SpaceX, Tesla, Meta Headline Week's Big Tech Earnings

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This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily Podcast, with Carol Massar and Tim Stenovec.

Carol Massar (0:32)

This rebound in chip makers, booing the stock market as dip buyers emerged on bets at the AI investment boom will continue to support solid earnings.

Following a sell-off in one of Wall Street's most crowded bets, we did see a gauge of chip giants climbing, as we said, the NASDAQ 100 is higher. Keep in mind, we'll also get some insight into that AI investment boom thanks to Meta Platforms providing earnings along with Tesla, also SpaceX, and then there's more to come. Here to kind of set us off for the week is Mandeep Singh. He's Global Head of Tech Research at Bloomberg Intelligence. He's here in our Bloomberg Interactive Brokers studio. Last week was tough for the AI trade. CoreWeave, just in general, it just felt like such a pushback. The semiconductors, we get Meta, SpaceX, Tesla. How important are these to you in terms of getting another read on what's going on in the AI boom?

Mandeep Singh (1:21)

I mean, I consider SpaceX to be a hyperscaler along with Meta. And so SpaceX to me is really interesting given the backdrop of Starlink situation and what's going on with them. And obviously, they won't comment much, but I expect on the analyst call you would see questions around Starlink and then what it means for the cloud segment growth. Because in the end, they need more customers, they need that cloud segment to ramp up. And the expectations are quite high because the company guided to 100 billion in ARR by the end of the year, and they're nowhere close to it. Where are they right now?

They are closer to 25 billion, 30 billion revenue run rate. So even if you extrapolate the ARR, they're nowhere close to that $100 billion mark. And so that's where the expectations are high, and you want to see them talk about customer growth, which they have, I mean, Anthropic and Google, but they need more than two customers.

SPEAKER_5 (2:23)

Yeah, and I mean, this is just their second public quarterly earnings report. So do you feel like there's going to be any sense of understanding, I should say, or maybe do you think investors may be a little bit easier on them as they're just kind of getting out? Or you mentioned the bar being high.

Talk about that.

Mandeep Singh (2:40)

I mean, I think overall, the sentiment going into the print is, I've been hearing a lot about Starlink. It's not very clear what happened and look, that is the more established part of the business. And if they can't win business outside the US, that's going to become a problem, whether it's Starlink or the cloud side of the equation. So something to keep an eye on in terms of how they guide. And I feel they've been quite aggressive with their guidance. So in the end, it comes down to the commentary around the expectations for 2027 And then how does the market react around CapEx? Because we have seen what's gone with CoreWeave.

I mean, SpaceX is incredibly levered as well. So if the market is not liking the high leverage for these Neo Clouds, I don't think SpaceX gets a pass either.

Carol Massar (3:33)

Yeah, I mean, debt is debt, and at some point you start to look at the ad.

I'm looking at the equity side. SpaceX shares are down about 27% from that high just after the IPO. All right, so we're watching that one very closely. What about Meta and how that fits into the AI trade? Because it feels like all of a sudden they're like, wow, look at what you like Meta views and everything that they're doing, and they've gotten a lot of attention.

Mandeep Singh (3:55)

I do, but with that being said, now that they have a frontier model to show for all the capex that they have done so far, the monetization question still looms. And if they're talking about raising capex for 2027, which I think they will, given they feel emboldened by the fact that they have a frontier model, then the debt question starts to come even for someone like Meta, because now it's not about financing everything to your operating, through your operating cash flow. You have to issue debt, and yes, Meta is investment grade, and they don't have any debt concerns like the core weaves. But at the same time, you know, the bar is getting higher in terms of showing that monetization.