SpaceX in Talks to Borrow $40B to Buy Nvidia Chips, Uber Gets Into the Catering Business

Zaid Admani (0:00)

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Wednesday, October 7th. In today's episode, we'll tell you about a concerning trend in the S&P 500, despite hitting record highs. We'll also break down SpaceX's plans to borrow $40 billion to buy Nvidia chips, and why Uber is spending $2.3 billion to get into the catering business. Then stick around to the end of the show to find out how much Anthropic CEO made last year, and why it might be less than you think. We got a great show for you today.

Let's go.

The stock market rally continued on Tuesday, with the S&P 500 climbing 0.6%, while the NASDAQ jumped by 0.5%, both indices closing at record highs. This was the S&P's first record high since early August. The tech has been the engine driving this rally, but the rally is starting to broaden out a bit, kind of. 10 of the 11 sectors were in the green yesterday with Utilities being the best performer. Utilities got a boost from Constellation Energy, jumping 12% after their nuclear deal with Google, and then Vistra also jumped 11% as well. We actually covered both those companies on yesterday's show, so go check that out if you missed it. But yeah, it seems like investors are piling into power companies as another way to play the AI boom because data centers need a ton of electricity. So like I said, the rally is broadening out, but it's going into companies that sell electricity to AI companies. If you zoom out though, it's not a very balanced picture. According to the Wall Street Journal, fewer than half of the S&P 500 stocks closed above their 200-day moving average on Tuesday. The 200-day moving average is basically a stock's long-term trend line, and the number of stocks above that level has been dropping since August. Meanwhile, the MAX 7 stocks just closed at a record combined value of about $25 trillion, and the equal-weight S&P index has been trailing the normal S&P over the last month. That just shows you that the recent stock market rally has been top-heavy. Big tech companies are doing all the work. What I think is going on is that investors are treating the big tech companies almost like defensive stocks because their businesses and strong earnings are less likely to be impacted by higher borrowing costs from surging bond yields. People are still using Google. People are still buying on Amazon and scrolling through Instagram. But that doesn't make these big tech companies immune because these companies are borrowing tens of billions of dollars to fund their AI build out and higher yields can make new borrowing more expensive. But so far, though, these rising debt loads haven't pushed investors away just yet. We're going to learn more about how these big tech companies, businesses are actually doing and other companies as well over the next few weeks as earnings season kicks into gear. We'll break it all down on the podcast. Definitely get subscribed if you haven't already and tune in every day to stay in the loop.

Let's run through some headlines and we're starting with SpaceX. SpaceX is looking to borrow 40 billion dollars to buy more Nvidia chips and what could be one of the biggest debt deals to fund the AI boom. Now remember, SpaceX isn't just a rocket company anymore. It also includes the X AI business. So this financing would support the AI infrastructure build out, things like building out data centers. According to the Financial Times and Bloomberg, the proposed financing would include about 10 billion dollars in bank loans and 30 billion dollars from selling bonds. Now, what makes this interesting is that SpaceX recently sold 25 billion dollars in bonds back in June right after their IPO. And some of their bonds are now trading at about 85 cents on the dollar because of concerns about rising debt loads at the company and heavy spending. Well, I'm sure the news of the company trying to take out another 40 billion dollars in debt isn't going to help. But despite the concerns from debt holders, SpaceX stock has been booming recently. It's up nearly 50% from its lows back in August. So it's interesting to see how differently SpaceX looks depending on what kind of investor you are. Shareholders are excited about the potential in space and obviously AI.

Lenders on the other hand still need to understand how all this spending will turn into enough cash to pay them back. You know, at this point, we're seeing a headline almost every week about a big tech company taking on more debt to fund AI. And the thing is, historically, too much debt is what causes a bubble to burst. And I'm not saying that's going to happen now, but it's just something to keep in mind. Especially since we're not hearing much chatter about an AI bubble these days. Nvidia must love these headlines though. Like Jensen is probably smiling right now as he listens to this part of the podcast because a lot of that money being borrowed is going to be spent on his chips. And then he's going to take that money to invest or lend it to other AI companies. For the sake of my portfolio and my kids' college funds, I really hope all this works out.