00:00Dan Ives of Yorkville Ives writes in the following, the CapEx tug of war between SpaceX and investors is a
00:05necessary build out that will require patience.
00:08Dan joins us now for more. Dan, whose patience and how much pain will we see for the stock in
00:13between?
00:15Look, I think this is a barometer of what we're seeing across tech, because the reality is this is an
00:20arms race.
00:21And when you think about what SpaceX is doing, the only way to get there is CapEx.
00:25And I think that's the double-edged sword as going public, because the scrutiny is going to be there.
00:31Look, we've seen it across big tech, you know, when it comes to the hyperscalers, on a different version.
00:37That's essentially what's happening with SpaceX, as they're trying to catch up to open AI, anthropic, and as Lisa talked
00:44about, really building out the vision.
00:45Do you think that this is the right move, Dan, to really lean into the hyperscaler side of things, the
00:50compute side of things, when really the money is coming from the space and the telecom side of things?
00:56Yeah, I think that's the quagmire that they're going through.
00:59And look, it's no different than so many other companies that we've seen.
01:03I mean, you go back to NVIDIA, right, where it's gaming and going after AI.
01:06The reality is that the gold at the end of the rainbow is around data, AI.
01:13It's going after that opportunity.
01:14And I think that's what they're doing.
01:16Look, it speaks to XAI and ultimately what probably could be Tesla as well.
01:22That's the broader vision of Musk.
01:24But the only way to get there is CapEx.
01:27And I think when you're going through this arm trace and you see it from all the chip players, all
01:33the memory players, costs are getting more expensive.
01:36And you're not just one of one in a room.
01:40You're one of many trying to get after those chips in the build out.
01:44Dan, if you were trying to figure out where you were going to lend your pool of cash, why would
01:50you choose SpaceX for some of those data, AI, LLM types of promises and dreams rather than either Anthropik and
01:57OpenAI on one side or Microsoft and Amazon on the other?
02:01Oh, no doubt.
02:02I mean, they definitely are at the low end of the totem pole relative to those players.
02:08And I think that for them is the challenge.
02:11And the hyperscalers, if you're just thinking about this earnings season, I mean, they come out flexing muscles relative to
02:17what we're seeing.
02:18And when you look at OpenAI and Anthropik, I mean, it's really their world.
02:22Everyone else is paying rent.
02:23Everyone's trying to play catch up.
02:25And that's the challenge.
02:27Now, for Musk, he's been there many times before.
02:29But that's really the opportunity.
02:31Look, if anyone's buying into SpaceX, you're buying Musk, you're buying the vision, and you're playing catch up.
02:37The price of capital, Dan, for these guys is going up.
02:40It's higher.
02:41In the next hour, we're going to have a conversation around this table about how rate insensitive these spending plants
02:46are.
02:46But I do believe everything's got a price.
02:48And at some point, Dan, there is a price at which these companies are no longer willing to pay.
02:53Are we close to that, Dan, where markets and the pushback, whether it's equity or whether it's debt, begins to
02:58dictate or even influence the spending plans of these companies?
03:02Look, I think right now, I mean, I think Oracle will be a great example, you know, relative to the
03:06OpenAI deal and just taking on debt and what's happened to that stock.
03:11Look, I think for these companies, it's a balancing act because they know if they lighten up on CapEx, they
03:17go to the back of the line.
03:18And it goes back to, like, you know, this is the building of the Vegas Strip, 1955.
03:24Dan, I think that's the issue, though.
03:26Just allow me to jump in.
03:27Why do you want to buy them as they go through that difficult phase?
03:31Why do you want to be buying them now?
03:34I think if you look at Microsoft and you look at Alphabet, those are two good examples where as they're
03:41going through it, you're basically in the build-out phase.
03:45Investors now, the switch has gone on.
03:48You've actually seen the monetization.
03:50And the question, John, is that when do you start to see the monetization switch?
03:54And investors are basically betting near-term pain for long-term gain.
03:57But there is a push-pull point.
04:00And I think as we get into the debt market, these companies take on more debt and more equity, I
04:05think Meta is a great example.
04:06You have to show it.
04:08You can't just talk it.
04:11Alphabet, Microsoft, you look at Amazon, I think you've got to prove it because it can't be the dog eat
04:16the homework every quarter.
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