eye on SpaceX's heavy capital expenditures, as the company plans to spend roughly $60 billion this year on AI data centers and cloud infrastructure.

Capitalize on the regulatory push against foreign hardware by investing in domestic manufacturers of optical transceivers that stand to benefit from proposed federal bans on Chinese components.

Monitor state-level moratoriums and electrical grid constraints in places like Texas and New York before investing broadly in AI data center developers.

SpaceX (SPCE)

• SpaceX delivered its first earnings report as a public company following an $86 billion IPO in June.
• Top-line revenue reached $7.8 billion for the quarter, representing a 92% year-over-year increase.
• Starlink generated $4.2 billion in revenue, with satellite internet subscribers doubling to 12 million over the past year (66% revenue growth).
• The AI side of the business brought in $2.6 billion from Grok subscriptions and data center rentals, which is triple the revenue from a year prior.
• AI-related capital expenditures (CapEx) totaled $15.8 billion for the quarter, making up 86% of total CapEx.
• The company recorded a $541 million quarterly net loss (excluding CapEx), which is an improvement from a billion-dollar loss in the first quarter.
• Management reported $6.7 billion in cloud services revenue in the pipeline over the next six months and expects the integration of Cursor to push SpaceX AI to a $100 billion run rate by the end of the year.
• Projected data center spend for the year is expected to reach around $60 billion, trailing competitors like Amazon, Google, and Oracle.
• Stock performance: The stock was previously down as much as 45% from its all-time high (falling below the $135 IPO price), gained 10% at the start of the week, but dropped 7% in after-hours trading following the earnings release.
• The earnings release marked the end of the first round of lockups, enabling early investors to sell shares into the market.

Takeaways

• Watch for the official closing of the Cursor deal and whether the company actually achieves its projected $100 billion AI run rate by year-end.
• Monitor cash burn and massive AI-related CapEx spending ($60 billion expected for the year) relative to incoming cloud services revenue.
• Be aware of increased selling pressure from early investors now that the initial post-IPO lockup period has ended.

Investment Theme: AI Data Center Infrastructure and Supply Chain

• A massive wave of local opposition, moratoriums, and regulatory hurdles is impacting data center development across the United States.
• States like Texas and New York have enacted stringent audits or moratoriums due to severe strain on local electrical grids and public pushback against transparency issues (such as non-disclosure agreements with local politicians).
• Federal regulators (like the FCC) are drafting bans on certain Chinese data center components—specifically optical transceivers used to convert digital data into light signals—citing national security risks and potential malware injection.
• This potential ban on foreign hardware creates a tailwind and protectionist boost for domestic manufacturers of optical transceivers, though it may introduce supply chain bottlenecks for the broader AI build-out.

Takeaways

• Investors in AI infrastructure should closely monitor regulatory actions at both the state level (power grid caps and moratoriums) and federal level (component bans on Chinese hardware).
• Companies that supply critical domestic data center hardware—specifically US-based manufacturers of optical transceivers—may benefit significantly from proposed national security bans on foreign alternatives.
• Data center developers and hyperscalers will likely need to allocate a much larger percentage of their budgets toward community relations, local grid upgrades, and transparent local incentives to overcome widespread public backlash.