SpaceX Starts Spending Like a Hyperscaler

SPEAKER_1 (0:00)

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Luke Vargas (0:33)

Michigan awaits the results of a Democratic Senate primary seen as a referendum on the party's identity. Plus powerful AI models once again break out of their testing environments to wreak havoc online.

And more US colleges dip into their endowments to cover day-to-day expenses.

Douglas Belkin (0:51)

What we're beginning to see in the United States among schools that are really hurting is that trustees are borrowing from these restricted funds without permission. And that's risky.

Luke Vargas (1:00)

It's Wednesday, August 5th. I'm Luke Vargas for the Wall Street Journal. And here is the AM edition of What's News, the top headlines and business stories moving your world today.

The votes have been cast, but a winner has yet to be declared in a closely watched Democratic Senate primary in Michigan that's emerged as a test of the party's direction. According to the Associated Press, Progressive Abdel Al Sayed is leading four-term representative Haley Stevens with 95 percent of votes counted. Speaking to his supporters, Al Sayed appealed for party unity, but also seemed to rebuff those who thought that his progressive stance was out of step with the politics of the electoral battleground.

Aaron Zittner (1:46)

We are not a purple state.

Luke Vargas (1:49)

We are a state in need of a movement. With Al Sayed and Stevens separated by just over a percentage point, the journals Ellie Davis said that primary voters failed to coalesce over their priorities.

Ellie Davis (2:04)

The voters I spoke to today as they were leaving the polls said that they voted for Al Sayed because of his stance against big money and politics. The moderate Democrats in Michigan, who I spoke to after they cast their ballots for Stevens, are worried that Al Sayed won't appeal to the independent voters he needs to win the general election.

Luke Vargas (2:21)

Contests next week in Wisconsin and Minnesota will offer similar tests, though journal editor Aaron Zittner said that the outcome in Michigan is likely to be parsed most intensely after a DNC panel last month chose it to vote fifth in the party's 2028 presidential primaries.

Aaron Zittner (2:38)

It's up at the beginning of the calendar and is going to play a major role in picking the party's next nominee for president. Candidates who are looking to run for president in 2028 and who wanted to find clues in Michigan to where the heart of the party was in its center or on its left wing are probably going to have to look pretty closely at these results because right now the course that the party's primary voters in a swing state want to pursue is not very clear.

Luke Vargas (3:07)

In a few other closely watched races last night, former Missouri representative Corey Bush, a one-time member of the Progressive Legislative Squad, failed to overcome millions of dollars in spending from pro-Israel groups in a bid to reclaim her seat. And Missourians overwhelmingly rejected a proposal to phase out the state's income tax and expand sales taxes to make up for lost revenue. That comes as Republican-led states have been racing to cut or eliminate individual income tax, while some blue states are attempting to raise income tax on their wealthiest residents. The Missouri measure marks the first time since the modern income tax began over a hundred years ago that a state legislature had asked voters whether to eliminate it.

Well, as we mentioned on the PM show last night, SpaceX shares are falling in off-hours trading after the company released its first quarterly earnings report since going public. Revenue was up more than 90 percent compared to a year ago, but equity markets reporter Joe Stoner says that wasn't what most investors were paying attention to.

Joe Stoner (4:09)

Like other hyperscalers, SpaceX is spending huge amounts of money on building out its AI data center capacity and its AI operations more broadly. Like other companies, it's still not clear how they're going to make money off of that. Elon Musk has spoken about leasing data centers. That's something that analysts respond to warmly, but still the figures are huge. It's spending over $18 billion in the last quarter. That's more than $5 billion ahead of market expectations.

Luke Vargas (4:35)

After the latest share drop, SpaceX is now trading more than 15% below its IPO price. And Joe said that shares could be coming under pressure again soon.