SpaceX's 1st Earnings Report, Big Tech Spending $725B & LinkedIn AI Slop

0:00This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more.

0:42Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Welcome back to the Rich Habits Radar, our Friday episode of the Rich Habits Podcast, where every Friday morning, we're coming at you with the biggest headlines impacting you and your money. This episode is brought to you by Public.com. My name is Austin Hankwitz. I'm joined by my co-host, Robert Croak, and the three things sitting at the top of our Rich Habits Radar this week include big tech spending a trillion dollars on AI infrastructure next year, SpaceX recent earnings call, their first earnings call, actually, since being a publicly traded company, and the$100 billion of insider stock that's just getting unlocked for the very first time, and recent U.S.

1:37jobless claims. Be sure to stick around to the end where we talk about what LinkedIn is doing about everyone suddenly using AI on their platform. Robert, let's dig into our first story. That's right. I'm excited about this episode. A lot of numbers, a lot of stats, and it's going to be great. $725 billion in AI CapEx spending for big tech. Across the five biggest AI spenders, including Amazon, Microsoft, Alphabet, Meta, and Oracle, 2 ,026 CapEx guidance now totals more than$725 billion. That's up 77 % from the roughly$410 billion they spent in 2025, and more than triple the$226 billion spent in 2024.

2:19Wall Street analysts at Bank of America are already projecting this number crosses$1 trillion in 2027. Yeah, let's talk about that big AI CapEx spending. So$725 billion in AI infrastructure spending for this year, a trillion for next year, Robert. That is such a big number. And Amazon is leading the pack at$220 billion. It's a number that their CEO, Andy Jassy, raised from their original$200 billion guidance that was issued during their Q2 earnings call last week. Andy Jassy blamed higher memory costs. Alphabet is next. They're spending about$200 billion. Microsoft guided to roughly$175 billion for this year.

3:01Meta raised the low end of their guidance to$135 billion with their ceiling at$145 billion. And then you've got the wild card, Oracle. Oracle's guiding for$70 billion net of customer prepayments, which is roughly$90 to$95 billion gross for their fiscal AI CapEx spend of 2027. Austin, that is a whole lot of billions, and this isn't speculative spending. These companies are sitting on a combined$2.3 trillion on contracted revenue backlogs,$2.3 trillion. That's remaining performance obligations, essentially contracts signed by customers that haven't been fulfilled yet. And the number is up 16 % from just last quarter, according to Bank of America analyst Vivek Aryeh.

3:45In Microsoft's commercial backlog, Robert, you're talking about this like remaining performance obligation. Let's break it down one by one. Microsoft,$678 billion of a backlog. That's revenue that people have signed a contract. Yes, I will give this money to you. I'm ready. We just need the data centers, right? $678 billion for Microsoft. AWS at Amazon at nearly half a trillion at$496 billion, right? We've got Google Cloud,$514 billion. Oracle, now here's again this wildcard,$638 billion of remaining performance obligation. But with Oracle, why they're the wildcard is because half of that is coming from a single customer, which is OpenAI.

4:30OpenAI is definitely not public yet, and they also are not doing hundreds of billions of revenue, which means I don't know how they're going to pay$300 billion to Oracle. So that one's a little over here, right? That kind of shows you how wishy-washy some of this backlog can be. But regardless, it is nothing to sneeze at. You mentioned that$2.3 trillion, Robert, and it's such a big number. Yeah, I don't think, because everyone's asking us in the Rich Habits Network, Is this the dot-com bubble and bust or the boom and bust? I don't think we're there yet, but it's definitely a pretty crazy house of cards when you think about all of these billions and tens and tens of billions that are being spent.

5:08But the revenue these companies are already generating from cloud and AI is accelerating and not slowing. So that's definitely a good sign. And over the last 11 quarters, the entire cloud market has doubled in size. So that's very, very important to keep an eye on. But the quote that really stood out to me from Andy Jassy on Amazon's Q2 earnings call, he said, this is a once in a lifetime opportunity. And he had previously estimated that AWS could eventually become a few hundred billion dollar revenue business. And last week he upgraded that. He now believes it will at least double and that could very possibly mean a trillion dollar annual revenue business for us in time.

5:47A trillion dollars of annualized revenue just from AWS because of AI. Andy Jassy also made it clear that even$220 billion in capital expenditures, Amazon is still not expected to have enough capacity to satisfy all of their AI demand in 2026 and expects that same bottleneck to persist in 2027. So again, to fund this build out, Amazon is shedding cash like it's never going out of style. They're spending hundreds of billions. They even sold$25 billion worth of bonds in early July. The company's trailing 12-month free cash flow has now swung negative by$7 billion. So Robert, all the money that's coming into these high margin hyperscalers, it's going right out the door.

6:32For Amazon here, Robert, they're pretty much saying I could go spend$200 billion of CapEx and realize half a trillion of revenue on the backside. That's pretty good, right? How about this, Robert? I give you$200 billion and you give me$500 billion back, right? That's the business they're in right now. So, Robert, what does this mean for our listeners and their money, especially the ones that own stock in these hyperscalers? Austin, I think this is the biggest single infrastructure buildout in the history of capitalism. And the bet these companies are making is that AI compute demand is so insatiable that even three quarters of a trillion dollars in a year won't be enough.

7:07I said that correctly. Three quarters of a trillion dollars in one year won't be enough. So the bull case is the backlog. 2.3 trillion in contracted future revenue gives you visibility that this spending isn't just a leap of faith. It's pre-sold demand. The bear case is cash flow. Amazon and Alphabet have both tipped in a negative free cash flow, and Meta is expected to follow, and Oracle's credit was just downgraded closer to junk. So the question isn't if AI revenue is real. It clearly is. The question is whether these companies can bridge the gap between the front-loaded spending and the back-loaded revenue without breaking their balance sheets.

7:45Well, Robert, you mentioned the dot-com bubble. I think the key difference between this cycle and something like we saw in the late 90s with the fiber optic buildout during this dot-com bubble was these aren't speculative telecom companies hoping that customers just show up. They have$2.3 trillion of signed contracts saying demand is here. We need the compute. Where are the data centers? We want to use it. We just like, what's going on? So they have the demand. They now have to say, okay, we have your contract. We're now going to go build the things and do the things so that we can actually deliver the service that you want and realize that backlog as revenue on their books.

8:29Now, another company that's doing a lot of this right now is SpaceX. SpaceX, they just reported their first ever earnings, Robert, as a publicly traded company. And today, as we filmed this on August 6th, which is a Thursday,$101 billion worth of insider shares have just now been unlocked. And funny enough, the stock is not crashing or cratering. It's actually green. Yeah, Austin, let's unpack this because there are three stories colliding here at once. And each one in its own would be the biggest space and AI story of the month. So let's get into it. Yeah, this one with SpaceX is interesting.

9:05So like, hold on to your seatbelts here. This is some funny, funny, fun stats, Robert. So first one, earnings, right? SpaceX posted$7.8 billion in Q2 revenue of 92 % year over year, crushing Wall Street's expectations by about a billion dollars. adjusted EBITDA, which is like, you know, profits-ish for the company, tripled to$3.5 billion for the quarter there. The company is still unprofitable from a GAAP perspective, generally accepted accounting principles. They posted about a$541 million net loss, right? But that's a massive improvement from the billion loss they had a year ago and the$4.3 billion loss they posted in Q1 of this year.

9:44Now let's look at where the revenue is actually coming from as we film this. Starlink brought in$4.3 billion in the quarter, up 66 % year over year, with operating margins of 39%, better than analysts expected. The subscriber count doubled to$12 million, with average revenue per user holding steady at$66 a month. Enterprise and government revenue, think American Airlines Southwest, the U.S. Space Force, jumped 108 % to$1.8 billion as well. Which means right now, Starlink alone is on track for about$17 billion of an annual revenue run rate, which is incredible. It's a connectivity business that did not exist five years ago.

10:28So shout out to them for just, isn't it wild? You can just build stuff and now, oh, I'm making$17 billion a year in just five years. How crazy. Yeah, but here's where it gets wild, Austin. SpaceX's AI segment, the compute cloud business, generated$2.6 billion in revenue, up 247 % year over year. And they signed a$14.1 billion in new cloud service agreements just this quarter. And compute capacity grew from 0.4 gigawatts a year ago to 1.4 gigawatts today. Now, like other hyperscalers that are figuring out their CapEx, right, they're also burning a lot of cash right now. So they're not even profitable with this business segment, that computing cloud business there.

11:10They're actually burning$1.3 billion of operating losses there during the quarter. that's down though from the 2.5 billion last quarter, which is good. So trajectory is moving in the right direction, but it's still not like a profitable segment like Starlink. Capital expenditures, we're talking about that CapEx spend from other big tech companies hit$18.4 billion, Robert. $18.4 billion from SpaceX in this quarter with almost 16 of that$18.4 billion, just all on AI, well above Wall Street's$13 billion of expectations. That is an annualized CapEx spend run rate here of$73.5 billion for SpaceX, nearly double what analysts were expecting.

11:53So between SpaceX, we were just talking about these, you know, Meta, Alphabet, Amazon, Microsoft, like between all of these companies, like, I mean, oh my gosh, this is unbelievable spending right now. Yeah, building the future is definitely expensive. So we'll be keeping an eye on this for years to come. And here's what Elon said on the call that really turned heads. He told analysts that SpaceX now expects to hit a$100 billion annualized revenue run rate by the end of this year, December 2026. Then he went further. He said SpaceX's internal projection for reaching $1 trillion in total revenue, not the ARR, but revenue, had moved up from 2031 to 2030, and that there's a non-zero chance of that being in 2029, which just blows my mind.

12:40Robert, to put this in perspective, right, you talked about a trillion dollars of revenue in 2030 for SpaceX, Amazon, Walmart, UnitedHealth Group, Apple, Google. All of these companies are far off of that, right? Amazon, Amazon is like the biggest marketplace ever. Walmart is the biggest marketplace ever. And they're only doing 700 billion of revenue. Like if you take off like the marketplace side of it, and you think like actually selling a good or a service to a customer, I think Alphabet or Apple are like the closest there. And they're both around 400 billion. So you're just you're more than doubling that figure for SpaceX selling this like these products.

13:23And so if we do some math, like to reach this$1 trillion of revenue in 2030, SpaceX needs to 10x their revenue profile from here in just three to four years. Elon pointed to these next-gen V3 satellites, calling it an order of magnitude more capable than the current version. He said if monetization per bit dropped by a factor of 10, that it would still mean a 10x increase in Starlink revenue. His quote is, it's not out of the question that at some point Starlink will deliver a majority of the world's internet, which is a crazy quote to begin with. But like you mentioned this one trillion figure, like it's just happenstance.

14:01Like that's just, no, this is bonkers. Yeah, I mean, they're coming for the internet. They're coming for the cell phone service. They're coming to own all the rockets and data centers in space. And, you know, I think the biggest takeaway here is there's so many tentacles to what's happening within SpaceX with all these different revenue models and streams. Even if he gets it 50 percent right, it's still going to be a massive, probably the world's largest company that we've ever seen. And on the AI compute side alone, Musk said SpaceX is exclusive to NVIDIA for its build out, betting on NVIDIA's Vera Rubin architecture.

14:35He set a tentative target of 20 gigawatts of compute capacity by the end of 2027. And here's the kicker. Up from 1.4 gigawatts today. That's crazy. Going from 1.4 gigawatts of compute to 20 gigawatts. Like, that's crazy, Robert. This is just wild. And now if we think about, you know, why does he want to do that? Well, it's because about 10 % of that, you know, compute feeds Grok, which is SpaceX's in-house AI model. But the rest, the 90%, gets rented out to external customers, including Anthropic and Google, two stories that we've closed here and talked about on the Rich Habits radar. And then the headline that sounds like science fiction.

15:15Here you go. Ready, Robert? Elon says that SpaceX expects to start launching orbital AI satellites next year in 2027, putting data centers in space to lower costs below the terrestrial competitors. So according to Elon Musk, not only will SpaceX be a trillion dollar a year business by the end of this decade in three, four years, but they will also have data centers in space next year. And their compute business will be doing a hundred billion in annualized revenue by the end of this year. This is either like the craziest things I've ever seen or heard my entire life or AI has just unlocked productivity we've never seen before.

16:00because like this is so hard to believe. Yeah, and now let's talk about the unlock. Today, August 6th, as we film this episode, 911.5 million shares worth roughly$101 billion became eligible for insider sales today. This is the first time pre-IPO shareholders can sell in the public markets. So for context, this stock IPO'd at$135 on June 12th and hit an all-time high of$225 four days later, then cratered back down to$107 by late July, a 52 % drawdown, I believe, in six weeks. And right now, as we film, it's sitting at$110 a share. And despite the massive unlock, the stock is still in the green as we film this.

16:44But that overhang of like more shares getting unlocked, because remember, you've got to think about this for a second, as these insiders that have worked at SpaceX for years or a decade or so, right, their equity is now worth millions upon millions of dollars. I think we heard the story about it was a janitor or someone that worked at a cafeteria that's now a millionaire because they got equity in SpaceX. And so those people, they're going to want to cash out, right? And so, you know, as everyone goes to sell stock, including early investors, that's going to put pressure on the stock, buy, sell, demand, right?

17:15Supply and demand, economics 101. As a lot of people go to sell, price should come down, which is what a lot of people thought were to happen. But to Robert's point right here, the stock's green today. And now another 900 million shares unlock after Q3 results come out in late October. So in my opinion, that's going to be another big date to keep an eye on. Yeah, I think the next three months, we're going to see a lot of volatility in the share price of SpaceX because of all this liquidity happening with all these shares and these people that have had their money tied up for years. But I still think it's something we definitely have to keep an eye on, especially if we get to that$80,$85 mark.

17:51and COO Gwynne Shotwell dropped one more number worth paying attention to. She said SpaceX is targeting the$600 billion a year mobile customer base owned by Verizon, AT &T, and T-Mobile with technology that should put a cellular base station on the same gear that holds a Starlink broadband dish, which is just wild to me and really great because, again, if economies of scale happen, maybe all of our cell phone bills come down dramatically. And I anticipate us to be able to acquire quite a few of their customers, she said. So Austin, this is a big, big point in this episode. Break it down for everyone.

18:28What does this mean for you and your money? Very simply, SpaceX is trying to be three companies at once. They're going to be a launch monopoly, right? Think rockets. A global ISP. Think they're, you know, satellites. And an AI cloud hyperscaler. And the first earnings report shows that all three segments are growing violently. The bull case is that Starlink's 38 % operating margins continue to fund the AI buildout. The$14.1 billion of new compute contracts proves that the enterprise demand is real. The$100 billion ARR target for December gives you a concrete milestone to watch. While the bear case is that the CapEx trajectory is just too much.

19:10At$73.5 billion annualized, SpaceX is spending at a rate that rivals a Microsoft and a Google companies with five, six, seven, eight times more revenue than they have, right? So free cash flow, it's negative. That's why they saw the bonds. That's why the IPO happened, right? They need cash. $25 billion in bonds that happened, you know, what was it, just a month ago? Like what I'm saying here is they got to spend a lot of money to keep up. They've got some really frothy expectations and excitement, right? The non-zero chance of hitting a trillion in 2029. That's fun and cool. But that comes after spending a lot more money, money that they don't have right now.

19:51And so they're trying to like, and this goes back to what Robert was alluding to with our big tech breakdown. You've got to balance, you know, keeping cash in the bank and the lights on while also reinvesting into the underlying business with these capital expenditures because the demand is there. Yeah, and SpaceX is the only company on Earth simultaneously building space infrastructure, global connectivity, and AI-computed scale. So whether it can execute all three without the balance sheet cracking is the single most important question in the market right now. If Musk is even directionally right about the V3 satellite and orbital data centers, this isn't just a space company, it's the next hyperscaler with trillions upon trillions of dollars.

20:34I'm fired up for it. I know you are, Austin. We are keeping a hawk's eye on where the stock price is so we can make sure to nibble in and ride this wave over the next three, four, five years. Yeah, I mean, think about it like this, Robert. Amazon's a$3 trillion business right now doing about$700 billion of revenue. If you're telling me that SpaceX will be doing 700, 800, 900, a trillion of revenue, right? By the end of this decade, shouldn't SpaceX be worth three, four, maybe five trillion dollars in market cap? Because right now it's worth about one, six, one, seven, right? So like there's, there's a clear, if this actually takes place, SpaceX is super interesting in my humble opinion.

21:19But it's a massive if, and that if is Elon Musk, the number one salesman in the world, The guy who can sell you the future without it even existing and then try to piece it all together. He's been doing this with space or he's been doing this with Tesla, the robo taxis. Remember the humanoid robot dance party thing? And they were all teleoperated. So it's like, you know, take all this with a grain of salt. That's what I'm doing. And to Robert's point, I'm keeping an eye on this because it's important to keep an eye on. And if it actually does come true, very cool. Yeah, definitely. Long term play, but we will keep an eye on it.

21:52So let's get into our third story, Austin. Let's do it, Robert. Today's weekly jobless claim came in at$199 ,000 for the week ending August 1st, up from$1 ,000 the prior week. Now, on its own,$199 ,000, it seems fine, but it's historically low even. But as we zoom out and stack it against other data points that will be dropping later this week, a.k.a. Friday, August 7, it begins to tell a different story. Yes. Yesterday, ADP reported that private companies added just 44 ,000 jobs in July, the weakest month since January, well below the 75 ,000 jobs expected, and nearly cut in half from June's revised 95 ,000 jobs.

22:35Healthcare carried almost all of it at 36 ,000. Goods producing industries actually have shrank a little bit. Trade, transportation, and utilities lost 8 ,000 positions. Last month's official BLS report showed only 57 ,000 non-farm payrolls in June, April, and May. They were all revised down by a combined 74 ,000 positions. So for the first half of 2026, produced just 552 ,000 total jobs, barely 92 ,000 a month in an economy that was averaging three times that two years ago. So consumer confidence isn't helping the picture either. The conference board index slipped to 90.8 % in July, down from 92.2%, its fourth consecutive month below 95.

23:22GDP grew at 2.1 % in Q1, up from a crawling 0.5 % in Q4 of 2025. But that rebound hasn't translated into hiring momentum just yet. Not yet. The Fed is watching all this, but keeping rates steady, of course, with inflation being the priority. Markets are pricing at a possible rate hike before the end of the year if prices don't begin to cool. So, Robert, what does this mean for you and your money? Well, it means that tomorrow morning's July jobs report is the one that matters. So if you're listening to this on Friday, August 7th, you should have read this news story already. Economists expect 83 ,000 payrolls and 4.2 % unemployment, especially after that ADP miss.

24:04Expect a hard repricing of rate expectations and volatility across the stock market. Remember, the markets don't like uncertainty. And the labor market isn't in crisis, but the trend is clear. Hiring is decelerating while big tech is pouring three quarters of a trillion dollars into AI infrastructure. So the economy is splitting in two. One half is building the future. The other half is starting to feel the squeeze. And the last we want to do is have our listeners be on the wrong side of history. This is why it's never been more important to own assets and have a stake in the U.S. economy by buying shares of VOO, QQQ, DIA, and AIQ.

24:44What a great breakdown, Robert. I could not agree more. You got to have a stake in the US economy because as these hyperscalers spend a trillion dollars next year, that trillion dollars is going to leave their income statements, going to leave their bank account and enter the bank accounts of other companies. And by owning equity in VOO, QQQ, DIA, AIQ, you will be reaping the rewards of those other companies bringing in that revenue as profits prices go up hyperscalers realize all of this backlog those prices go up like you have to be an investor you have to have some skin in the game so robert what another great reminder before we jump to our radar points got to give a shout out to public.com this episode of rich habits radar is brought to you by public the investing platform for those who take it seriously because on public you can build a multi-asset portfolio of stocks bonds options cryptocurrency and now generated assets, which allow you to turn any idea into an investable index using artificial intelligence.

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26:17Paid for by public investing, full disclosure in the podcast description. All right, Robert, do you want to kick us off with your radar points? Sure, I'll rock it out. So my radar points are kind of all over the place. So bear with me today. I just wanted to find some really kind of fun, different ones that weren't so locked in of the typical headlines we're seeing every day. And my first one today, my first radar point is Amazon to offer GLP-1 weight loss drugs to Medicaid and Medicare patients through Amazon.com. Amazon.com said patients with Medicare Part D prescription plans now have access to certain GLP-1 weight loss medications through the Amazon pharmacy.

26:57Oral and injectable versions from Novo Nordisk will also be part of that offering. And also on top of that, ZepBound and Foundayopills will be available at a cost of$50 a month with free home delivery, Amazon said. And it's offering same-day delivery in more than 3 ,100 locations and no Prime membership is required. So I thought that was an interesting one. As the GLP-1 market gets better and better, Amazon wants their piece of it and people love Amazon. My second radar point today is U.S. mortgage rates rose to a one-year high, averaging 6.81%, pushing home sales to a five-month low. I still think it's a great time to buy, but I want to share this to give people some perspective because mortgage rates reached the 6.81 % and it's impacting buyer activity and cooling pending home sales across several major metropolitan areas.