SPCX Earnings Reaction: AI Compute "Colossus" Piece

**Jenny** (0:00)
But joining us now for some more insights into that is John Taves, Managing Director at The Post Oak Group. So Josh, great to have you with us. Now, after the first earnings report as a public company for SpaceX, what are the most important metrics that you took away from this print? And overall, just how you assessed some of the, of course, pressure we saw in yesterday's session.

**Josh Taves** (0:21)
Yes. Thanks for having me, Jenny. First of all, as you understand, SpaceX is divided into mostly three categories. And so we have space, we have connectivity, we have AI.
But on all fronts, they outperformed revenue numbers. And so today with the unlock of so many shares, 911 million shares, this is one of those stories where we expected such incredible volatility. But it's been kind of holding steady. It's down a little bit, not such a crazy reaction overall in the markets. And so I was very happy by what I heard on the earnings call yesterday, or I'm sorry, two days ago. I also read the full 150 page 10Q that they filed. And this is a company that is going in the right direction. It's not a quick trade. This is a long-term investment, a long-term hold, and I love it.

**SPEAKER_3** (1:32)
Yeah, Josh, they got kind of like three really different, but important kind of futuristic verticals. So in many ways, this is like the ultimate long-term growth type of investment. Whether it will ultimately work, time will tell as sort of a standard disclaimer on there. But what I was most fascinated on is that this is like the purest look at like an AI company as one of their verticals as we've gotten in public markets. We know Anthropic and OpenAI, they got the hype.
Allegedly, they got the success, but we're not really seeing inside that just yet. The case of SpaceX, I mean, they exceeded the AI revenue forecast by like 23 percent. Like I thought that was super impressive. What did you think of that?

**Josh Taves** (2:18)
Yeah. Well, the other thing to note is that you got to understand it. Anthropic spends almost $1.25 billion per quarter with SpaceX, because they are leasing some of the compute in the form of Colossus.
Again, with these three verticals that they have, it is a great thing. But I'll also add this. I don't know if you want to get into this concept, but the potential for a Tesla merger, it is purely rumor. However, these are things that are worth paying attention to. Imagine this for Elon Musk. All of a sudden, if you merge Tesla and SpaceX, and now you own cars, robots, labs, AIs, social connectivity, compute, and now with X money, and maybe even let's think about Neuralink. Brains, this is a crazy thought, but this guy's maybe going to try to become president of Earth without the title and without the office. Maybe his office will be on Mars.

**Jenny** (3:30)
I like that. I think that he would like to actually have his office on Mars and would like to be able to get more into the space sphere. But I mean, of course, both of these names, their right now consistent tie is Musk. But I mean, to what extent right now do you see that potential merger? I know that there's not really confirmation. He kind of like danced around it, at least on Tesla's earnings call. How do you see right now like broader market influence, perhaps, weighing on if that does happen? Like do you see it as an eventual reality that is, I mean, definite reality or is it still something that hinges a lot on like broader market conditions?

**Josh Taves** (4:02)
Yeah, nobody can tell.
It's one of those situations where you cannot predict the future, but Elon Musk certainly does have this concept of, listen, yes, is there a need for growth capital when he does an IPO? Of course, is there a potential for a merger between the companies? Yes, for a few reasons, not only combining the technology, also, when you do this for Elon Musk, he now, I think he presently owns approximately 20% of the Tesla stock, approximately 80% of the shares of SpaceX. And so by combining these things, this makes him a majority owner with voting control of all aspects of that bigger concept. And so, listen, SpaceX has become a, I'll use the term, a bellwether for growth investing. And so when one of the markets most closely watched growth companies sells off, it often causes investors to reassess other high growth names and so this is one of those stocks that everybody's paying attention to. I think it definitely influences markets as a whole.