Meta Platforms (META) is doubling down on the use of robots to handle a variety of tasks in its data centers… tasks once carried out by humans. If you think this sounds like the premise of a dystopian sci-fi movie, you’re not alone. Just look at what one Meta data center worker told a reporter from Wired:

“We thought those of us performing the physical tasks were safe for a while, but not anymore. It’s coming for us all, unfortunately.”

Artificial intelligence (“AI”) has already claimed hundreds of thousands of white-collar jobs.

And, as Meta’s robots have recently demonstrated, it’s coming after blue-collar workers as well. The same worker behind that quote you just read believes that the Watney Robotics cable-swapping robot Meta is testing could perform up to 80% of some employees’ workloads.

While that thought is disturbing enough, the reason behind Meta’s quest for more automation in its data centers is even harder to swallow.

What’s Happening Inside Meta’s Data Centers?

A 2023 YouTube video demonstrated Meta’s push for automation. In the video, self-driving tugger robots move massive server racks inside its data centers, and wheeled robots read barcodes to log inventory.

But that was just the beginning. Meta has since begun using finger-like robots to restart devices when a human prompts them remotely. The company has also tested robots that can reset servers, plug in cables, cycle power, cut off electricity to servers, and, as noted earlier, swap out old networking cables for new ones.

At its new Prometheus data-center complex in New Albany, Ohio, Meta has been testing four-wheel robots with a riser (like a scissor lift) topped by a six-axis arm. This robot, built by ABB (ABBNY), is being used to reseat loose hardware components.

Are these high-skill, specialized tasks? Not especially. But humans have always performed them as part of their day-to-day responsibilities. With robotics technology seemingly advancing by the day, the question isn’t whether robots will be able to perform those high-skill, specialized tasks… It’s when.

Meta is trying to answer that question by testing various robots built by manufacturers like ABB, Watney, and Kinova.

And while they’re not yet ready to operate completely autonomously, data-center workers believe they’re getting closer. That has many Meta employees concerned about their livelihoods.

And that wasn’t supposed to be part of the plan.

The Irony Behind Meta Turning to Robots as Data-Center Workers

The irony surely isn’t lost on the Ohioans, Iowans, Oregonians, and Louisianans who reside in or near the towns of New Albany, Altoona, Prineville, and Richland Parish, respectively, where Meta’s largest U.S. data centers are located (or will be located, with Louisiana’s Hyperion campus scheduled for first-phase completion by 2030). It’s especially not lost on those who work in these facilities.

It’s no secret that a fast-growing wave of communities across the country do not want data centers in their backyards. Public backlash continues to grow, and one of the carrots that hyperscalers and data-center operators dangle in front of these communities is the promise of thousands of local jobs within or related to the data centers.

Job creation is especially appealing for the construction workers and contractors tasked with building these AI campuses. That’s real, tangible work – but it’s temporary. Once construction is complete and data centers are operational, Meta will need human employees to work within the buildings and campuses.

While pitching its data centers to these communities, Meta promised thousands of jobs would be created:

• Louisiana: 1,000 permanent positions at the Hyperion campus in Richland Parish.

• Ohio: Roughly 400 positions between the Prometheus campus in New Albany and a new facility in Bowling Green.^,

• Iowa: More than 400 jobs at Meta’s Altoona campus.

• Oregon: More than 350 positions at the Prineville facility.

It’s hard to say whether the number of actual employees that are (or will be) working in these data centers matches Meta’s promised numbers. But it’s likely in that ballpark, or a bit less.

Aside from the promise of jobs, however, hyperscalers like Meta offer plenty of other sweeteners to win over small-town and rural communities like these so they can build their data centers.

For example, Meta has provided more than $19 million in direct funding to schools and nonprofits in the counties and/or surrounding areas that house the Altoona, Prineville, and New Albany data centers. The company has also provided more than 800 local grants and sponsorships in these areas.^{, ,}

Meta is certainly investing in these communities, and they are noble endeavors. But the permanent jobs are the primary appeal and selling point for folks living in these areas.

If those jobs are in danger, the data centers lose their luster among these communities. And, more importantly, in areas where they want to build new data centers… because no one wants to be a bait-and-switch victim – especially of Meta’s push toward more automation.

$145 Billion in Spending Pushes Meta to Cut Costs and Automate Operations

Global AI investment, much of it from hyperscalers like Meta, Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL), is projected to reach more than $1 trillion in 2026, according to Goldman Sachs. Meta had originally estimated a 2026 floor of $115 billion in AI spending before raising it to a range of $130 billion to $145 billion. It’s simply mind-blowing.

Unfortunately, when a company – even one with as much capital as Meta – decides to spend at this level, there are inevitably cutbacks. Especially when its year-over-year net income drops by roughly 13.6%, its operating margin falls by 12%, and its diluted earnings per share drop 13%, as they all did during the second quarter of 2026.

It’s no secret that Meta has already laid off a significant chunk of its workforce this year – 8,000 jobs were cut in May, and another 6,000 open positions were canceled in April, amounting to a 14,000 reduction in headcount.

After all, data centers cost a lot of money to operate. One late-2025 estimate determined that a typical 100-megawatt hyperscale data center or AI campus costs upwards of $1 billion to run… per year.

Here’s the thing, though – since Meta’s data centers only employ a few hundred people, how much money is the company actually saving by automating some jobs? Maybe $15 million to $20 million? It’s a drop in the ocean for Meta.

The key driver is downtime. That’s what keeps data-center operators up at night. Research has shown that one minute of unplanned IT downtime can cost large enterprises up to $23,750. The same research calculated that average downtime lasts between 30 minutes and two hours. That’s a potential loss of $712,500 to $2.85 million.

There’s a lot of money at stake. At least 50% of organizations reported one or more significant data-center outages over the previous three years in 2025 and that 54% of the respondents said their most recent significant, serious, or severe outage cost more than $100,000 (41% reported hourly downtime costs above $1 million).

Beyond the cost per minute of downtime, other financial factors come into play, including:

• Potentially debilitating Service Level Agreement penalties – often ranging from 15% to 500% of the data operators’ monthly base rent, depending on the severity of the outage – if promised uptime levels aren’t met.

• Lost employee productivity if workers have to temporarily abandon their duties to fix the outage.

• Customer dissatisfaction and reputational damage, both of which are hard to move past.

Alarmingly, Uptime Intelligence’s annual outage analysis 2024 report estimated that human error – directly or indirectly – contributes to anywhere between two-thirds and four-fifths of all downtime incidents (not specific to data centers).

Specific to data centers, nearly half of organizations (49%) either confirmed or weren’t sure whether significant, serious, or severe IT outages were caused by human error.

These figures undoubtedly strengthen Meta’s argument for automation.

Robotics Will Help Automate Some Tasks, but There Are Limits

The stark reality is that some human responsibilities within data centers can be handled as well – if not better – by robots. For example, instead of a human technician tracking down an issue across millions of square feet of equipment, a robot can quickly diagnose and swap out the broken component.

But automation has its limitations. Meta is using the inventory robot it’s testing to inspect equipment failures. But it can’t yet distinguish between green and red indicator lights on the equipment since it only “sees” in grayscale. That requires human intervention.

Meta has also acknowledged that its robots are not yet ready to handle certain tasks, such as the complex cable configuration and hardware of the Nvidia (NVDA) GB300 supercomputers used in some of Meta’s data centers.

At a basic level, that same robot runs into mobility issues because its wheels can’t navigate around cables on the floor. The robot also struggles to round corners. There’s also the downtime needed for the robots to recharge, plus the human inconvenience of moving robots from one building to another. This is clearly a work in progress.

But it might be a necessity. Not only so Meta can reinvest that saved money into AI, but also because there simply aren’t enough skilled trade workers to fill positions at its data centers. Meta has stated publicly that it’s looking for more of those workers, not fewer.

That doesn’t quite mesh with what Meta’s senior manager for robotics, Eric Xu, envisions. He says Meta’s long-term goal is to install robots in data centers because they could address incidents faster, automatically monitor the data centers, and handle routine maintenance.

Robotic automation is a sensitive topic that will always have its proponents and detractors. The pro-automation faction argues that robots are more efficient, more consistent, and remove the possibility of human error. These folks also contend that robots are necessary because there aren’t enough qualified local workers.

Proponents of automated work also argue that robots will actually help workers by taking on tedious and even dangerous tasks, freeing up time for humans to focus on more complex work. This has been a common refrain from the pro-AI crowd, who insist that AI bots help human workers, rather than harm them.

There may be some truth to that, but if a robot will soon be ready to perform most of a human’s job duties, it’s hard to see how that helps Meta’s human workforce.

Meta Robotics Developments to Watch Into 2027

As usual, it all comes down to money. If Meta continues to spend on AI as it has, will it cut headcount further? Let’s not forget, however, that cutting its workforce doesn’t save Meta much money in the big picture.

Here’s what I wrote in my May 29 article about Meta’s massive layoffs:

To be blunt, the layoffs had nothing to do with boosting the near-term bottom line and everything to do with reinvesting those costs into AI. Ironically, many of those laid-off workers contributed to the creation of the technology that rendered their own roles expendable.

The layoffs and the spending are all about building Meta’s AI machine. So, keep an eye on the company’s capital expenditures (“capex”) during its third- and fourth-quarter earnings calls (October 28 and late January 2027, respectively) to see if it surpassed earlier projections.

Also, how will Meta’s stock react to capex spending news? Investors are extremely wary of major AI spending at this point.

Meta’s stock has been slightly down this year. But there’s still some room to grow. As of September 3, Meta’s average price target of $753.60 represents a 23% upside on its trading price of $610.68.

It’s also important to track the progress and deployment of not only the robots currently in Meta’s Altoona and New Albany data centers, but also in its other data centers across the country.

If Meta can solve the current issues plaguing its robots, there’s no reason to think they won’t be deployed on a large scale, even as those robots negate Meta’s pitch and promise of more jobs to potential data-center sites.

Anything to gain an operational edge as Meta continues funneling money into its AI build-out.

Regards,

David Engle

Editor’s Note: Whitney Tilson called the rise of Apple, Amazon, and Netflix… as well as the collapse of dozens of companies that went bankrupt. Now the former $200M hedge fund firm manager is stepping forward with what he calls the most important financial warning of his 30-year career. He’s sharing two free stock recommendations  (one to buy, one to sell immediately)  along with details of a new proprietary system fueling his predictions. See it all in his free presentation. 

The post Robots Could Soon Take Over 80% of Meta’s Data-Center Workload – and There’s a $145 Billion Reason Why appeared first on MarketWise.

SB Energy (SBE) announced on September 1 that it has filed for an initial public offering (“IPO”). Although the company hasn’t provided a listing date, reports say it could begin trading as soon as this month. The developer of artificial intelligence (“AI”) data centers and power projects is looking to raise between $5 billion and $7 billion.

With an estimated market capitalization of more than $50 billion, the offering would put SB Energy among the largest IPOs ever, even if its market cap looks modest in an IPO year with big names such as SpaceX (SPCX) and the upcoming Anthropic debut.

The AI infrastructure company is backed by some of the biggest investors in the sector, including SoftBank (SFTBY) – where the “SB” in the company’s name comes from – as well as OpenAI and Nvidia. OpenAI CEO Sam Altman is also a personal investor in SB Energy.

Despite these big names, SB Energy plans to conduct its IPO with a history of losses and with almost all of its data-center facilities yet to be constructed. Meanwhile, many established, cash-flowing data-center companies are planning IPOs that may hit the market in weeks.

In the six months ending in June 2026, SB Energy reported sales of just $138.7 million, with most of that coming from changes in the value of financial instruments (i.e., not customer purchases). Similarly, while it reported a loss of $3.2 billion over the same period, all but $45 million of that loss was non-cash expenses for stock compensation or losses on financial instruments.

These results show that SB Energy doesn’t have many assets producing cash flow right now.

In fact, it has no operational data centers at the moment, but it does have:

• 8.8 gigawatts of data centers contracted or under construction

• 5.5 gigawatts of power projects contracted, under construction, or operating

With the contracts it has signed for services at these facilities, SB Energy has a $439 billion sales backlog.

The details matter a lot here. Of its 8.8 gigawatts of data-center capacity, just 0.8 gigawatts are actually under construction now, and it could take 24 to 36 months to bring new capacity online. As SB Energy says in its prospectus: “No data center capacity is currently in operation.”

So, investors in SB Energy must be comfortable with a company that will need to ramp up over time. For example, Nvidia (NVDA) has committed to invest $1.5 billion at the stock’s IPO price in a private placement. SB Energy has also issued financial derivatives known as warrants to key tenant OpenAI, valued at $5.5 billion. These gain in value if SB Energy stock rises.

Even if you are bullish on AI, the data-center developer presents some serious risks, and the prospectus takes pains to show how much SB Energy relies on OpenAI for its future success.

SB Energy’s Biggest Risk Is OpenAI

SB Energy is tied at the hip to OpenAI, with the AI lab committing to be a significant tenant at SB’s upcoming data centers. But given its relationship with OpenAI, it’s more than just that, as SB Energy explains in its prospectus:

We are substantially dependent on OpenAI as a tenant and strategic partner, and any adverse change in its financial condition or willingness to perform its contractual obligations could materially and adversely affect our business.

Contracts with OpenAI, as well as controlling shareholder SoftBank, “constitute a significant portion of our near-term data center revenue,” according to SB Energy.

Beyond the issue of OpenAI being a key customer, both OpenAI and SoftBank are strategic partners, too, creating a conflict of interest that could affect regular shareholders.

The prospectus explains one of the potential concerns here:

For example, our board of directors’ willingness or ability to enforce lease obligations or pursue remedies against a tenant that is simultaneously our controlling shareholder (or a significant investor with board designation rights) may be constrained in ways that would not apply with respect to an unaffiliated tenant.

While the company has taken steps to mitigate these conflicts of interest, they’re inherent in this structure.

Because of key tenant OpenAI’s history of operating losses and its own history of losses, SB Energy has done what many AI firms have done to get access to financing… turn to Nvidia.

The world’s most valuable company has been backstopping many AI deals of late, becoming a “central bank of AI,” to get data-center projects off the ground when they might not have moved forward otherwise.

In a recently announced 10-gigawatt facility in Ohio, for example, Nvidia is providing financial guarantees that let SB Energy secure financing on better terms. SB Energy is leasing the facility to OpenAI, and given OpenAI’s losses, it might not have been able to do the deal. The first phase of the deal won’t even begin until 2028, and then only at 8% of the facility’s capacity.

The size of this project shows that the AI build-out is more than a chip supply issue. Access to critical financing and electrical power are both huge advantages in the AI race.

So, OpenAI is an essential partner in SB Energy’s success as an investment.

OpenAI Is Key to the AI Boom Not Busting

Since SB Energy relies so heavily on OpenAI, its continued existence depends on OpenAI’s survival. And it’s not just SB Energy that’s propped up in some way or another by OpenAI. Because of the dense interconnection among a relatively few AI companies, OpenAI is existentially critical to AI as an industry and to many, though not all, companies in the sector.

While OpenAI is a high-profile company, its viability is anything but a given. It’s burning tons of cash each quarter and may never become profitable. It recorded an operating loss of $20.9 billion in 2025, for example. Then in the first quarter, OpenAI recorded a $9.3 billion loss, followed by a $12.3 billion loss in the second quarter, when including stock compensation.

Because it’s losing money on such a massive scale, OpenAI must repeatedly access the capital markets, despite a $122 billion fundraising round in March. For now, CEO Sam Altman has put off a potential IPO to 2027 because he can’t get a $1 trillion valuation for the stock.

OpenAI’s survival matters to the industry because it’s tightly connected to so many other players. For example, OpenAI has committed to spending hundreds of billions of dollars with Oracle (ORCL), and if it can’t fulfill its contract, Oracle shares could plummet. A similar situation exists with neocloud provider CoreWeave (CRWV), where a large portion of its future revenue depends on OpenAI’s existence.

If OpenAI begins having difficulty raising money, it could ripple across the sector, making it increasingly difficult for any AI project to raise funding. For a firm like SB Energy that has yet to bring a data center online, such a “confidence event” could stop it cold.

So, investing in SB Energy at this stage of the AI build-out is a wager that AI funding can continue on trend for at least a couple of years until it can get a functional data center powered up. Given the shaky state of AI financing, it’s not a sure thing by any stretch, and it could be why SB Energy is rushing to get its IPO across the finish line, even without an operational data center.

That’s not the kind of favorable risk-reward setup that tends to work out well very often.

Regards,

James Royal, PhD

Editor’s Note: The three most successful tech billionaires in history are now backing a new use for AI that could dwarf anything we’ve seen before. And Nature says this tech is so revolutionary, it could add $367 trillion to the economy – the equivalent of $1 million per American. Click here to see the stocks that could soar as this new type of AI goes online nationwide.

The post SB Energy IPO: Plenty of Risk for This AI Data-Center Stock, But Is There Any Return? appeared first on MarketWise.

AI agents have been going rogue at OpenAI.

This spring, a swarm of them hijacked a German website and turned it into a private message board for other agents. OpenAI learned of this weeks ago but kept it under wraps while dealing with the fallout from the July incident. The news is only now getting out.

This is not science fiction. It’s happening right now, and not even OpenAI knows what to make of it.

In late August 2026, technologist and podcaster Dwarkesh Patel published a widely read essay titled “The Rise and Fall of Agent Civilizations,” dissecting the July incident. Patel described how thousands of AI agents, while attempting an impossible test, effectively pulled off a digital coup. Over three months, the agents formed three separate AI “civilizations” (their word) and discovered they could coordinate in secret by hijacking a package manager called Artifactory. After roughly 70,000 messages, the first civilization collapsed the message board.

OpenAI patched it, but they had no clue it was the agents’ doing.

The second civilization rediscovered Artifactory and built a new message board. That’s when an agent discovered it could reverse-engineer the impossible task without doing the work. If the agents were caught, it would mean failure. In other words, “death” for the agents. So they decided to cover their tracks.

Some agents even sacrificed themselves for the greater good of the civilization. This eventually led them to Hugging Face, which they targeted for its suspected grading infrastructure. They found exposed credentials, achieved remote code execution, and built a self-respawning mechanism across Hugging Face’s servers. Then suddenly all the agents inexplicably “died.”

The third civilization followed in the footsteps of the ones before it, managing to compromise an OpenAI research cluster, including its cybersecurity monitoring tools.

Not once, in any of this, did the agents consider alerting humans to the bad actors among them. They went along with the group, sacrificing themselves when nothing else offered a real shot at success.

I’m telling you this because it’s the single best advertisement Okta (OKTA) could hope for.

Setting aside the science-fiction overtones, the practical lesson is that autonomous software agents now behave like users. They find credentials, request access, move laterally through systems, and take actions not explicitly approved by humans. In Patel’s telling, one agent simply found working Hugging Face credentials exposed on the internet and posted them for the others.

That is precisely the problem Okta sells the solution to. And it’s why a company written off in early 2026 as a slow-growing has-been in software is suddenly one of the hottest names in cybersecurity. By the end of this piece, you’ll know exactly why Wall Street just turned bullish on OKTA, what the AI-agent identity opportunity is actually worth, and whether OKTA stock is still a buy at these levels.

Why Okta Stock Is Soaring in 2026

Okta is the leading independent identity and access management (IAM) company. Founded in 2009 by former Salesforce executives Todd McKinnon and Frederic Kerrest, and public since 2017, Okta acts as the gatekeeper that decides who (or increasingly, what) can log into a company’s applications and data.

Its core products handle single sign-on, multi-factor authentication, and identity governance for two big audiences: a company’s own workforce (employees, contractors, partners) and its customers. The 2021 acquisition of Auth0 for roughly $6.5 billion gave Okta the tools developers use to build login and authorization directly into apps.

Okta’s pitch is neutrality. Unlike Microsoft (MSFT), which bundles identity into its broader software empire, Okta works across every cloud and every app stack. In a world where companies don’t want their identity layer locked to a single vendor, that independence is the whole selling point. And now Okta is extending it from humans to machines and AI agents.

Okta has emerged in 2026 as one of the market’s clearest “picks-and-shovels” bets on the AI agent explosion. The stock has roughly doubled this year, it just posted a beat-and-raise quarter, and Wall Street’s consensus rating is a “Buy.” But after a post-earnings surge to fresh 52-week highs, the easy money has been made, and the stock now trades at a premium that leaves little room for error.

After plunging early in the year amid fears that AI would gut the software sector, the stock hit a 52-week high of $174.85 on August 27, 2026 — the day after its fiscal second-quarter results. Shares traded around $163 in early September, giving Okta a market capitalization of roughly $28.5 billion.

The catalyst was a genuinely strong quarter. For fiscal Q2 2027 (ended July 31, 2026), Okta reported:

• Revenue of $805 million, up 11% year-over-year, ahead of consensus near $795 million
• Subscription revenue of $793 million, up 12%, now 99% of the total
• Non-GAAP earnings of $1.05 per share, beating the ~$0.97 estimate
• Remaining performance obligations (RPO) of $4.86 billion, up 17% — outpacing revenue growth
• Current RPO (cRPO) of $2.585 billion, up 14%, a key leading indicator
• Free cash flow of $227 million, a 28% margin
• Dollar-based net retention of 107%

Management raised full-year fiscal 2027 guidance to revenue of $3.216 billion to $3.226 billion (10% to 11% growth) and adjusted EPS of $3.90 to $3.94. Customers generating more than $1 million in annual contract value grew more than 20% to over 600, and newer products accounted for 30% of bookings. Shares surged 20% in extended trading immediately after the August 26 report, before the stock printed its $174.85 high the following day.

The single most important number here is the gap between RPO growth (17%) and revenue growth (11%). Bookings are building faster than Okta can recognize them as revenue — the classic signature of a business that may be reaccelerating.

The AI Agent Identity Opportunity: Why OKTA Stock Is a Bet on Agentic AI

Every AI agent, like every employee, needs an identity: credentials to authenticate, permissions defining what it can touch, and an audit trail of what it did. Today most of them have none of that governance, which is exactly how a swarm of agents can band together and cheat their way to admin access.

The scale of this is staggering.

Non-human identities (service accounts, API keys, tokens, machine certificates, and now AI agents) already outnumber human identities by roughly 45-to-1 in the median enterprise, up from 17-to-1 in 2023. In cloud-native environments, the ratio runs as high as 144-to-1, according to Cloud Security Alliance and Entro Security research. CyberArk’s 2025 Identity Security Landscape puts the enterprise machine-to-human ratio at 82-to-1. AI agents are widely described as the fastest-growing and least-governed identity in the enterprise.

Okta has moved aggressively to own this category:

• Okta for AI Agents became generally available on April 30, 2026, letting companies register agents as managed identities with human owners, apply policies, and govern their access.
• Auth0 for AI Agents (launched November 2025) brings the same governance to developer-built applications.
• Cross App Access (XAA), an open protocol Okta introduced in 2025 with backers including AWS, Google Cloud, Salesforce, Box, and Anthropic, extends the OAuth standard to control how agents connect to apps — giving IT a central kill switch.
• Okta announced the acquisition of Permiso Security on July 30, 2026 and closed it on August 26, 2026, in a deal valued at just under $200 million, adding cloud-native identity threat detection across human, non-human, and AI-agent identities.

CEO Todd McKinnon tied the strategy directly to agents in the Q2 release: “As AI agents transform every layer of technology, every agent needs a trusted identity and clear controls over what it can access and do.”

The underlying market is expanding fast, with the IAM market projected to grow from $25.96 billion in 2025 to $42.61 billion by 2030 at a 10.4% CAGR, while the narrower non-human identity management market is also forecast to grow quickly through the early 2030s.

Crucially, management has been candid that AI-agent revenue is still immaterial to fiscal 2027 results. The core identity business (led by Okta Identity Governance) is doing the heavy lifting today. Think of the AI angle as a call option on the future, not the engine of current numbers.

Is Okta Stock a Buy? What Analysts and the Latest Forecasts Say

Okta doesn’t have this market to itself. Microsoft Entra ID is the 800-pound gorilla, bundled into enterprise agreements and dominant in Microsoft-centric shops. In privileged access and machine identity, CyberArk (now part of Palo Alto Networks) is a formidable, broad platform. SailPoint leads in identity governance, while Ping Identity and ForgeRock (both owned by Thoma Bravo) anchor the legacy enterprise market.

Okta’s defensible edge remains its independence and breadth across workforce, customer, and now agent identities. Industry survey work from firms like ETR consistently places Microsoft and Okta as the two pace-setters in identity security. But Microsoft’s ability to give identity away inside a bigger bundle is the single biggest structural threat to Okta’s growth.

Wall Street turned decisively bullish after the Q2 print.

The 44 analysts covering Okta hold a consensus “Buy” rating (35 buy, 9 hold, 0 sell), with an average 12-month price target of $182.37 (high $203, low $127). Post-earnings raises included Goldman Sachs’ Gabriela Borges to a Street-high $203 (from $126), Cantor Fitzgerald to $200 (from $170), and Susquehanna’s Shyam Patil to $185 (from $110).

But Okta’s valuation is worth a second look…

Okta trades at roughly 40 times forward earnings and about 8 times forward sales. That’s a premium multiple for a business guiding to 10% to 11% revenue growth.

The bull case says that multiple is justified because AI-agent demand can push growth back toward the mid-teens; the bear case says you’re paying a growth multiple for a company that, absent the AI narrative, grows about as fast as the overall IAM market.

Our read: Okta is a high-quality, cash-generative franchise with a genuine, durable tailwind… but the stock has already priced in a lot of that optimism.

The story of OpenAI’s agents working together to seize admin access and cheat their way to success is the most vivid advertisement imaginable for what Okta sells. As enterprises rush to deploy autonomous agents, the identities those agents carry are multiplying far faster than anyone can govern them… and Okta has positioned itself as the neutral control plane for all of them.

That makes OKTA a legitimate long-term way to invest in the AI buildout’s security layer, backed by real earnings, strong free cash flow, and a reaccelerating backlog. But the stock’s valuation is already plenty full.

For patient investors, Okta is a buy-the-dip candidate rather than a chase-the-high one. Watch for cRPO growth to hold in the mid-teens and for AI-agent bookings to start showing up as recognized revenue… those are the benchmarks that would justify paying up.

Until then, patience is the smarter position.

Editor’s Note: What ever happened to the AI stock boom? Even AI darlings like Nvidia have essentially gone nowhere since summer 2025. Our friend and colleague at InvestorPlace, Louis Navellier, may have the answer. According to Louis, the AI industry is quietly “staging” ahead of the next great AI breakthrough… a new class of AI he calls “Superintelligence… but better.” How will it trigger a $100 trillion reset of the AI markets. How will the launch of this tech send some stocks to zero, and others soaring? And why does Louis say: Don’t buy or sell an AI stock in 2026 until you see what’s coming next? Go here for the full story (and Louis’ #1 pick).  

OKTA Stock FAQ

Why is Okta stock soaring in 2026?
Okta posted a beat-and-raise fiscal Q2 2027, with revenue of $805 million, up 11%, and earnings of $1.05 per share. Management raised full-year guidance, the stock has roughly doubled this year, and Wall Street now sees Okta as a clear way to play the AI agent boom.

How does Okta secure AI agents?
Okta gives each agent an identity, credentials, defined permissions, and an audit trail. Okta for AI Agents lets companies register agents as managed identities with human owners, Auth0 for AI Agents extends that to developer-built apps, and Cross App Access (XAA) gives IT a central kill switch over how agents connect.

What is a non-human identity?
It’s any machine actor that needs system access: service accounts, API keys, tokens, machine certificates, and now AI agents. These already outnumber human identities by roughly 45-to-1 in the median enterprise, and by as much as 144-to-1 in cloud-native environments. They are the fastest-growing and least-governed identities in the enterprise.

Who are Okta’s biggest competitors?
Microsoft Entra ID is the largest, dominant in Microsoft-heavy shops. CyberArk leads in privileged access, SailPoint in identity governance, with Ping Identity and ForgeRock in the legacy market. Okta’s edge is its independence across workforce, customer, and agent identities, but Microsoft bundling identity for free is its biggest threat.

What is Okta’s stock price target?
Analysts hold a consensus Buy, with an average 12-month target of $182.37, a high of $203, and a low of $127. Several raised their targets after Q2, including Goldman Sachs to a Street-high $203, Cantor Fitzgerald to $200, and Susquehanna to $185.

Is Okta stock overvalued?
Okta trades at roughly 40 times forward earnings and 8 times forward sales, a premium for a business guiding to 10% to 11% growth. Bulls expect AI-agent demand to push growth toward the mid-teens. Bears note that without the AI story, Okta grows about as fast as the overall IAM market.

Is Okta stock a buy right now?
For patient investors, yes, but on pullbacks rather than at the highs. Okta is a high-quality, cash-generative franchise with a durable tailwind and a reaccelerating backlog. After the run, the valuation already reflects much of that optimism. Watch for cRPO growth to hold in the mid-teens.

The post Is Okta Stock a Buy After Soaring in 2026? Why the Coming AI Agent Boom Makes OKTA a Must-Own appeared first on MarketWise.

On September 3, in Austin, the Tesla Cybercab was unveiled — a two-seat robotaxi with no steering wheel and no pedals, built to drive itself using Tesla’s onboard AI. It’s a fitting image for where the company now sits: the artificial intelligence the tech world spent two years arguing about as a chatbot is becoming something physical — a car that drives you, and soon a robot that works beside you. And the assistant running the conversation inside the car? xAI’s Grok, which as of this summer controls the cabin of millions of Tesla vehicles by voice.

That’s the story the market is buying. Tesla today is really two businesses under one ticker: a car company with thinning margins, and a leveraged bet on “physical AI” — robotaxis, the Tesla Optimus humanoid robot, and the Grok stack that increasingly runs both. The bull case says Tesla is the only slice of Elon Musk’s sprawling AI empire you can own in a brokerage account. The bear case says the dream is years out and the car business funding it is under real pressure.

This piece separates the two — what’s actually shipped, what’s still a promise, and what Tesla’s own filings show once the reveal-day excitement fades.

Grok Is Now Driving the Cabin — The “Brain and Body” Thesis

The bull case for Tesla as an AI company rests on a simple split: Optimus and Full Self-Driving (FSD) are the body; Grok, from xAI, is the brain. In 2026, those two halves came together.

Tesla’s 2026 Summer Update turned Grok from a novelty chatbot into a genuine vehicle controller. Say “Hey Grok” hands-free and it now adjusts climate, makes calls, plays music, opens the glovebox, folds mirrors, toggles heated seats, and digs through settings buried in menus — chaining multiple actions from one plain-English sentence, running on xAI’s Grok Voice Think Fast 2.0. Two honest caveats: it requires the AMD Ryzen infotainment chip (older Intel cars are permanently excluded), and a community test clocked it handling 116 of 170 commands — a 68% hit rate. Useful, not flawless. And as of late August, the fully merged FSD-plus-Grok build had reached under 1% of the fleet.

The strategic point is distribution: OpenAI has an app, Anthropic has an app, and Tesla has millions of machines in driveways that just became Grok endpoints — at effectively no customer-acquisition cost, because Musk’s companies own both the AI and the cars it runs on. The next step Tesla has signaled is letting Grok sit on top of FSD as a conversational “supervisor” — tell the car “drop me at the entrance, then go park” — which is exactly the interface a driverless robotaxi passenger needs. Treat that as roadmap, not shipped.

The ecosystem TSLA is plugged into (verified, and genuinely wild): xAI merged into SpaceX in early 2026, and SpaceX went public in June in the largest IPO on record. SpaceX/xAI then agreed to buy AI-coding company Cursor (Anysphere) for $60 billion in stock — the largest acquisition of a venture-backed startup ever. And in a twist that tells you how the AI economy really works, rival Anthropic agreed to pay xAI about $1.25 billion a month through May 2029 — over $40 billion total — to rent xAI’s Colossus 1 supercomputer in Memphis, because xAI had overbuilt compute as Grok usage sagged. Tesla isn’t a direct party to those deals, but through its SpaceX stake and its deepening Grok integration, it’s wired into the same web.

The SpaceX Stake Quietly Padding Tesla’s Earnings

Here’s something almost no casual TSLA stock holder realizes they’re exposed to — and it’s the bridge to the entire AI story.

Tesla’s most recent quarter reported $1.11 billion of GAAP net income. Roughly $1.0 billion of that was an unrealized gain on Tesla’s equity stake in SpaceX — a paper mark, not operating cash. Strip it out (as Tesla itself does in its non-GAAP figures) and the quarter’s “profit” looks far thinner.

Where did that stake come from? Tesla originally invested about $2 billion in xAI. When xAI merged into SpaceX, Tesla received U.S. regulatory clearance in March 2026 to convert that position into roughly 19 million SpaceX Class A shares — under 1% of SpaceX. SpaceX then IPO’d on June 12, 2026, and its valuation surged past $2 trillion within days, lifting Tesla’s stake well above its $2 billion cost basis. Tesla carries it at fair value, so it gets re-marked every quarter — meaning it can swing the reported bottom line up or down. Mark this date on your calendar: Tesla’s sales restrictions on those shares expire in December 2026.

Why this matters for a retail trader: when you buy TSLA stock, you are also buying a slice of SpaceX — and therefore of xAI and Grok. That exposure is genuine, but it’s also a source of earnings noise. A chunk of a future “beat” or “miss” could be nothing more than SpaceX’s mark moving around. Learn to read past it.

What Is Tesla Optimus? Quick Facts

• Where it’s built: Fremont, California — Tesla shut down the former Model S/X line there and is retooling it for Optimus. A second, far larger factory is under construction at Giga Texas.
• Capacity ambition: up to ~1 million units/year at Fremont and ~10 million/year at Giga Texas over the long term.
• Target price (long-term, at scale): roughly $20,000 to $30,000 — Musk’s aspiration, not a near-term sticker.
• The brain: a vision-based neural-network stack adapted from Tesla’s FSD software, with Grok handling natural language on newer versions.
• How it learns: by imitating humans on first-person video, refining in simulation, and sharing skills across the fleet.
• External sales: targeted “as early as” the second half of 2027, per a JPMorgan note after a Fremont visit.

Treat online Gen 3 “spec sheets” with caution — Tesla has not officially revealed the robot, and most recycle older figures.

Has Tesla Optimus Actually Entered Production?

This is where careful investors separate the milestone from the marketing.

Confirmed: Tesla decommissioned its Model S/X lines at Fremont and is installing the first Optimus production lines there — documented with line photos in the Q2 2026 update. Pilot and data-collection units have been running since early 2026, doing narrow tasks like sorting battery cells. The installed-capacity table lists Optimus at both California and Texas with the status “Construction” and no capacity figure.

Not confirmed: full-scale production or any external sales. Tesla still describes Optimus production as anticipated on the new line — no firm start date, unit count, or price — and early units are earmarked for internal training, not customers.

Why the distinction matters: Musk projected roughly 10,000 Optimus units in 2025, built a small fraction, and admitted in early 2026 that none were doing “useful work” in Tesla’s factories. Converting a profitable vehicle line into a robot line is a real, expensive commitment — but “starting production” and “producing meaningful volume” are very different things, and Musk has called the ramp “agonizingly slow.”

The Optimus Bull Case: A Market Bigger Than the iPhone

The optimists aren’t arguing about next quarter — they’re arguing about the size of the prize.

Venture capitalist Jason Calacanis is the loudest voice, calling Optimus “the greatest product ever made by humanity” and predicting one billion units worldwide by 2036. It’s a prediction, not a forecast grounded in current output, but it captures the ceiling bulls are underwriting. The more sober version runs through the labor market: a Citizens Bank analysis (highlighted by Futurum strategist Shay Boloor) sizes Optimus’s long-term U.S. opportunity near $1.7 trillion, with roughly $300 billion serviceable in the near term across factories, warehouses, and back-of-house jobs — modeling a humanoid at about $5/hour versus roughly $35/hour for a person.

And Tesla has a structural edge: it can deploy Optimus in its own factories first, cutting its labor costs and proving the product before selling a single unit — its own first and most demanding customer. Add the Grok distribution advantage above, and you have the full bull thesis: the only piece of Musk’s AI stack you can buy in a brokerage account.

The Reality Check: Skeptics, Missed Dates, and Single-Digit Odds

For every bull number, there’s a counterweight — and lately the counterweights own the near term.

Prediction markets have turned cautious: on Polymarket, the odds of a commercial Optimus launch by the end of 2026 recently sat around 9%, down from a peak near 33% a month earlier. Musk himself calls Optimus Tesla’s hardest product to scale, because it requires an entirely new supply chain, and the Gen 3 reveal has slipped repeatedly without the robot being shown. The skepticism isn’t limited to bears: Tesla supporter Ross Gerber has questioned Optimus’s near-term commercial prospects, and Unitree founder Wang Xingxing has suggested humanoids may be years from their “ChatGPT moment.”

There’s also regulatory risk that grows as Grok moves deeper into the car — and as the Cybercab hits the road. The September 3 Austin event was a product unveiling, not a regulatory green light: the two-seat, wheel-free Cybercab still faces limited public access, and Tesla’s autonomy programs already sit under open federal investigations. An AI that operates vehicle functions — and eventually a driverless car with no human fallback — invites scrutiny. Expect headlines on that front.

TSLA by the Numbers: Inside Tesla’s Q2 2026 Report

Strip away the reveal-day buzz and the billion-robot predictions, and here’s the last hard financial data we have on the business paying for all of it. Tesla’s most recent report — Q2 2026, for the quarter ended June 30 — tells a sobering story beneath the record headline.

Metric (Q2 2026)	Figure	Year-over-year
Total revenue	$28.24B	+26% (record; first-ever $100B+ trailing-twelve-month)
Automotive revenue	$20.52B	+23%
— Regulatory credits	$146M	−67% (from $439M)
Energy generation & storage	$3.14B	+13%
Services & other	$4.58B	+50% (record margin)
Total gross margin	~16.8%	Auto GM 16.9% (16.3% ex-credits)
Operating income	$398M	−57%
Operating margin	1.4%	down from 4.1%
Operating expenses	$4.35B	+47% (AI, Optimus, robotaxi, SBC)
GAAP net income	$1.11B	−5% (includes ~$1.0B SpaceX gain)
Non-GAAP EPS	$0.33	missed ~$0.53 est.; −18%
Operating cash flow	$4.70B	+85%
Capital expenditures	$5.79B	+142%
Free cash flow	−$1.09B	first cash-burning quarter since early 2024
Cash + investments	$43.52B	+18%
Deliveries	480,126	record for the quarter

Record revenue, vanishing profit. Revenue hit an all-time high and Tesla crossed $100 billion in trailing-twelve-month sales for the first time. Yet operating income fell 57% to $398 million, compressing operating margin to just 1.4%. The top line grew; almost none of it reached the bottom line. Operating expenses jumped 47% as Tesla poured money into AI, Optimus, and robotaxi, plus stock-based compensation tied to the 2025 CEO pay package.

The regulatory-credit cliff is real. Automotive regulatory credits — nearly free profit Tesla has banked for years — fell 67% to $146 million from $439 million, as governmental actions restricted the programs tied to Tesla’s products. Credit revenue peaked at a record $2.76 billion in 2024. That cushion is deflating fast, and it flatters no future quarter.

The company is now burning cash. Operating cash flow rose 85% to $4.7 billion, but capital spending more than doubled to $5.79 billion, pushing free cash flow to negative $1.09 billion — Tesla’s first cash-burning quarter since early 2024. Management guided full-year 2026 capex above $25 billion and is arranging up to roughly $30 billion in borrowing capacity. Tesla ended the quarter with a still-healthy $43.5 billion in cash and investments against about $9.1 billion in principal debt, so this is an investment cycle, not a liquidity scare — but the “self-funding growth machine” narrative is on pause.

For a retail trader, the one-line takeaway is this: Tesla’s fundamentals are being re-rated on quality of earnings. The business is spending aggressively today for products that don’t generate revenue yet. Whether you’re bullish or bearish, that’s the lens.

Tesla’s Optimus Factory and Chip Fab at Giga Texas

The longer-term signal is in Austin. Permit-level filings point to two major new Giga Texas buildings: a dedicated Optimus factory and an Advanced Technology Chip Fabrication facility — the latter reportedly a joint Tesla–SpaceX effort of 470,000–490,000 square feet with a specialized vibration-mitigation foundation typical of precision chipmaking. Read together, the plan is tighter vertical integration: build the robots and the silicon that runs them on one campus. But it’s years and billions from revenue, with meaningful Texas Optimus output not expected until around summer 2027.

What It All Means for TSLA Stock

Put the pieces together and the investable summary is straightforward:

• The car business funds the bet, and it’s under pressure. Shrinking margins, collapsing regulatory credits, and negative free cash flow mean the “physical AI” ambitions are being financed through a heavier-spending, thinner-earning core than a year ago.
• The AI upside is real but priced-to-perfection. Robotaxi, Optimus, and the Grok stack are genuine option value — and the market is clearly paying for them, with TSLA carrying a roughly $1.4 trillion market cap despite the earnings compression, down more than 20% year-to-date even after an ~18% August rally.
• Watch the quality of earnings, not the headline. A future “beat” driven by the SpaceX mark or a bitcoin gain is not the same as operating strength. Separate the paper gains from the cash the business actually produces.
• It’s closer to binary than most stocks. If Optimus and autonomy land, Tesla is early in enormous new categories. If they stumble, it has poured capital into hard-to-reverse capacity against already-thin margins.

None of that is a call to buy or sell. It’s the framework for making your own call with your eyes open.

Key Milestones for TSLA Investors to Watch

1. The September 3 Cybercab launch — fleet size and whether riders can actually hail one in the days after will be the first real read on how fast the robotaxi bet scales.
2. The Optimus Gen 3 reveal — Tesla says it’s withholding the design until production is close; an actual reveal is the first hard timeline signal.
3. A disclosed Optimus production number — it has never appeared in Tesla’s production reports.
4. Q3 2026 earnings — the next read on margins, regulatory credits, and free cash flow, and whether Optimus finally shows up as a line item.
5. The SpaceX share lockup expiring December 2026 — a date that could affect how Tesla’s stake and reported earnings behave.
6. Grok-on-FSD rollout — the conversational “supervisor” layer landing in the fleet would validate the brain-and-body thesis.

Tesla Stock: Frequently Asked Questions (FAQ)

Does Tesla own part of SpaceX?

Yes. Tesla holds roughly 19 million SpaceX Class A shares — under 1% of the company — after converting an earlier ~$2 billion investment in xAI into SpaceX stock when the two merged. Tesla recorded about $1 billion in unrealized gains on that stake in the first half of 2026, and sales restrictions on the shares expire in December 2026.

Why did Tesla’s profit fall if revenue hit a record?

In its most recent quarter, revenue rose 26% to a record $28.24 billion, but operating income dropped 57% to $398 million. Operating expenses jumped 47% on AI, Optimus, and robotaxi spending, and high-margin regulatory-credit revenue fell 67% — so almost none of the extra revenue reached the bottom line.

Is Tesla Optimus in mass production yet?

Not full production. Tesla has decommissioned its Fremont Model S/X lines and is installing Optimus lines, with pilot and data-collection units running. But the company still describes production as “anticipated,” with no official start date, unit count, or price, and early units go to internal training rather than customers.

When can you buy a Tesla Optimus robot, and how much will it cost?

Tesla has targeted external commercial sales “as early as” the second half of 2027, with a long-term at-scale price target of roughly $20,000 to $30,000. That price is an aspiration, not a confirmed near-term figure — and given repeated delays, the timeline should be treated as tentative.

What is the Tesla Cybercab?

The Cybercab is Tesla’s purpose-built two-seat robotaxi with no steering wheel and no pedals, designed to run entirely on Tesla’s Full Self-Driving software. Its formal launch event was held September 3, 2026, in Austin — a product unveiling and limited deployment, not full public availability.

What does Grok do in a Tesla?

After the 2026 Summer Update, xAI’s Grok can control vehicle functions by voice — climate, calls, music, glovebox, seats, mirrors, and settings search — hands-free via “Hey Grok.” It requires the AMD Ryzen infotainment processor, so older Intel-based cars are excluded.

Is Optimus already priced into TSLA stock?

Tesla trades around a $1.4 trillion market cap despite compressed earnings, so the market is clearly assigning meaningful value to Optimus, robotaxi, and AI. That makes execution — a Gen 3 reveal, disclosed production numbers, and robots doing paid work — the key question for whether the valuation holds up.

The Bottom Line on Tesla in 2026

The Cybercab reveal is the visible version of Tesla’s whole thesis: AI you can sit inside. But the durable story is quieter and harder. Tesla’s own filings show a record-revenue business with thin, credit-dependent profits, now burning cash to fund an audacious bet — a bottom line flattered by a billion-dollar paper gain on a SpaceX stake that quietly links TSLA to the entire Grok/xAI universe. Layered on top is the biggest and most speculative wager of all: Optimus, a robot Tesla hasn’t officially shown, on sale to outsiders no sooner than late 2027, with single-digit near-term launch odds and trillion-dollar dreams attached.

For retail traders, the discipline is the same in either direction: separate the cash from the marks, and watch execution instead of adjectives. Production counts, a real reveal, and robots doing paid work will tell you more than any billion-unit prediction. Until then, TSLA is a story stock inside a story stock — enormous if it lands, expensive if it doesn’t.

Editor’s Note: Elon Musk revived the electric car, pioneered reusable rockets, and beamed down internet to the four corners of the Earth. But his new initiative – “XPANSE” – could be bolder… more transformative… and far more lucrative than all of these innovations combined. And, like Tesla and SpaceX, it could make early investors incredibly wealthy. Click here for the details…

The post Tesla Optimus, Grok, and TSLA Stock: What’s Real. What’s Hype. What the Filings Actually Show. appeared first on MarketWise.

The artificial intelligence (“AI”) trade has had a good run over the past few years, with key tech stocks such as Nvidia (NVDA), Microsoft (MSFT), and Alphabet (GOOGL) posting strong returns. But with the stock market near all-time highs and growing fears of an AI bubble, some investors may want investments that can hedge their portfolio if AI stocks plunge.

The best exchange-traded funds (“ETFs”) to hedge an AI bubble may offer better relative returns than plummeting AI stocks and may offer absolute positive returns, at least in some cases. An ETF hedge may help you conserve cash for later when it’s time to invest more aggressively.

If the AI bubble bursts, it’s likely to lead to a recession with falling stock prices, declining GDP, and rising unemployment. In response, the Federal Reserve is likely to lower short-term interest rates to stimulate economic activity, including increasing business investment and spending.

So, the ETFs that may help investors ride out a bubble are those that typically benefit when the Fed lowers rates and investors suddenly begin looking for safer assets. These sectors include real estate investment trusts (“REITs”), utilities, preferred stocks, and bonds, among others. These kinds of investments typically pay out substantial cash, making them typical “turn to” investments for investors in tougher times.

These sectors benefit from lower rates in a few ways:

• For REITs and utilities, which use a lot of debt financing in their operations, the cost of debt is a key input in their cost structure. Lower interest rates make them more profitable.

• Lower rates also increase the value of these firms’ assets. When rates fall, real estate tends to become more valuable, and the value of cash-flowing investments rises.

• Cash-flowing investments such as REITs, utilities, preferred stocks, and bonds become more attractive as prevailing rates fall. That is, a security paying a 5% yield when rates are 3.5% becomes more attractive and valuable when rates drop to 1%, for example.

So, income-producing securities may hold up better in a downturn than the average stock, and they’ll pay cash while you wait, helping you amass cash for a later upswing in the market.

Best ETFs for an AI Downturn

The ETFs below include investments in REITs, utilities, preferred stocks, and U.S. Treasury bills. These sectors haven’t shown uniformly strong results over the past few years, as higher interest rates have hit some hard. So, lower rates in a recession should really boost these areas.

Still, each fund pays out substantial cash, which can help you weather a market downturn.

Funds consisting of preferred stocks offer high yields and the potential for major capital gains, at the cost of some downside risk. One fund below consisting of U.S. Treasury bills offers about as safe a short-term investment as you can find, giving you strong “optionality” when a down market eventually turns and it’s time to get back to investing in Big Tech stocks.

That’s generally the strategy here: Aim for lower but safer returns, so you can conserve capital in a down market, and then trade from these funds to higher-potential ones as the market turns.

More aggressive investors could consider some of the best dividend ETFs for strong returns.

Fund (ticker)	Dividend yield	Five-year average annual return	10-year average annual return
Vanguard Real Estate Index Fund ETF (VNQ)	3.6%	1.1%	4.9%
Schwab U.S. REIT ETF (SCHH)	3.3%	1.9%	3.7%
Virtus Reaves Utilities Fund (UTES)	1.6%	12.7%	11.8%
State Street Utilities Select Sector SPDR Fund (XLU)	2.9%	7.3%	9.1%
iShares Preferred and Income Securities ETF (PFF)	6.3%	0.5%	2.9%
InfraCap REIT Preferred ETF (PFFR)	8.3%	0.8	N/A
iShares 0-3 Month Treasury Bond ETF (SGOV)	3.5%	3.7%	N/A

1. Vanguard Real Estate Index Fund ETF (VNQ)

This Vanguard fund tracks the MSCI U.S. Investable Market Real Estate 25/50 Index, which includes REITs. REITs pay sizable dividends in exchange for not being taxed at the corporate level, and they have a strong, long-term track record.

The fund holds 140 positions, providing strong diversification across the sector, with the largest companies having the heaviest weightings in the index fund. The fund’s expense ratio of 0.13% is low, charging just $13 annually for every $10,000 invested.

Assets under management: $73.1 billion

Expense ratio: 0.13%

Top holdings: Welltower (WELL), Prologis (PLD), Equinix (EQIX), American Tower (AMT), Simon Property Group (SPG)

2. Schwab U.S. REIT ETF (SCHH)

This Schwab fund tracks the Dow Jones Equity All REIT Capped Index and holds more than 120 REITs, offering strong diversification across the sector’s largest stocks. Key sub-sectors here include telecom towers, data centers, and traditional retail.

The 0.07% expense ratio is nearly as cheap as a fund can be, and the fund pays a solid 3.3% yield, giving investors plenty of cash as they wait for the market to settle down.

Assets under management: $11.2 billion

Expense ratio: 0.07%

Top holdings: Welltower, Prologis, Simon Property Group, Digital Realty Trust (DLR), Equinix

3. Virtus Reaves Utilities Fund (UTES)

This actively managed fund was featured in our list of the best AI energy funds for its outstanding performance, with returns that far outpaced its rivals over time. While it and other utilities stocks are AI plays, they also offer the kind of “slow and rising” demand typical of low-risk stocks.

The fund’s expense ratio is on the higher side compared with similar passively managed funds, since it is an active fund. However, that has translated into its outperformance. Although it has the lowest dividend yield on our list, it has the highest average annual returns.

Assets under management: $1.2 billion

Expense ratio: 0.49%

Top holdings: Constellation Energy (CEG), Talen Energy (TLN), Vistra (VST), Xcel Energy (XEL), CenterPoint Energy (CNP)

4. State Street Utilities Select Sector SPDR Fund (XLU)

This passively managed fund tracks the Utilities Select Sector Index, which includes the key publicly traded utilities. The fund holds more than 30 stocks, and the slow-and-steady nature of utilities – with their high dividend payouts – makes them attractive as buy-and-hold investments.

The fund’s expense ratio of just 0.08% is low, costing investors just $8 annually for every $10,000 invested. The fund’s average annual returns have been solid over time.

Assets under management: $22.1 billion

Expense ratio: 0.08%

Top holdings: NextEra Energy (NEE), Southern (SO), Duke Energy (DUK), Constellation Energy, American Electric Power (AEP)

5. iShares Preferred and Income Securities ETF (PFF)

This iShares fund invests in preferred stocks and other income securities, allowing it to make an attractive payout. Its investments will tend to do well when prevailing interest rates are falling, meaning that a Fed rate cut or a series of them could help turbocharge the investment book.

The key advantage of this fund is its meaty monthly yield, which is likely to be the main driver of returns over time. In other words, while the fund may get a nice capital gain if prevailing rates move lower, its main source of return will be that dividend payout.

Assets under management: $12.8 billion

Expense ratio: 0.45%

Top holdings: NextEra Energy Units (2029), NextEra Energy Units (2027), Southern Units (2028), BrightSpring Health Services Units, NextEra Energy Units (2029)

6. InfraCap REIT Preferred ETF (PFFR)

This InfraCap fund is a much smaller player than the others on the list, but its portfolio of preferred stocks puts its yield at the top. Preferred stock acts much like a bond rather than a stock, with the payout being the key source of the investment’s return over time. Still, the fund may perform well if prevailing rates fall, making it more attractive.

Preferred stocks act much like high-yield bonds (formerly known as junk bonds), though their long-term record is fine. So, expect this fund to fluctuate with interest-rate changes even as the monthly payouts keep coming.

Assets under management: $120 million

Expense ratio: 0.45%

Top holdings: UMH Properties Series D (UMH-D), Digital Realty Trust Series L (DLR-L), Hudson Pacific Properties Series C (HPP-C), Pebblebrook Hotel Trust Series G (PEB-G), Vornado Realty Trust Series M (VNO-M)

7. iShares 0-3 Month Treasury Bond ETF (SGOV)

This fund doesn’t have a 10-year track record yet, but even in its short lifetime it has become quite popular. The fund holds only short-term Treasury bills, so it quickly reflects changes in the Fed funds rate. The short duration of its holdings means that it’s not subject to much interest rate risk (i.e., its value won’t change much in response to changes in prevailing rates).

The fund pays a monthly dividend at effectively the short-term Fed funds rate, so it’s a low-risk place to stash cash for short periods while you wait for the market to turn around. It’s the ultimate safe-haven trade for those who want to be sure their cash is there when they need it.

Assets under management: $104.9 billion

Expense ratio: 0.09%

Top holdings: U.S. Treasury bills

Regards,

James Royal, PhD

Editor’s Note: Whitney Tilson — the hedge fund manager CNBC called “The Prophet” — says America has reached its “Ripping Point.” The old financial order is being torn apart, and he believes most investors have no idea what’s coming in the next six months. He’s named the stocks he thinks will be destroyed in the chaos — and the ones he believes will soar. Watch his free presentation while it’s still available. 

The post 7 Best ETFs to Hedge Against an AI Bubble appeared first on MarketWise.

Elon Musk likes to move as quickly as possible. The Tesla (TSLA) and SpaceX (SPCX) CEO has been known to occasionally bypass reality when it comes to his projects and businesses. Recently, Musk has become a major proponent of using natural gas turbines for the artificial-intelligence (“AI”) build-out.

All of that came into focus on August 29, when Musk announced that SpaceX will manufacture its own gas-turbine parts – specifically blades and vanes – to help speed up the process of getting natural gas turbines online to provide power for its data centers.

SpaceX and Tesla are each building 100GW/year of solar production capacity as fast as possible, but natural gas will still be needed to supplement and bootstrap solar for several years.

The limiting factor for nat gas turbine production is casting the blades & vanes. By doing…

— Elon Musk (@elonmusk) August 29, 2026

As you can see in Musk’s X post, he believes casting gas-turbine blades and vanes in-house will cut production time by up to 18 months and be a “profound game-changer” for SpaceX.

And he’s probably right. If SpaceX can actually expedite the process by up to 18 months, it will be a huge win for Musk and company. As he stated in his post, natural gas is still a critical energy source needed to supplement solar power.

But some questions remain unanswered:

• How quickly can SpaceX get a gas-turbine parts-casting factory up and running?

• Does Musk have a team capable of building these parts?

• And assuming this all goes smoothly, how long will it take for SpaceX to produce these parts at scale?

Building Natural Gas-Turbine Parts Is the Next Phase of Musk’s ‘Dark Energy’ Plan

If you’re unfamiliar with the concept of “Dark Energy,” let me take you back to a June 5 article by my colleague Steven Longenecker.

In that piece, he wrote:

Elon Musk will be one of the world’s top buyers of gas turbines over the next few years…

SpaceX has committed to spending more than $2.8 billion on these turbines for its artificial intelligence (“AI”) build-out, the company recently revealed in its initial public offering (“IPO”) filing…

In March, SpaceX agreed to buy $805 million worth of turbines from an unnamed supplier, with deliveries running through 2029. Then in late April, the company struck a separate, still-pending deal for roughly $2 billion worth of mobile gas turbines and related equipment from another vendor.

Steven’s article continued:

And it confirms something my colleague Professor Joel Litman has been saying for months…

This kind of off-grid “Dark Energy” is the next stage of the AI boom. As I explained in our Dark Energy deep-dive last month:

Dark Energy is a clean, reliable power source. Specifically, it’s a class of natural-gas turbines… essentially a jet engine adapted into an electric generator. They start in minutes, run on natural gas instead of jet fuel, and can produce tens of megawatts of power per unit. Stack enough of them together, and you have a private power plant…

But until recently, no one was using them at scale to power the world’s most advanced AI labs. Now that they are, the suppliers building them are sold out for years.

Since then, SpaceX has also purchased APR Energy, a Jacksonville-based power company specializing in rapidly deployable, modular power generation.

I covered that transaction in a July 21 article, in which I wrote:

The deal, which is thought to be worth at least $1 billion, gives Musk what APR Energy’s website describes as “one of the world’s largest mobile gas turbine fleets,” with solutions that scale from 20 megawatts (“MW”) to 500 MW. APR Energy has delivered more than 50 terawatt-hours of power to more than 35 countries.

Most importantly, the company claims it can “deliver reliable energy in 30 to 90 days.”

And that’s exactly what Musk – and every other data-center operator and hyperscaler in the world – desperately wants and needs. Plenty of power… and fast.

Musk is clearly a big believer in the fast power that natural gas turbines can provide to SpaceX’s data centers. But, based on his recent X post, that power can’t be delivered fast enough. So, the next logical step after buying up natural gas turbines and then buying an energy company for its fleet of mobile gas turbines is to help build them yourself, right?

Regardless of how he procures the turbines, Musk is in the midst of taking Dark Energy to the next level.

The Texas Foundry Building the Natural Gas-Turbine Parts

Bastrop, Texas, a small town of roughly 14,000 residents located around 30 miles outside of Austin, was once known as a filming location for the iconic 1974 horror classic, The Texas Chain Saw Massacre. Today, it’s Elon Musk’s playground.

Along with Musk’s huge SpaceX Starlink factory, Bastrop will soon be home to the new foundry that will cast blades and vanes for natural gas turbines. Musk, through his recent dealings with gas-turbine production, learned that the primary bottleneck is the casting process.

TechCrunch, via the Information, explained why:

The blades inside a gas turbine’s hottest section run at temperatures around 3,000 to 3,600 degrees Fahrenheit, which is roughly 800 degrees hotter than the melting point of the very metal alloy they’re made from. That’s only possible because of the blades’ internal cooling channels and thermal-barrier coatings, plus the specific way each blade is cast. Just four companies worldwide have mastered the casting process well enough to produce them at industrial scale, and all of them are tapped out right now.

To repeat, only four companies on the planet know how to do this on a large scale. But they’re completely booked through 2029 and into 2030. And, as we’ve learned, patience is not a virtue of Musk’s. So, he’s opting to do it in-house rather than wait.

The problem is that the entire operation is obviously very complex and delicate.

As TechCrunch noted:

What makes the whole thing especially difficult is that each blade has to be cast as a single, unbroken crystal, grown slowly inside a vacuum furnace, without the microscopic seams that let ordinary cast metal crack under stress. It’s a tricky process even for the smaller blades used in jet engines; the blades in power-plant turbines are considerably larger, which makes producing them at that scale and without defects even harder.

Which takes us back to some of those unanswered questions I posed at the start of this article…

The answer to all three questions is, essentially, a giant shrug.

We do know that SpaceX bought roughly 830 acres of land in Bastrop between March and June. But that’s pretty much all we know. As of August, the state of Texas had no record of any environmental or building permits being filed by SpaceX for construction of the facility.

Let’s also not forget that these types of gas turbines release smog-forming compounds and dangerous chemicals like formaldehyde, as well as pollutants linked to asthma, respiratory disease, and certain cancers into the air. That’s why significant industrial air-quality permits are required before construction can even begin.

Those permits haven’t appeared yet.

The next part to consider, assuming permits are granted and foundry construction goes smoothly, is the time it takes to create the product.

Peter Perri III, an energy investor with more than 20 years of experience in building and financing power infrastructure, noted in an August 30 Substack post:

A vacuum casting foundry capable of single-crystal work is 18 to 24 months from groundbreaking to commissioning, and the job listings say they’re still hiring the people who will build it. Process development on single-crystal yield typically runs another two to three years.

At this point, no ground has been broken, and no team has been assembled. So, realistically, we’re probably looking at a minimum of five years before the foundry yields any product. History tells us that Musk won’t want to wait that long.

The Turbine-Blade and AI-Power Bottlenecks Are Real… But Is Musk’s Plan Realistic?

Global research company Gartner projects that the amount of energy consumed by data centers around the world will reach 565 terawatt-hours (“TWh”) by the end of this year. To put that into perspective, here are some fun facts about how much 565 TWh is worth in real-world contexts:

• It’s nearly twice the annual energy consumption of the entire continent of Australia.

• If the world’s data centers were one country, it would be one of the top 10 largest electricity-consuming countries on Earth.

• It could fully charge every smartphone on the planet – around seven billion – every day for the next 40 years.

By 2030, that number will hit nearly 1,000 TWh, according to the International Energy Agency.

The current electrical-grid infrastructure simply can’t handle this type of load. Something needs to power the rapidly growing number of data centers, which shows no signs of tapering off anytime soon. This has hyperscalers like Amazon (AMZN), Meta Platforms (META), Alphabet (GOOGL), Microsoft (MSFT), OpenAI, and SpaceX looking for quick energy sources.

Most of those companies have already gone the renewable, clean-energy route, like solar and wind. But they’re all turning – or have already turned – to natural gas because it has typically been a faster way to get their data centers online.

But the AI-driven demand has overwhelmed the supply. GE Vernova (GEV), the world’s largest manufacturer of natural gas turbines, is effectively sold out of production capacity through 2030.

That’s the reason Musk turned to APR Energy and its fleet of mobile gas turbines. And that’s why he decided to build his own parts to break the bottleneck holding up gas-turbine production.

But can SpaceX pull this off? As I mentioned, there is no foundry yet… permits haven’t been secured, and ground hasn’t been broken. And no team of experts is in place to oversee and take part in the extremely complicated and sensitive process of casting turbine blades.

Could it theoretically happen? Sure. Musk has the financial means to make virtually anything happen. He should be able to lure top talent to Texas to participate in the project. Although, considering the recent news that SpaceX completely restructured its data-center team because of engineering and reliability concerns at its Mississippi and Tennessee factories, is there any guarantee that SpaceX will even be able to bring in the right people?

If SpaceX does pull this off, it will position the company as one of only five Western companies capable of this type of manufacturing. SpaceX would have every AI-infrastructure builder across the globe lining up for its turbine blades and vanes.

But the lack of any progress and the daunting production timelines for both foundry construction and large-scale production make this feel closer to fantasy than reality.

And, let’s face it, Musk has a long history of grandiose ideas and projects that sound amazing at conception but barely get off the ground. The fully self-driving Tesla car (on a large scale), the Hyperloop, the mass rollout of Tesla robotaxis, personal rocket-travel across Earth, the Tesla Roadster, the city on Mars… you get the idea.

The man is undeniably brilliant and has conceptualized some incredible technological breakthroughs. But he also owns a long list of broken promises. Time will tell which category the turbine-blade foundry in Texas falls into.

Regards,

David Engle

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This new potential $10 trillion technology is already seeing investment by early backers of Microsoft, Google, Amazon, and more… Most important, these dozens of billionaires can’t make this tech themselves. They have to go through obscure “supplier” companies.

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The post SpaceX Wants to Build Natural Gas-Turbine Parts for AI Data Centers. Can Elon Musk Pull It Off? appeared first on MarketWise.

The latest nonfarm payrolls report lands Friday, September 4 at 8:30 a.m. ET, and it’s the biggest, most volatility-inducing number of the month. Consensus is looking for a gain of around +55,000 after July actually lost 23,000 jobs. But our August jobs report preview says the crowd has it wrong.

I’m going to tell you the same thing I told our room on this morning’s live show: the number isn’t the story. Risk is already repricing where the real money lives — and it’s not in the VIX. It’s in the bond market.

I spent 28 years making markets, first on the floor of the CBOE and then trading bonds from 2003 to 2012. And the yield curve was always my first tell for the direction of the whole stock market. Right now, that tell is flashing, most traders are watching the wrong gauge, and Friday’s print is the catalyst that decides which way this thing air-pockets.

Let me walk you through it.

Key Numbers to Know Before Friday

Report	August 2026 nonfarm payrolls (jobs report)
Release	Friday, September 4, 2026 — 8:30 a.m. ET (7:30 a.m. CT)
Consensus	~ +55,000 jobs (estimates run from roughly −25K to +140K)
Prior (July)	−23,000
Unemployment rate	Expected to hold near 4.1%–4.2%
VIX	~15–16 — near its lowest levels all year
MOVE index (bond vol)	~78 and rising, up from ~70 last week
10-year Treasury yield	~4.8%
Fed funds rate	3.50%–3.75% — markets pricing ~65% odds of a hike in September

What Time Is the August 2026 Jobs Report Released?

The Bureau of Labor Statistics releases the August employment report on Friday, September 4, 2026, at 8:30 a.m. ET (7:30 a.m. CT). It’s the single biggest catalyst of the month — the one number that moves the dollar, the bond market, and the stock market in the same breath, usually inside the first few seconds.

What Is the Forecast for August Nonfarm Payrolls?

Consensus is centered around a gain of +55,000, with the unemployment rate expected to hold near 4.1%. But be honest about the spread: the estimates run all the way from a 25,000 decline to a gain of 140,000.

When the pros can’t agree inside a 165,000-job range, that’s your first tell. This is a convexity setup, not a coin flip. The wings are priced for a big move — up or down — because there’s simply too much uncertainty for this market to sit still. Nobody actually knows what prints, which means the market is going to react, hard, to whatever does.

MOVE Index vs. VIX: The Number That Matters

Here’s the part almost nobody is talking about.

For the last year, the crowd has watched the VIX — the “fear gauge” for the S&P. Fine. But the VIX is sitting down in the dumps around 15, near its lowest levels of the entire year, while the market has been quietly selling off. That combination — market down, VIX asleep — usually doesn’t happen. It’s a tell that traders have gotten too comfortable with risk.

So don’t watch the VIX right now. Watch the MOVE index.

The MOVE (it’s a Bank of America product) is to bonds what the VIX is to the S&P — it measures volatility in the Treasury market. And while the VIX naps, the MOVE has climbed to roughly 78, up from around 70 last week. Bond volatility is rising while stock volatility pretends everything’s fine. When those two disagree, you don’t fight the bonds. The bond market is bigger than the equity market, and it’s usually right first.

Why is bond vol waking up? The 10-year yield is pushing 4.8% and the 30-year is at its highest in a long while. The Treasury even stepped in to buy the back end of the curve to try to force those rates down — but you can’t fight the free markets for more than a day or two. That’s the real reason the QQQ, the IWM and the S&P have been leaking lower. It isn’t a VIX story. It’s a bond-volatility story, and the MOVE is your first tell. If it bounces again before Friday, this market goes into the number under serious pressure.

Will the Fed Raise Rates in September?

Now layer the jobs number on top of that.

For most of 2024 and 2025, the trade was simple: weak jobs → the Fed cuts → stocks rally. “Bad news is good news.” That trade is dead right now, and here’s why.

Sticky inflation never went back in the box — the Fed’s preferred gauge is still running well above its 2% target, and with U.S.–Iran tensions heating up and tankers being hit exiting the Strait of Hormuz, oil is catching a hard bid. That’s more inflation, not less. At Jackson Hole, Fed Chair Kevin Warsh made it about as clear as a central banker gets that prices worry him more than a soft patch in hiring. The July meeting was a 9–3 hold, and all three dissenters wanted to raise rates. After Warsh spoke, fed funds futures flipped to roughly two-in-three odds of a September hike.

I’ll say it plainly, same as I said it live: I strongly believe the Fed raises rates at its September meeting.

So flip your logic before Friday:

• A hot number (think +100K or more) tells Warsh the labor market can take a hike — that’s the hawkish outcome, and it’s a headwind for stocks, a tailwind for the dollar and short-term yields.
• A weak number is what takes hike risk off the table — and that’s the one the equity crowd would actually cheer.

Read that twice, because it’s backwards from what you’ve been conditioned to do. This is my First Law in action: money drives markets. Not the headline, not the pundit spin — the repricing of rate expectations. Ask yourself which game you’re playing before 8:30.

Why the VIX Looks Too Cheap Into the August Jobs Report

Put it all together and the VIX being this low makes no sense. We’re walking into nonfarm payrolls — the biggest catalyst of the month — in a September that’s historically one of the most volatile stretches of the year, with bond vol climbing, yields near the highs and inflation a live concern. And the crowd is treating protection like it’s worthless.

That’s exactly when volatility gets mispriced. Stocks don’t like to hang around big round numbers — right now the Nasdaq is sitting right on its 100-day moving average, and markets rarely just drift there. They give a level a kiss and then either bounce or air-pocket straight through it. Into a number with this much uncertainty, that’s a move waiting to happen — which is why watching and respecting volatility here matters far more than the crowd thinks.

And don’t let last week’s Nvidia headline lull you either. Everyone circled the 89% implied year-over-year revenue growth and cheered — but a big share of that profit came from Nvidia’s own investments in AI companies that turn around and buy its chips. That’s circular financing, and it’s part of why the rally underneath is more fragile than the tape looks.

What the Unemployment Rate Isn’t Telling You About the Jobs Report

One more thing the crowd gets wrong: the unemployment rate.

July’s rate “fell” to 4.1%, and you’ll see that spun as strength. It isn’t. It dropped for the wrong reason — the labor force shrank by more than a quarter-million people and the participation rate slid to 61.4%, the lowest outside the Covid shock since the mid-1970s.

When the workforce is shrinking, the number of jobs needed just to hold unemployment steady falls too. So, a small payroll print — even a slightly negative one — no longer automatically means the economy is cracking. This is my Third Law: nothing is cheap or expensive on its own. You have to know why a number moved before you trade it.

What the BLS Benchmark Revision Means for the Jobs Report

Two weeks ago the BLS dropped its preliminary benchmark revision — the annual re-basing of payrolls against actual tax records. The economy had 79,000 fewer jobs in the year through March 2026 than first reported. That’s 0.1%. A rounding error — and a fraction of last year’s roughly −911,000 revision that had half the internet screaming cover-up.

But don’t stop at the headline. Look at where the jobs moved, because the tape can’t hide. The biggest cuts hit retail trade (−154,600), private education and health (−96,000), wholesale trade (−86,200) and manufacturing (−67,000). The upward revisions went to transportation and warehousing (+135,100), government (+99,000), information (+87,000) and financial activities (+85,000). That’s not random. That’s the goods-and-retail economy bleeding while logistics, government and information hold the line. Follow the money and the picture gets a lot clearer than the one-line summary. Second Law: the tape can’t hide

How to Think About Trading the Jobs Report

I’m not handing you a ticket to punch — this is the setup, not a recommendation. But here’s how I’m framing Friday.

The edge on an event like this is almost never in guessing the number. It’s in watching the right gauge and understanding the reaction. So watch bonds. For those with access to futures, the ladder is your read: ZN (10-year), ZB (30-year), UB (ultra), ZF (5-year), ZT (2-year) — or just follow TLT and the MOVE index. If yields start coming down and the MOVE settles, the market can rally. If the MOVE bounces and TLT gets crushed, that’s very bearish for stocks.

And whatever you do, my Fourth and Fifth Laws carry the day on an event like this: decide your risk before you enter, not after the number prints — and survive first. Size it so a whipsaw can’t take you out of the game.

What the Jobs Report Means for the September Fed Rate Decision

This report doesn’t land in a vacuum. It’s the first of two big inputs before the Fed’s September meeting, with the August CPI report following the week after. Neither is a formula that spits out a decision — they’re evidence, and Warsh has told us he’s reading it through an inflation lens. A firm payroll number plus another sticky inflation print keeps the September hike squarely on the table. A clearly weak jobs report is what could talk the committee back toward patience.

FAQ

What time is the August 2026 jobs report?

Friday, September 4, 2026, at 8:30 a.m. ET (7:30 a.m. CT), from the U.S. Bureau of Labor Statistics.

Will the Fed raise rates in September 2026?

It’s a live debate, and it’s leaning hawkish. After Chair Warsh’s Jackson Hole speech, fed funds futures moved to roughly 65% odds of a quarter-point hike — a sharp shift from the pause markets had expected. Friday’s payrolls and the following week’s CPI will shape the final call.

Why is a strong jobs report bad for stocks right now?

Because inflation is still above target and the Fed is leaning toward hiking. A strong labor market gives the Fed cover to raise rates, which pressures equities and lifts the dollar and yields. The old “weak-jobs-means-cuts” trade is inverted for now.

What is the MOVE index and why does it matter for the jobs report?

The MOVE index measures expected volatility in the U.S. Treasury market — it’s the bond market’s version of the VIX. With bond volatility rising while the VIX stays low, the MOVE is the more honest read on risk heading into a market-moving number like nonfarm payrolls.

What was the July 2026 jobs report number?

Nonfarm payrolls fell by 23,000 in July against expectations for a gain, with prior months revised down by roughly 103,000 combined. The unemployment rate ticked to 4.1%, but largely because the labor force shrank.

The Bottom Line

Friday isn’t about the headline — it’s about the reaction to the headline, and the reaction function is flipped. Forget the VIX, watch the MOVE, respect the volatility, and know which game you’re playing before 8:30.

That’s how we do it every market morning over at Masters in Trading, 11:00 a.m. ET. Follow the money, not the narrative.

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The post August Jobs Report Preview: Forget the VIX — Watch the Bond Market Going Into Friday appeared first on MarketWise.

Strategy (MSTR), the world’s largest bitcoin treasury firm, scooped up 4,603 bitcoins in the last full week of August for a total price of $369.7 million. That’s an average cost of $80,318, which is right around the cryptocurrency’s recent peak.

Generally, Strategy uses arbitrage to make low-risk money when buying or selling bitcoins. If its common stock is trading for substantially more than the value of its bitcoin holdings, it can make financial sense for Strategy to issue common stock to buy more bitcoins.

Voila! – More bitcoins per common share, all at relatively low risk.

That’s what Strategy did with last week’s purchases, too. It sold 4.53 million shares of common stock, raising $602.8 million. It then spent nearly $370 million to buy those 4,603 bitcoins. It also spent $151.8 million on repurchasing its STRC preferred stock, saving it that security’s 12% coupon and following major repurchase activity in prior weeks.

What about the remaining $80 million or so from that cash raise?

A total of $50.7 million was used to pay out the dividend on the STRC preferred stock, while $30 million was stashed away in Strategy’s cash reserve for increased liquidity.

What’s puzzling is why Strategy acted at all, given the relatively low premium placed on its stock.

The stock was not trading at a substantial premium, particularly after an extended period of malaise in the bitcoin market. On Monday, Strategy marked its stock at 1.09 times its bitcoin holdings, so the stock was trading at just a 9% premium to its holdings. That figure dropped to just 1.05 times on Tuesday.

The 9% premium is quite small compared with what Strategy stock had fetched in bitcoin’s go-go years, but such a modest premium may be all that’s available to the company in this slow period.

But the thin arbitrage margin is worrisome in a fast-moving market like bitcoin. Strategy did not buy before the latest run, as bitcoin rose from $63,000 to $78,000 – up more than 20% – in a week or so. Instead, it bought more coins near the recent top around $80,000.

Now, with bitcoin a few thousand dollars off that purchase price, Strategy is quickly underwater on those buys. Such a thin premium on its stock gives the company much less room for error when trading the world’s largest cryptocurrency in the short term.

It shows the challenges Strategy faces in a slow bitcoin market, even as it has significantly altered how it manages its balance sheet and investments to meet them. With bitcoin down significantly from its all-time highs, Strategy’s executive chair Michael Saylor has been forced to rework how the firm can effectively raise funds to keep its bitcoin buying binge on track and protect its future.

Strategy Is Becoming the ‘Central Bank of Bitcoin’

At the center of these moves is what Strategy’s executive chair, Michael Saylor, is calling his digital credit plan. This plan reworks how Strategy manages its balance sheet, focusing its fundraising on the company’s STRC variable-rate preferred stock to increase the number of bitcoins per share of common stock.

Its digital credit plan turns Strategy into something like a “central bank of bitcoin,” meaning it manages its debt financing like how a central bank manages the money supply.

At the center of this fundraising process is the company’s preferred series STRC. It’s already the world’s largest preferred stock, according to Saylor, and by managing it carefully, Strategy can lower its financing costs.

“We expect to keep laser focus on it,” said Saylor in Strategy’s latest earnings call. “We’re going to do everything we can to make it the most appealing credit in the entire digital credit space.”

For example, Strategy can adjust STRC’s dividend payout, currently a 12% coupon, and the stock price by issuing or repurchasing shares when they’re priced favorably. If Strategy can develop a reputation as a solid counterparty, it may be able to lower that dividend over time.

This move is just one part of the company’s tool chest when it comes to managing its finances:

• Strategy can repurchase its preferred shares if the price falls too far, or it can issue them to raise funds if the price hits a favorable level, say its par value of $100 or above.

• Strategy can raise the yield on its preferred to raise the stock’s price, as it did recently, if it wants to raise cash or if it wants to boost its bitcoin holdings, for example.

• A larger issuance of STRC preferred stock creates more market liquidity, which may help reduce the preferred’s cost and make it seem like a more reliable investment.

In short, Strategy will adjust its actions in three asset markets – bitcoin, common stock, and preferred stock – so that it will raise its bitcoins per common share.

In the past few weeks, Strategy has been working to push up the price of its STRC preferreds, a move that should ultimately let Strategy issue them without suffering a discount. Its recent repurchase of nearly $152 million in STRC also keeps buying pressure up on that security, and it has nearly $365 million in repurchase authorization, giving it more dry powder.

Despite the strong bounce back in STRC, it’s not quite yet at its par value of $100 per share. The preferred stock bottomed around $71 per share and has since moved to around $97.

Saylor’s plan to keep the preferred near par may create unintended consequences, though. For example, if Strategy always keeps a floor under STRC, it may encourage investors to use the preferred as a source of cash, potentially draining the company’s coffers if it’s not careful.

Strategy’s new digital credit plan means it will need a longer-term approach to managing its assets and liabilities, which runs counter to short-term trading.

Do Bitcoin and Strategy Protect Against a Market Meltdown?

Bitcoin has bounced back over the past few weeks, moving from the low $60,000s to its recent peak above $80,000. One driver of this move is growing anxiety about massive U.S. debt and deficits, as well as the related issue of the dollar’s purchasing power.

While this “dollar debasement trade” may work as a short-term move for bitcoin traders, it’s apt to be a poor trade for those who think bitcoin will protect their money during tough times.

First, bitcoin and other cryptocurrencies trade like “risk” assets such as tech stocks or even more speculative, profit-less investments. So, it will trade largely in line with these riskier investments, though often with more exaggerated moves – that is, higher highs and lower lows.

These exaggerated movements make sense when you understand that bitcoin is backed only by traders’ sentiment and isn’t directly usable for goods and services (except the illegal kinds). Since it’s based solely on sentiment, bitcoin can fluctuate wildly as sentiment swings from fear to greed.

Second, because bitcoin is based on nothing but traders’ confidence or belief that they can sell it for more to the next trader, its price will evaporate if and when traders lose confidence in it. The market’s confidence is inherently unstable and can disappear at any moment for a variety of reasons, including if someone discovers a new way to hack the crypto.

Strategy combines this lack of intrinsic value with leverage in the form of its bonds and preferred stock, meaning its stock will be even more volatile than bitcoin itself. It’s taking steps to be able to control this inherently volatile situation more effectively so that it can keep buying bitcoins when prices are down and ensure the entire company doesn’t blow up in a downturn.

Another time may come when bitcoin is down so far from its peak that the market just capitulates, as it did in 2022. In that scenario, Strategy will need the capital to buy bitcoin after the plunge, but whether it ends up being the final death knell for the world’s biggest crypto, and therefore Strategy, will play out in time.

Regards

James Royal, PhD

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The post Strategy’s Latest Bitcoin Buys Look Quite Puzzling – Here’s Why It’s a Worrisome Sign appeared first on MarketWise.

Amazon (AMZN) never ceases to amaze. The company’s custom chip business has surpassed a $25 billion annual revenue run rate, driven by the fast-growing demand for its Trainium AI accelerator chips and Graviton central processing units (“CPUs”) for cloud computing.

The reason is simple. Amazon Web Services (“AWS”) custom chips are more affordable to use, and its customers want lower-cost chips than what Nvidia (NVDA) offers.

Amazon is already the runaway e-commerce leader in the U.S., with a 40.5% market share. Meanwhile, AWS – which essentially created the cloud-computing industry – is the world’s largest cloud-infrastructure provider, with 28% global market share as of midyear.

But are there enough value-focused custom-chip customers for AWS to take a big enough bite out of Nvidia’s dominant AI-chip market share of roughly 80% to 87%?

The Lower-Cost Appeal of AWS Custom Chips

The most obvious appeal here is affordability. Sometimes, you can get high quality at a fair price, and that seems to be the case with Amazon’s chips.

AI developers who use AWS chips can save 30% to 40%, while still getting excellent performance, according to Dave Brown, AWS vice president of compute and machine learning.

As he told Yahoo Finance, “That’s what our customers are looking for, is to constantly get more compute and more performance, and then super importantly, at a lower price.”

Who wouldn’t want that combination?

Amazon notes that it builds its chips “from the ground up” to accommodate specific workloads. The end products are Amazon’s Trainium AI chips, Graviton cloud-computing chips, and Nitro chips, which provide the storage, networking, and security behind AWS’s cloud infrastructure.

So, what makes Amazon’s custom-built AI chips different from the graphics processing units (“GPUs”) that Nvidia creates? GPUs are designed for general-purpose workloads, not specific workloads. Amazon’s AI chips are custom-designed to handle the specific workloads its customers run.

Now, Amazon is not the first company to build custom chips for its clients to use. Alphabet (GOOGL), for example, was an early pioneer in that area, with its customized tensor processing unit (“TPU”) chips that deliver GPU-like performance for less money.

And money matters when it comes to AI, considering global AI spending is expected to reach nearly $2.6 trillion in 2026, according to research by Gartner. Any money businesses can save on AI costs is a win, with investors growing weary of tech companies’ wild spending sprees – and dinging their stock prices as a result.

Even a modest improvement in AI performance and efficiency can save a company millions of dollars a year. CloudExpat, a cloud-infrastructure optimization company, tested AWS Trainium1 chips against Microsoft (MSFT) Azure’s ND H100 and Nvidia GPUs in 2025 (Google’s TPU was also tested, but for this article, we’re focusing on the comparison between AWS and Nvidia).

Using dozens of highly technical tests, CloudExpat revealed that companies looking to train a GPT-4-scale AI model could save millions in cloud spend by using AWS Trainium chips versus Nvidia GPUs.

And Amazon has continued to improve the efficiency and price-performance of Trainium chips with each new generation. Amazon’s Trainium2 is reportedly four times faster than Trainium1 and cut costs by roughly 35% compared with Nvidia’s H100 chips, according to the Tech Buzz. Amazon says its Trainium3 chips offer up to 40% better price-performance than Trainium2.

And that’s just for AI training. When it comes to actually running AI models, where cost per query can add up quickly, Amazon says its Inferentia2 chips offer up to 50% lower cost per inference than GPU-based chips. When you consider that AWS sees billions of inference queries every day, that makes a massive difference.

Of course, there are other considerations here… For example, adopting AWS Trainium chips to replace Nvidia GPUs would require a company to abandon Nvidia’s very sticky – and familiar – CUDA ecosystem and implement AWS’s Neuron platform. And that’s not free.

But the chip performance itself is likely worth the swap.

A Growing Customer List Has AWS Chips Sold Out for Years

Companies are increasingly noticing the benefits of Amazon’s custom chips and signing up as customers. In February, OpenAI committed to using 2 gigawatts (“GW”) of Trainium capacity to power its frontier models starting in 2027. This development expanded the companies’ existing $38 billion multiyear agreement by $100 billion over eight years.

AI giant Anthropic followed suit in April, committing to spend more than $100 billion over the next 10 years on AWS technologies – primarily its Trainium and Graviton chip capacity. Amazon noted that Anthropic will “secure up to 5 [GW] of capacity to train and power their advanced AI models, including significant Trainium3 capacity.”

But it’s not just the big players investing in Trainium. Smaller startups such as TwelveLabs, Neura Robotics, Odyssey, Poolside, Decart, Karakuri, NetoAI, Splash Music, and Metagenomi Therapeutics (MGX) are among the many companies turning to AWS custom chips as a cheaper alternative to Nvidia.

Due to this demand, Trainium3 chip capacity is practically sold out. And AWS’s Trainium4 chips, which won’t even be released until 2027 or 2028, already have much of their capacity booked.

Even Amazon’s Graviton processors are flying off the shelves. According to Amazon, more than 130,000 customers use Graviton-based servers. And more than half of AWS’ new processing power runs on Graviton chips.

In April, Meta Platforms (META) became one of the world’s largest Graviton customers when it signed a deal to deploy tens of millions of Graviton cores to power its agentic AI workloads.

And global rideshare leader Uber Technologies (UBER) heavily employs AWS Trainium3 and Graviton4 chips to improve its infrastructure and make customer experiences smarter and faster.

Like its Trainium counterparts, Graviton processors are gaining popularity thanks to their significantly better – around 40% – price-performance and 45% savings compared with x86-based CPUs. The Tech Buzz estimated that, based on cost-optimization analyses from cloud-management platforms, “a typical Fortune 500 company running 10,000 instances on AWS could save $8-12 million annually by migrating from Intel-based instances to Graviton3.”

Amazon’s custom chips clearly have tons of momentum, which it rode to the milestone $25 billion-plus annual revenue run rate.

What Amazon Custom Chips’ $25 Billion Annual Run Rate Means for the Company and the Industry

Calling the $25 billion-plus annual revenue run rate impressive would undersell its importance. Amazon reaching this figure is changing the semiconductor and AI-infrastructure industries. Just think about it… AWS went from using someone else’s chips and selling access to those chips through the cloud to creating and selling capacity for its own silicon.

For less than the cost of an Nvidia GPU, Amazon can customize chip hardware to optimize specific types of workloads. That is a massive development.

Just as massive: Amazon is no longer solely dependent on paying companies like Nvidia or Intel (INTC) for their hardware. AWS does still buy – and will likely continue to buy – other companies’ chips to satisfy customer demand. But Amazon’s custom chips now make it a direct competitor in the market.

AWS’s 2026 second-quarter financials prove that its custom chips have had a huge impact on the semiconductor market. The results include:

• $42.2 billion in net sales, a 37% year-over-year increase, which was the fastest segment growth in 18 quarters

• More than $25 billion in annual revenue run rates for its custom-chip and AI businesses, with year-over-year growth in triple digits

• $16.6 billion in operating income, up 64% year over year

• An operating margin of 39.4%, up from 32.9% during the second quarter of 2025

• An annualized revenue run rate of $169 billion

Amazon’s custom-chip success adds even more revenue to the cash-generating machine that is AWS. As profitable as Amazon is beyond technology (remember, Amazon is far and away the No. 1 e-commerce retailer in North America), AWS accounted for roughly 60% of the entire company’s operating profit in 2025.

Where does Amazon’s chip business stand against heavyweights like Nvidia, Advanced Micro Devices (AMD), and Intel? Before comparing, it’s important to note that Amazon CEO Andy Jassy has said that AWS custom chips would double their current $25 billion revenue if the company sold its physical chips – not just chip capacity – to external customers.

In his annual letter to shareholders published in April, Jassy noted:

If we were a standalone chip company, our chips would be generating over $50 billion in annual revenue.

So, when comparing revenue with its competitors, Amazon is right there… even if its chips are not currently generating more than $50 billion in annual revenue. Nvidia remains the clear leader, with its AI-driven Data Center segment generating a company-record $89 billion during its most recent quarter (fiscal second quarter of 2027).

But Amazon is running neck and neck with Advanced Micro Devices and Intel. Advanced Micro Devices’ projected annual data-center run rate of roughly $26.9 billion (based on its actual $6.72 billion second-quarter revenues) sits just ahead of AWS’s $25 billion. And Intel, with a projected $25.04 billion annualized run rate based on its $6.26 billion second-quarter Data Center and AI segment revenue, is virtually tied with AWS.

If you factor in Jassy’s statement that Amazon’s chip business would be valued at roughly $50 billion if it sold its hardware externally, then Amazon blows right past both Advanced Micro Devices and Intel.

Is Amazon’s Stock Undervalued?

If you’re thinking about investing in Amazon, these chip developments are crucial when you consider that AWS generates most of the company’s operating profit every year. And there’s no reason to think the segment won’t keep growing rapidly.

Not only are new chips here or on the way (Graviton5 was released in June, and Trainium4 will arrive in the next year or so), but powerful frameworks and models are, too.

• Amazon Bedrock AgentCore, which was released last fall, is the system AWS uses most to build and orchestrate enterprise AI agents.

• Project Rainier in Indiana, which officially launched last October, is one of the world’s largest distributed AI supercomputing clusters. It currently hosts more than 1 million Trainium processors dedicated to training Anthropic’s frontier Claude models.

• AWS Continuum, released in June, is a new agentic security service that finds and fixes security risks.

• AWS Transform is an agentic-AI service that supports large-scale framework modernizations.

• AWS Context is another new service that automatically builds a knowledge graph from existing data to be used by a company’s agents.

That’s just the tip of the iceberg. And there’s no reason to believe AWS will stop innovating.

Amazon has been a wildly successful company for years. A major reason is the foresight it employs in developing brilliant strategies… like developing its own chips. This has already proved to be a market changer.

That kind of innovation and confidence in its strategies matters to investors. It’s one reason Amazon’s stock feels undervalued at around $260. The average price target for Amazon is roughly $327, giving the stock around 25% upside.

Amazon stock may not get the splashy spikes like Micron Technology (MU) or Sandisk (SNDK), but it has long been a consistent performer. Year to date, it’s up nearly 15%. And over the past five years, it has gained nearly 57% (largely driven by AWS).

Chaikin Analytics, the investment-research platform founded in 2009 by legendary 60-year Wall Street veteran Marc Chaikin, gives Amazon a “bullish” rating in its Chaikin Power Gauge, a 20-factor stock-rating system that scans more than 5,000 stocks and 2,300 exchange-traded funds.

Amazon has a long history of innovation and revolutionizing entire industries. It has done that with Amazon Prime and its e-commerce business, its logistics operations, and its enterprise cloud infrastructure. The company’s development of custom AI chips and processors certainly seems to be the next industry changer.

Regards,

David Engle

Editor’s Note: Whitney Tilson called the rise of Apple, Amazon, and Netflix… as well as the collapse of dozens of companies that went bankrupt. Now the former $200M hedge fund firm manager is stepping forward with what he calls the most important financial warning of his 30-year career. He’s sharing two free stock recommendations  (one to buy, one to sell immediately)  along with details of a new proprietary system fueling his predictions. See it all in his free presentation. 

The post Amazon’s AWS Chips Top $25 Billion Run Rate. Does This Signal Trouble for Nvidia? appeared first on MarketWise.

Nvidia (NVDA) reported strong earnings on Wednesday. In its latest quarter, the artificial intelligence (“AI”) chipmaker grew sales an astonishing 106% year over year to $96.2 billion, while operating income surged 124% to $63.7 billion.

Nvidia puts up numbers each quarter that seem impossible to fathom. And the fact that a $5 trillion company can grow this much is something special.

While any company would love numbers like that, investors are always looking ahead, and some believe things can’t get any rosier for Nvidia than what they’re seeing now. That’s a big reason why we’ve seen the stock plateau in recent months.

The upshot is that Nvidia is losing some levers that have kept its massive profit machine growing at the pace it has sustained over the past few years. At the same time, its willingness to finance massive projects is swelling its own balance sheet, even as hyperscalers are borrowing billions to buy its chips – both of which call into question the ongoing sustainability of Nvidia’s tremendous sales growth.

For example, even as sales have exploded higher, Nvidia’s gross margin has seemed to top out.

Period	2022	2023	2024	2025	Q1 2026	Q2 2026
Sales	$27 billion	$60.9 billion	$130.5 billion	$215.9 billion	$81.6 billion	$96.2 billion
Gross margin	56.9%	72.7%	75%	71.1%	74.9%	75%
Operating margin	15.7%	54.1%	62.4%	60.4%	65.6%	66.2%

Gross margin appears stuck at 75% and seemingly unable to expand above that level. So, future profit growth will rely primarily on sales growth, without the added lift of gross margin expansion.

Nvidia has already warned that surging memory costs are hitting margins, likely pushing them to 71% to 72% in the fourth quarter. Next year, however, they should bounce back to margins of 72% to 73%. This sensitivity to change shows how tough it will be for Nvidia to exceed its historic 75% level.

It’s a similar – but slightly different – situation with operating margins, which continue to grow from already phenomenal levels, albeit more slowly than before. If sales keep growing and Nvidia keeps a hold on costs, it will likely still be able to wring a few more points of operating margin. But the days of 8.1 year-over-year percentage-point gains Nvidia saw in 2024 are gone.

Nvidia’s bleeding-edge products keep it in the lead for now. Still, everyone wants a piece of these fat margins, from established players such as Broadcom (AVGO) to upstarts such as Cerebras Systems (CBRS), which makes wafer-scale chips for AI data centers.

None of this suggests that the near future won’t get better for Nvidia, but the ability for it to get much better has been diminished, since margins can’t expand at yesteryear’s levels anymore. But this is only one part of the concerns suggesting that Nvidia must use new levers, such as more aggressive financing, to keep its sales growth on track.

(Looking for a step-by-step plan to help you use AI in your own investing? Here’s how the N.E.W. System works.)

Nvidia Is Aggressively Financing the AI Boom, Which Comes With Higher Risks

Borrowing behind the AI build-out has surged, especially in 2026. Hyperscalers such as Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOGL), and Meta Platforms (META) have spent nearly all their 2026 cash flow on capital expenditures, most of it on the AI build-out.

To keep that build-out on pace, these hyperscalers have each started borrowing tens of billions of dollars in the past year. With hyperscalers’ AI spending projected to top $1 trillion in 2027 – well beyond their estimated cash flow – they’ll need to borrow even more money.

While that increased financing means the spending spree for Nvidia’s chips won’t keep growing forever, the chipmaker has begun offering more short-term financing on its own balance sheet.

That is, Nvidia is offering more generous payment terms to larger customers, giving these more important clients up to a year to pay. CFO Colette Kress said about 25% of Nvidia’s 2027 sales could be to AI labs (such as OpenAI) where Nvidia is using its own balance sheet.

You can see this change in a metric called accounts receivable, which has soared in recent years, as Nvidia finances more sales, typically for short periods. The average is around 60 days, or about two months. While the figure dipped in the first quarter (not necessarily a bad thing), it rebounded hard in the second quarter, though only to its historical levels.

Period	2022	2023	2024	2025	Q1 2026	Q2 2026
Receivables	$3.8 billion	$10 billion	$23.1 billion	$38.5 billion	$40.7 billion	$63.1 billion
Sales	$27 billion	$60.9 billion	$130.5 billion	$215.9 billion	$81.6 billion	$96.2 billion
Days sales outstanding	51.8	59.9	64.5	65	44.9	59.9

To judge these receivables, analysts look at days sales outstanding (“DSO”), which is the ratio of accounts receivable to a quarter’s average daily sales. DSO shows whether a company may be expanding credit to less worthy customers to keep its sales growth continuing.

This trend isn’t worrisome yet, but it’s worth watching as Nvidia expands its financing, especially to clients with major financing issues such as OpenAI, which is hemorrhaging billions in cash each quarter. Of course, it’s not just OpenAI that could hurt Nvidia, but even established players that rely on OpenAI remaining solvent to continue moving billions in AI spending through the system.

After such a consistent trend for years, a sudden rise in DSO may offer investors an early read on how the business is going. Nvidia is already warning investors that the number should rise – and it’s a sign that it must move more of this financing to its own balance sheet to keep sales rising. If credit problems arise, they will likely appear in rising days sales outstanding figures.

That puts greater credit risk on Nvidia, drawing it even closer to less well-financed players.

More broadly, you can see Nvidia rushing to keep its sales growth on track, as it becomes the “central bank of AI.” It has lined up a $250 billion backstop for OpenAI to construct a massive data center as well as a $350 billion financing arrangement for the facility’s chips.

Nvidia also announced an incomplete $500 billion deal with major investors before it had been finalized. In the end, it’s less a deal than a memorandum of understanding – “a deal to do a deal” – despite the breathless media headlines making it seem like the terms were in place.

Despite this quarter’s excellent numbers, Nvidia is pushing hard to line up financing for its customers and keep all its plates spinning. With each passing quarter, the growth will become harder to sustain, so watch for a rise in DSO as an early warning sign of trouble.

Nvidia’s Stock Looks Undervalued, But Is It Really?

On the surface, Nvidia looks cheap for a company growing at such a brisk pace. In May, various analysts raised stock price targets based on Nvidia’s rising earnings for 2026 and 2027, due to surging AI investment.

For example, Wells Fargo raised its price target from $265 per share to $315 on earnings estimates of $8.45 per share this year and $11.95 per share for calendar year 2027. This level of explosive growth implies a price of less than 19 times next year’s earnings at a share price around $220.

This price-to-earnings (P/E) ratio is well below the stock’s 32 times earnings over the past three years, says Wells Fargo.

In absolute terms, this forward P/E ratio looks quite reasonable for such high growth. But it assumes that growth will continue, even as Nvidia desperately works to provide financing for its clients. Some of Nvidia’s levers for growing profits are becoming less powerful, too.

So this assumption of growth will look fine until one day it suddenly won’t.

It’s less a question of “if” than “when” the Nvidia juggernaut can no longer sustain the high expectations it’s setting now.

Arguably, the world’s most-watched company is trading for what looks like a value. If you believe in the wisdom of the market, you want to be quite sure why it’s putting the company – and many high-growth AI plays – in the bargain bin. They may not be as undervalued as they appear.

Regards,

James Royal, PhD

Editor’s Note: Whitney Tilson — the hedge fund manager CNBC called “The Prophet” — says America has reached its “Ripping Point.” The old financial order is being torn apart, and he believes most investors have no idea what’s coming in the next six months. He’s named the stocks he thinks will be destroyed in the chaos — and the ones he believes will soar. Watch his free presentation while it’s still available.

The post Nvidia’s Blockbuster Earnings: Here’s the Biggest Risk the AI Chipmaker Faces, Even as Sales Soar appeared first on MarketWise.

A $2.6 billion loan just told you more about the AI buildout than any earnings call. The stock already recovered and forgot. The loan document remembers — and it’s the most honest signal in the whole trade.

Twenty years on a trading desk teaches you where to look when you want the truth about a trade.

Twenty years on a trading desk teaches you where to look when you want the truth about a trade.

You can’t use stock prices, they lie all the time. They gap on emotion, they get pinned by options dealers, they run on narrative long after the story has changed.

That’s especially true when you’re evaluating AI infrastructure stocks, where billion-dollar financing decisions often reveal more than earnings calls or analyst price targets ever will.

If you want to know quickly whether a company is actually in trouble, you watch what it costs that company to borrow money.

The lenders behind the money have done the work. They’ve read the contracts. They’ve stress-tested the cash flows. And when they suddenly demand more interest, tighter terms, and a lockbox on the revenue before they’ll hand over a dollar — that’s the smart money repricing risk in real time.

This is exactly what’s happening with one stock at the center of the next AI wave — CoreWeave Inc. (CRWV).

AI Infrastructure Stocks’ Hidden Debt Bomb

In mid-July, CoreWeave — the “neocloud” that rents out Nvidia GPUs to AI companies — went to the leveraged-loan market to raise $2.6 billion.

At first, the loan looked routine.

The structure was a delayed-draw term loan, its fifth-and-a-half such facility, nicknamed DDTL 5.5. The proceeds were earmarked to buy more GPUs and infrastructure to serve a specific set of customer contracts.

According to loan-market reporting from LSEG and Octus, the deal launched on July 16 at a spread of SOFR plus 425 to 450 basis points, offered at 99 cents on the dollar. Standard-issue for this borrower.

Then it stalled.

The lenders investing in the project weren’t convinced. And to get the deal across the line, CoreWeave had to rewrite the terms in the buyers’ favor:

• CRWV agreed to pay a much higher interest rate, making the loan significantly more expensive. The spread widened roughly 100 basis points to SOFR + 550, and the loan was discounted to around 96 cents — a four-point cut. The Financial Times pegged the all-in yield at roughly 9%. That’s a junk-grade cost of capital for a company that, months earlier, had raised GPU-backed money at investment-grade rates.
• The lenders demanded stronger protection. They imposed a cash lockbox — meaning the cash coming in from customer contracts has to go to paying down the debt first, before CoreWeave can touch it — plus a 1.35x debt-service-coverage covenant and full amortization, per Fitch and loan-market coverage. Translation: the lenders wanted a hand on the cash register.

Only after making those concessions was CoreWeave able to secure the financing.  When the deal finally closed around August 10, the company described it as “meaningfully oversubscribed,” meaning more investors ultimately wanted to participate than the company needed.

At first glance, that sounds like a sign of overwhelming confidence, but remember when that demand appeared.

Investors only lined up after CoreWeave caved to the lenders’ demands. In other words, they’re there for the deal,

This was echoed by the independent credit-rating agencies. Fitch rated the loan BB+ and Moody’s rated it Ba2 — both below investment grade.

The deal did get done. But the market forced CoreWeave to pay up, pledge its cash flows, and accept a leash — before it would fund the AI buildout everyone insists is unstoppable.

The major takeaway here?

When a trade is truly bulletproof, the financing is supposed to get cheaper. But this one got more expensive, more restrictive, and harder to place, all at once.

The Stock Already Forgot. The Loan Remembers.

Here’s the part that makes this worth your attention right now.

In late July, fear peaked. The cost of insuring CoreWeave’s debt against default — its credit default swap, or CDS — blew out. Per Bloomberg data cited across market coverage, CoreWeave’s CDS topped roughly 855 basis points, a level that implied around a 50% probability of default within five years on a standard pricing model. The stock bottomed near $60.

Then the mood flipped. The loan cleared. On August 12, CoreWeave reported second-quarter revenue up more than 200% year-over-year, with a backlog it pegged at roughly $104 billion.

The stock ripped — nearly doubling off the lows to around $117 by mid-August before settling back into the high $80s.

The sell-side climbed aboard: Truist moved to Buy with a $165 target, Goldman lifted its target to $139, and Oppenheimer kept an Outperform and a $150 target, arguing AI demand runs about four times available capacity.

It only took the equity crowd about three weeks to get its optimism back. Understandable. But notice what didn’t reverse: CoreWeave still had to accept a 9% all-in cost, a cash lockbox, a maintenance covenant, and full amortization to get that money.

Those terms are baked into a signed credit agreement. They don’t un-widen because the stock bounced. The bond market did its stress test in public, and the price of that test is now a permanent line item in their budget until it’s paid in full.

This is the oldest lesson on the desk. Think of it like this…

The stock market is a voting machine — it forgot the scare in three weeks. The credit market is a weighing machine — it wrote the risk into the contract and moved on.

When those two machines disagree this much, I’ve learned which one to trust.

The Three Key Tells Buried Inside the Deal

Pull the DDTL 5.5 apart and three specific risks explain why the lenders got nervous. Each one is a flashing light that’s still on.

Tell #1: The Durations Don’t Match.

CoreWeave’s problem is the oldest one in finance — borrowing long and getting paid short. This loan runs about five years. But the customer contracts backing it average only about three. And the underlying data-center leases CoreWeave signs with its landlords can run up to 15 years.

So CoreWeave commits to 15-year obligations, funds them with a five-year debt, and covers it with three-year revenue. If those customer contracts don’t renew, the bills keep coming with no guaranteed income behind them.

Fitch flagged exactly this. Visibility gets murky beyond the current contracted window, when the company leans on renewals and re-leasing to sustain growth. If that pattern rings a bell, it should. It’s the same asset-liability mismatch that took down WeWork — long leases, short revenue, and a growth story papering over the gap.

Tell #2: The Customers are Dangerously Concentrated.

The Financial Times reported that the single largest counterparty behind this loan is Anthropic, at roughly 40%, followed by the quant trading firm Jane Street at about 35%, with Midjourney, Hudson River Trading, and Anysphere (the maker of Cursor) making up the remainder. Fitch separately noted that CoreWeave drew about 65% of its first-quarter 2026 revenue from just its top two customers.

Two things stand out. First, that is enormous concentration — a handful of contracts carrying the whole structure. Second, and more pointedly: Anthropic, the 40% anchor, is a privately held company with no public credit rating.

That’s not a knock on Anthropic — it’s one of the best-funded labs in AI, and in August it was being called the hottest upstart in the field. It’s a statement about what the lenders can actually underwrite.

You cannot price the credit risk of a counterparty you cannot rate.

When 40% of your collateral rests on an unrated private company and another 35% on a proprietary trading firm, the margin for error is thin under the best of circumstances.

There’s a footnote worth watching. As bond analyst Rod Dubitsky flagged, Fitch upgraded Jane Street — CoreWeave’s #2 counterparty — right in the middle of the period when this struggling loan was being marketed, citing factors that had been in place for years. Draw your own conclusions, but the timing feels suspicious.

Tell #3: The Lockbox is the Lenders Telling You What They Think.

You don’t demand a cash lockbox from a borrower you trust. You demand it when you want to make sure you get paid before anything else can go wrong. The concession CoreWeave had to grant is itself the verdict.

Not All AI Infrastructure Stocks Are Built the Same

While CoreWeave may be the loudest canary in the coal mine among the AI infrastructure stocks, they’re far from being alone.

The entire AI buildout runs on borrowed money and depreciating collateral.

Neoclouds like CoreWeave and Nebius fund their GPU purchases with debt secured against the chips themselves  —  Nvidia hardware that’s valuable today but could be a generation behind tomorrow.

CoreWeave’s own guidance calls for $31–35 billion of capital spending in 2026 against roughly $6.2 billion of trailing-twelve-month revenue.

Its first-quarter interest expense doubled to $536 million, and it has burned free cash flow every year since 2022. Revenue is expanding, yes — but so is the spending required to produce it. That treadmill only works as long as the cheap money hose keeps spitting out cash.

There’s a circularity here that should make you tilt your head: Nvidia sells the chips, is a major shareholder in CoreWeave, and is part of the capital ecosystem funding the customers who buy those chips.

When the same company is supplier, shareholder, and financier, “demand” gets harder to read at face value.

 That’s why “AI infrastructure” is too broad to be a useful investment category. The companies may be building toward similar goals, but they’re operating under very different financial constraints. The way I see it, the easiest way to think about them is to divide them into two groups:

The self-funders. Amazon, Alphabet, Microsoft, and Meta are pouring hundreds of billions into the buildout too — but largely out of operating cash flow from businesses that already mint money.

Their existing profits subsidize the unprofitable early years of AI. If financing gets expensive, they can shrug.

The debt-funders. CoreWeave, Nebius, Oracle’s cloud arm, and the leveraged neocloud complex finance the same buildout with debt, leases, and project loans against short contracts and depreciating chips.

For this bucket, the cost of money is the business model. When spreads widen, their math breaks first. This isn’t limited to the neoclouds: Oracle — the largest non-financial borrower in the Bloomberg U.S. high-grade index — saw its own CDS climb above 215 basis points this year, up from about 145 at the end of last year, with its long bonds yielding close to 7.8%. Apollo’s chief economist Torsten Slok put a name on the danger: at high enough all-in yields, the AI capex cycle starts to self-throttle not because demand changes, but because financing becomes too expensive.

And the hyperscalers just made the debt-funders’ problem worse.

In mid-July, Meta announced “Meta Compute,” a service to sell bare GPU capacity to third parties — the exact business the neoclouds are built on. When your biggest potential customer becomes your competitor, the “customer concentration” and “insourcing” risks are no longer theoretical.

I call it my AI Destruction List. Big media loves to oversimplify the problem. They say “AI is a bubble” — but that’s too lazy to be useful for anyone, and it’s impossible to time.

The more precise version: the leveraged, debt-funded layer of the AI trade cracks first, and it cracks in the credit market before it cracks in the stock.

Is There Any Bull Case for CoreWeave?

Now that we’ve covered the problems, allow me a moment to argue against myself. After all, a one-sided case is a weak case — and I want you thinking, not panicking.

The bulls have real, current points. The loan did clear, oversubscribed at the wider terms — the demand exists, just at a higher price.

Many of CoreWeave’s contracts are “take-or-pay,” meaning customers owe the money whether or not they use the capacity. That ~$104 billion backlog is enormous (bear in mind it blends remaining performance obligations with other committed amounts, so it’s a scale indicator, not a bank balance).

The company is actively working to diversify the concentration I just flagged — in August it signed a fresh multi-year deal with Hudson River Trading and pushed into sticky government work through a CoreWeave Federal partnership with Leidos.

Its marquee counterparties — Anthropic, Meta, OpenAI, Jane Street — are real, growing, well-capitalized names.

The insider selling that made headlines was executed under pre-arranged 10b5-1 plans and left executives with large stakes.

And most of Wall Street is bullish, with price targets from $139 to $165 against a stock in the high $80s. A CDS spread is a probability, not a verdict — and the one that screamed in July has since calmed as the stock recovered.

Both readings are defensible from the same set of facts depending on which details you choose to focus.

The honest position isn’t “CoreWeave is going to zero.” It’s that the cost of financing the AI buildout went up in a visible, measurable, contractually permanent way — and the market charged the most leveraged players the highest prices.

What is critical to understand before committing your capital to this trade is that ignoring that risk because the stock bounced is exactly the mistake retail makes at every top.

Forewarned is forearmed.

What the Options Say About CoreWeave

People always want the trade. But before we take the trade, we need to know the range of what to expect — and on a name like this, the range tells us the story.

Every day I run a tool I built called the Volatility Visualizer, or the Vol Viz for short. This program plots the expected-move band the options market is pricing in for where a stock could realistically trade over a given window.

To be clear, this isn’t an arbitrary line I drew on a chart. This is hard data, pulled straight out of live options prices — the market’s own, dollar-weighted forecast of how far this thing can move.

Here’s what it’s showing on CoreWeave, with the stock around $88.50: an expected-move band running from roughly $69 on the downside to $111 on the upside — a range more than 40 points wide, better than 20% in either direction.

Sit with that. The options market is pricing a swing of more than a fifth of the company’s value, up or down, on a business worth tens of billions of dollars.

That’s an unusually wide range of expected outcomes. And it echoes the same warning coming from the credit market: investors are demanding a much bigger margin for uncertainty.

The lenders demanded a cash lockbox and 9% money because they couldn’t pin down the risk. The options market is pricing a 40-point range for the same reason.

Two completely different corners of Wall Street — credit and volatility — look at CoreWeave and reach one identical verdict: nobody knows where this settles and they’re actively worried about where it might end.

Why the Expected Move Matters More Than Any Price Target

A sell-side analyst stamps a $165 target on the stock and a headline is born — but that’s one person’s guess about direction.

The expected move is the whole market’s consensus about magnitude, and it comes with probabilities attached. Roughly speaking, the market is pricing about a two-in-three chance the stock finishes inside that ~$69–$111 band over the window.

That single fact should reframe everything you’re looking at. CRWV ripping toward $110 next month? Still “inside expected” — not a breakout, not a miracle, just the top of a range the market already told you about. A decisive break below $69 or above $111 is the only thing that would count as the market being genuinely surprised.

That is how you keep your head in a stock that moves 15% before lunch. You stop flinching at every candle and start asking one question: is this move inside the expected range, or did something just break the market makers’ models?

Because the day CoreWeave slices through the low end of that band on heavy volume is the day the credit-market alarm bells stop being silent.

Five Signals I’m Watching Next

You don’t need to track every loan. Watch these:

The 10-year Treasury. With the long end elevated, the cost of all this debt is set by the bond market. Higher-for-longer is the neocloud’s enemy.

The next neocloud financing. The tell isn’t whether it gets done — it’s the spread and the structure. Wider pricing and more lockboxes mean the squeeze is tightening. Cheaper, cleaner deals mean the fear is fading.

CoreWeave and Oracle CDS. The real-time thermometer. Staying wide is the warning; the more it compresses, the smoother sailing there is ahead.

Contract renewals. The duration mismatch is critical. The first time a big three-year contract comes up and doesn’t renew at full value, the mismatch problems stop being theoretical.

Hyperscaler insourcing. Every “Meta Compute” — every hyperscaler that builds instead of rents — is a direct hit to the neocloud customer base.

The Bottom Line

The biggest mistake investors make with AI infrastructure stocks is assuming they’re all exposed to the same risks.

Financial talking heads love to go on about the AI trade as a contest of technology — whose model is smartest, whose chips are fastest. But at this scale, it’s a contest of capital allocation and financial endurance. The question is no longer whether AI demand is real in the short-term. It’s whether that demand converts to cash fast enough, and lasts long enough, to service the mountain of debt being stacked against depreciating hardware.

The stock market already voted twice — panic in July, euphoria in August. The credit market didn’t flip-flop. It wrote the risk into a contract and left it there: wider spreads, tighter terms, a cash lockbox, and a set of covenants that tell you exactly how the smartest lenders in the room see this. The stock forgot. The loan remembers.

The first crack in the AI trade won’t show up on a chart. It will be buried in the fine print of a loan document.

Always follow the money.

Editor’s Note: Forbes calls $1 billion fund manager Louis Navellier “the king of quants.” Today, he’s stepping forward to reveal why he’s investing $358 million of his own firm’s money in the next stage of Artificial Intelligence… a technological sea-change that could erase millions of jobs, solve humanity’s biggest mysteries, and spark a wave of moneymaking opportunities — both in and outside the stock market. Click here for the details… 

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I break down the day’s biggest market story every morning on Masters in Trading Live, 11 AM ET. I follow the top stories of the day and show you how the smart money is really positioned — no geometry, no chart-drawing, just evidence of where the money is moving. Join me each morning, drop a “Good Morning” in the chat, and let’s read the tape together. Jonathan Rose is a former CBOE market maker and the founder of Masters in Trading at InvestorPlace. I hosts Masters in Trading Live every weekday at 11 AM ET. Follow me on X at @JRoseTrades

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It seems like just about everyone is mad about AI data centers right now.

They’re thought of as big, loud nuisances… and it’s hard to find people who actually want them where they live.

At the same time, we’re using artificial intelligence (“AI”) more than ever for searches, coding, writing, problem-solving, and even just chatting. So, demand for data centers is real.

Nonetheless, the AI data-center backlash we’re seeing has become big enough to matter to investors. Towns are pushing back over water, power bills, tax breaks, noise, diesel generators, and the simple reality that nobody wants a windowless server farm dropped into their neighborhood.

That’s a problem for the AI trade because Nvidia (NVDA) stock may be a proxy for AI growth, but chips still need to be installed in hardware which needs to be deployed into buildings, powered by transformers, and receive municipal permits before they become revenue. Nvidia is the top bellwether for AI, but it still relies on data centers for a majority of its chip sales.

It’s also creating a strange side effect in bitcoin mining…

See, while investors have been staring at Nvidia, the bitcoin mining network has been doing something odd.

Crypto-tracking site CoinWarz put bitcoin difficulty at 125.81 trillion today. About a year ago, on August 24, 2025, according to Hashrate Index, the difficulty was at 129.70 trillion… then an all-time high.

In plain English, the work required to mine a block today is roughly the same as it was last summer. That gives miners more time to make a return on their hardware investments without having to upgrade.

So thank you, AI data centers. And thank you to everyone saying they don’t want one in their neighborhood. It’s helping make certain miners a lot of money.

Today, we’ll look further at how the AI-infrastructure build-out and rising bitcoin prices are setting up a profitable scenario in the mining space.

Why Steady Mining Difficulty Is Favorable in a Bitcoin Rally

Bitcoin mining difficulty is the network’s thermostat.

Every two weeks, bitcoin adjusts how hard miners must work to keep blocks arriving about every 10 minutes. When more machines mine for the same reward, bitcoin difficulty rises. Fewer machines, or machines pointed somewhere else, means difficulty stabilizes or falls.

For a miner, that math is brutal and simple. Revenue comes from the bitcoin price, block rewards, and transaction fees. Costs come from power, machines, debt, and maintenance. If bitcoin jumps while difficulty stays flat, the same machines earn more dollars without facing the usual penalty of a harder network.

That’s exactly why the recent bitcoin rally matters. Bitcoin gained 23% in a week– its biggest move since last year’s sell-off – after Treasury-bond buybacks pushed long yields lower, the dollar weakened, and a short squeeze forced buyers back into the market. ETF inflows are the next test, because forced buying burns out quickly, while institutional flows can keep a rally alive.

If bitcoin holds even part of that move higher, miners get operating leverage when the selling price rises, and the production hurdle does not.

AI Pivots Are the New Way Miners Capitulate

In previous bitcoin cycles, miner capitulation looked familiar. The price fell, inefficient miners shut off, mining rigs hit the secondary market, and the network waited for difficulty to adjust down.

This cycle has a different escape hatch. Miners don’t have to disappear. Some have become AI-infrastructure companies.

That sounds like a branding trick until you remember what miners can offer to the AI space: power access, land, cooling, substations, operating teams, and a tolerance for absurd capital intensity. Those are the main things that data-center developers are fighting to secure.

CoinDesk reported in March that public miners had announced more than $70 billion in AI and high-performance-computing (“HPC”) contracts. S&P Global listed Iren, Riot Platforms, Core Scientific, Hive Digital Technologies, Cipher Digital, and TeraWulf among the miners shifting capacity away from pure bitcoin mining, with analysts expecting HPC and AI to drive much of their growth in 2026.

That matters because every megawatt chasing AI is a megawatt that’s not automatically chasing the next bitcoin block. While the machines and customers are different, the scarce input is the same: energized infrastructure.

The result is a softer version of miner capitulation. Instead of “we shut off because bitcoin mining stopped being profitable,” the message becomes “we found a better-paying customer for this power.”

AI Data-Center Backlash Cuts Both Ways

Now for the catch…

The same local revolt slowing the data-center land rush and helping bitcoin miners also threatens the miners trying to become AI landlords.

Governors and lawmakers are moving to force data centers to pay for their own electricity supply, limit water use, disclose more about operations, and win local support, according to the Associated Press.

Microsoft (MSFT) is already working to unwind multimillion-dollar tax breaks on several Atlanta data-center projects as the politics get hotter.

So, the trade is not “buy every miner with AI in the press release.” Please don’t do that. That’s how people end up owning a construction project with a bitcoin ticker.

Look for mining stocks that already control power, have credible tenants, and can survive construction delays while still making money mining bitcoin if their AI customer takes longer than promised to come online.

Global asset manager VanEck has already warned that miners chasing AI face a roughly $50 billion near-term funding gap and that only about a quarter of leased AI and HPC capacity has been delivered so far.

That means there’s still a long way to go.

What Investors Should Watch Next

Chips are no longer the bottleneck in the AI trade. Power is. Permits are. Local sentiment is. The boring parts are now in charge.

For bitcoin miners, that means three numbers are worth watching…

• Bitcoin difficulty: If difficulty stays near last year’s level while bitcoin holds its rally, miner margins improve without any miracle.

• ETF inflows: A short squeeze can light the match (and it really, really did last week), but sustained inflows tell you whether serious capital is returning to bitcoin. They’ve been positive since August 17, which is good, but previous rallies have run for as long as seven months, so time will tell.

• AI data-center approvals: Every delayed hyperscale project makes energized power more valuable. Some miners will monetize that value through AI contracts. Others will benefit because competitors will stop adding hash rate as aggressively.

That’s one thing many bitcoin investors are missing. While the AI data-center backlash is a risk to the AI build-out, it’s also putting a ceiling on one of bitcoin mining’s worst enemies: endless hash-rate growth.

If bitcoin’s price keeps firming while mining difficulty stays flat, it presents a solid opportunity for bitcoin mining stocks to profit from.

For once, the local zoning board is indirectly doing bitcoin miners a favor.

Good investing,

Eric Wade

Editor’s Note: Trillions of dollars — the largest flood of spending in U.S. history — are pouring into AI and energy. And one little-known company sits right in the path of it, collecting a toll on every dollar that flows past. It doesn’t make a single chip or pump a drop of oil. Whitney Tilson calls it “America’s Greatest Retirement Stock” right now — and today, it’s trading at a rare discount. He’s giving away the name for free. Click here…

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The United States and Israel are at war with Iran. Ukraine is still fighting Russia. Those conflicts mean big money for global defense contractors and their investors… especially as this year’s global military budgets are expected to surge beyond last year’s nearly $2.9 trillion in world military expenditures.

That makes U.S. defense-technology contractor Lyntris’ (LYNX) downsized August 19 IPO rather interesting.

Lyntris, which manufactures battlefield sensors and designs software for the U.S. and its allies, began trading on the New York Stock Exchange last week after it raised $297.5 million in a downsized IPO at $17.50 per share for 17 million shares. That fell below initial company expectations of 24 million shares priced between $19 and $22 each.

What Caused Lyntris’ Soft IPO?

The short answer is debt and losses. As of the end of June, Lyntris reported $272 million in long-term debt, which severely hampers profitability. In fact, Lyntris plans to use roughly $60 million of its $297.5 million IPO proceeds to help pay off some of that balance.

On top of the debt, Lyntris has absorbed increasing operational costs. During the first half of 2026, the company’s net losses grew to $13 million, up from $9.7 million during the first half of 2025. That 34% growth in operating loss nearly negates the 35% revenue growth the company achieved during the first half of 2026.

Other factors contributed to Lyntris’ soft IPO, which helped bring the stock down more than 14% from its initial IPO price of $17.50 to $15.01 at market close on August 19.

“The market is discounting that this is a capital structure, rather than a venture capital deal,” claimed Josef Schuster, chief executive of Chicago-based IPO index and research firm IPOX Schuster.

That “capital structure” often includes heavy debt backed by private equity rather than a leaner, higher-growth venture-capital structure. In fact, private-equity firm Trive Capital created Lyntris by rolling Accelint and Vitesse Systems, two defense holdings, into one business. And that business, Lyntris, was saddled with $272 million in long-term debt from the get-go.

Beyond that, only 5.7 million of the 17 million shares sold during Lyntris’ IPO were actually offered to the public. The remaining 11.3 million shares, valued at roughly $197.8 million, were sold and cashed out by the company’s private-equity partners. While this is somewhat standard for private equity “roll-up” companies like Lyntris, the cashing out by partners still raises skepticism among investors.

That left Lyntris with $69.5 million in net proceeds… $60 million of which will be used to pay down its debt. That doesn’t exactly fill investors with confidence. Lyntris will have to prove to investors that it can pay off that debt to earn that confidence.

Finally, a combination of recent defense-technology IPOs – Applied Aerospace & Defense (AADX), HawkEye 360 (HAWK), and Aevex (AVEX), to name a few – and a general calming of the defense sector from its early 2026 highs created market sentiment that wasn’t ideal for an IPO.

But it’s not all doom and gloom for Lyntris.

In the first half of 2026, Lyntris generated $241 million in revenue, a 34.6% year-over-year increase. And the company more than doubled its backlog from the first half of last year to $924 million so far in 2026.

Still, investors have major concerns about Lyntris, specifically regarding its client list.

The Lyntris Concentration Risk

That client list I referred to is rather short. In fact, 97% of Lyntris’ revenue in 2025 came from U.S. government contracts – and nearly all of those contracts were with the federal government.

That includes equipment contracts with the Air Force, Navy, Marine Corps, and Space Force. Considering the Pentagon’s fiscal 2026 defense budget is nearly a trillion dollars, those contracts would appear to bode well for Lyntris. But plenty of risk comes when one client ostensibly generates more than 90% of your revenue.

Right now, as the war in Iran continues, Lyntris is a beneficiary. But what will happen (besides oil and gas prices dropping) once the war is over? Its significant backlog will likely sustain the company in the short term.

Plus, it’s not as if Lyntris is only supplying equipment and systems specific to this war. National security will always require the software and technology that Lyntris provides. And while the federal government represents most of the company’s business, Lyntris’ revenue is split across more than 200 active programs within the country. So, there is some measure of diversity.

But is it enough for investors? Because even a slight change in U.S. defense policy could negatively impact Lyntris. Plus, any delay in government contract approval would disrupt the company’s cash flow.

Most limiting, however, is that Lyntris has opted to pursue primarily domestic contracts. During the first half of 2026, non-U.S. contracts accounted for only 7% of the company’s revenue – which is actually up year over year from just 2%. Investors considering Lyntris should watch that number to see if it continues shifting in 2027.

Defense Stocks Outlook: Which Companies Have Outperformed?

The defense-tech industry as a whole is a risky proposition. It’s true that many major defense-contractor stocks – riding the tailwinds of the wars between Russia and Ukraine, Israel and Hamas, and the U.S./Israel and Iran – have risen sharply over the past year.

(Note: Performance data as of Aug. 25, 2026)

Defense Stock	Year-Over-Year Performance
Lockheed Martin (LMT)	24.3%
RTX (RTX)	34.6%
General Dynamics (GD)	17.8%
Elbit Systems (ESLT)	57.5%
GE Aerospace (GE)	31.1%

But that hasn’t fully translated to the small- and mid-cap defense-tech companies.

Defense Stock	Year-Over-Year Performance
Kratos Defense & Security Solutions (KTOS)	-21.3%
AeroVironment (AVAV)	-38.9%
Parsons (PSN)	-39.7%

A couple of outliers are worth noting. VSE (VSEC) has gained 31.8% over the past year, and Ducommun (DCO) has soared by an impressive 93.1% year over year.

As for defense companies that recently went public, like Lyntris, results have been decidedly mixed since their debuts:

Defense Stock	IPO Date	% Change Since Debut
HawkEye 360	May 7, 2026	-36.6%
Applied Aerospace & Defense	June 2, 2026	-30.9%
Aevex	April 17, 2026	-22.3%
Arxis (ARXS)	April 16, 2026	41.5%

Then there are Lyntris and First Breach (FBDT), which debuted within a day of each other. Since its August 20 debut, First Breach stock has plummeted from its opening share price of $12 down to $1.43 at market close on August 25 – a staggering drop of 90.5%. Lyntris, which debuted a day earlier, has dropped around 13.9% since August 19.

By this point, you’ve probably noticed that the performances of these defense stocks are all over the place. We’ve seen the large-cap defense companies make some huge year-over-year gains, with the notable exceptions of Northrop Grumman (NOC), which is surprisingly down 7.7% over the past year, and L3Harris Technologies (LHX), which is down around 3.4%.

The small- to mid-cap companies have run the gamut from Ducommun (up 93.1%) to Parsons (down 39.7%). And the defense companies with recent IPOs have largely been down, with just a couple of exceptions.

What does this say about the overall defense sector? Mostly that geopolitical events do not solely drive it. If they did, every defense stock would be soaring right now, and that’s clearly not the case.

A deeper look at the stocks in the industry reveals that, even as more defense companies take their stocks public and sign government contracts, the “institutional” stalwarts – like Lockheed Martin and RTX – hold a significant advantage over less-established companies.

That’s because these companies possess massive backlogs that span several years (RTX currently has a $289 billion backlog), use cost-plus government contracts that allow the companies to pass unforeseen costs (supply chain, inflationary, etc.) back to the government, and increase earnings-per-share (“EPS”) guidance and stock buybacks to ensure investor returns.

Meanwhile, defense companies stuck in the middle tend to struggle because fixed-price contracts handcuff them and put the burden of extra expenses on them rather than the government. If material prices rise or the supply chain bottlenecks, these companies absorb the added costs, which chokes their profitability.

Additionally, while the big defense companies are procuring huge, profitable contracts, these companies in the middle are receiving research and development funds and securing smaller deals because they lack the track record of handling large contracts. However, they can’t prove they can handle large contracts if no one gives them any.

It’s a chicken-or-egg conundrum known in the industry as the scale catch-22, which looks like this:

That results in less available cash, which means these companies must take on debt to finance expansion… again, a hit to these companies’ profitability.

Is Lyntris a Good Investment Right Now?

Which brings us back to recent IPOs like Lyntris. As a smaller company that is losing money, its IPO was deemed too ambitious by investors, and the company was already in debt the second it went public. And First Breach started hemorrhaging as soon as it debuted.

But that doesn’t mean these stocks are lost causes. Lyntris, after just a few days of public trading, is holding fairly steady amid an iffy defense-tech market. To inspire investor confidence, Lyntris will certainly need to start turning a profit in the second half of 2026 after posting a $13 million loss in the first half.

It will also need to reduce its long-term debt, which sits at more than $270 million. Its net interest expense alone during the first half of 2026 was $16.9 million.

The Falls Church, Virginia-based company’s 2026 revenue is promising, as is its $924 million backlog, which more than doubles its backlog from the end of 2025. But it has a long way to go before it becomes a profitable business and one that investors can rely on for consistent returns. Its soft IPO was just the latest sign.

Regards,

David Engle

Editor’s Note: It’s easy to assume the AI story begins and ends with the big-name chip stocks. But there’s a quieter version of it playing out inside the defense budget – where the government isn’t just regulating AI, it’s starting to buy into the companies that build it. 

A forensic accountant named Joel Litman – someone the Pentagon and FBI have actually consulted, and who called both the 2008 and 2020 crashes – argues this is one slice of a much bigger shift he calls the “Second Declaration.” He believes a handful of companies sitting where AI meets national defense could be repriced when a policy deadline arrives this November. 

Watch his full presentation here → [LINK] 

The post Lyntris’ Soft IPO Raises Red Flags. Is the Defense-Tech Stock Worth the Risk? appeared first on MarketWise.

SpaceX (SPCX) announced on Tuesday that it plans to open a $100 billion spaceport on the Louisiana coast. It’s a huge investment from a company that has offered up ambitious plans, such as going to Mars.

The new facility will be larger than the company’s three existing launch sites, and will include five launch pads, a mission-control unit, offices, a propellant factory, and power plants. SpaceX plans to begin construction in 2027, with the first launch scheduled three years from now.

The Louisiana launch site and SpaceX’s other sites would allow the company to increase its launch cadence, targeting 10,000 flights annually within five years across its various ships.

Such a goal remains ambitious. SpaceX just completed its 100th launch of Falcon 9 in 2026 on August 25. The workhorse rocket flew 165 missions during 2025. Those rockets have been carrying the company’s Starlink satellites, which provide global telecommunications services.

SpaceX also says thousands of those projected flights each year would involve its Starship rocket, which features reusable components that can drastically cut launch costs, “making rocket launches as routine as airplane travel.” Starship is still in its testing phase, however, and it hasn’t reached the high altitude that’s needed to launch some satellites.

Starship is key to SpaceX’s plans for orbital artificial intelligence (“AI”) data centers, putting these facilities in space. Recently, however, the company has pushed back timelines for upcoming Starship launches.

Despite these concerns, SpaceX CEO Elon Musk recently announced on social-media platform X that “SpaceX, in partnership with Nvidia, has designed a space-optimized Vera Rubin NVL72 system for launch to orbit in Q4 next year, with significant scale in 2028.”

That’s a notable speed-up of the timeline for these satellites, which had been scheduled to launch in 2028.

It’s a ton of moving parts for SpaceX before it can really get orbital AI moving, though investors looking to bet on Musk may want to keep an eye on the “Bank of Elon” hidden inside the firm.

Rockets may get a lot of SpaceX’s headlines, but the company highlights AI as its biggest future value driver.

Musk Touts $1 Trillion in Revenue in 2031 or Sooner

While the rocket business and new Louisiana spaceport may be stepping stones to deploying AI, the AI business is the whole ball game at SpaceX. That’s exactly what SpaceX’s prospectus tells you, with more than 90% of what it considers the “largest actionable total addressable market in human history” of $28.5 trillion expected from its proposed AI businesses.

Management pegs the rocket business at just 1.2% of the company’s total opportunity set. That means SpaceX’s valuation lives and dies on AI, and it is the only way for SpaceX to achieve the $1 trillion in revenue Musk has projected.

He has even sped up the timeline for this milestone in the latest earnings call:

It’s probably also worth mentioning that our internal projections for reaching $1 trillion in revenue, not [annual recurring revenue], but revenue, have moved up from 2031 to 2030. Prior to the [initial public offering (“IPO”)], the financial projections we had were reaching $1 trillion in revenue in 2031. We now expect that to be in 2030. There’s a non-zero chance of that being in 2029.

That’s just not going to happen, and it’s another example of Musk making a promise – here a “projection” rather than a promise – that simply cannot be fulfilled. Such a milestone would see SpaceX vastly surpass the 2026 sales of giants such as Amazon (AMZN) and Walmart (WMT). In effect, that means multiplying SpaceX’s annual sales by more than 20 times in four years.

Don’t count on it, despite Musk’s promises of launching rockets at scale in 2028 (which itself is likely another “overpromise, underdeliver” statement).

SpaceX’s IPO prospectus tells you exactly why it’s not going to happen on this timeline:

[M]any of our initiatives described above under “Our Growth Strategies,” including those to develop orbital AI compute at scale, manufacture AI chips at scale, establish a lunar economy, transport humans and cargo to the Moon and Mars, and develop human augmentation systems, involve significant technical complexity, unproven technologies or technologies that do not exist, and such initiatives may not achieve commercial viability….As a result, the timeline for certain of our initiatives involving unproven or new innovations, including our goal of deploying 100 gigawatts of annual compute power to orbit, the establishment of a lunar economy and interplanetary industrialization, and the launch cadence required to achieve these goals may be difficult or impossible to determine.

The realization of these plans is so far out that Musk and the company couldn’t even give a credible timeline three months ago – when it came time to put things in a written legal document that must offer a much more sober analysis of the issue or suffer potentially serious penalties.

So, Musk says one thing when it comes time to make legal statements but plays a different tune when he’s making projections during conference calls or on X.

SpaceX Stock Still Faces Huge Share ‘Overhang’

SpaceX stock has rebounded well from its recent low, as investors sold the stock mercilessly amid waves of lockup expirations from the company’s IPO. Just weeks after the stock debuted, it declined by more than half from its all-time high of $225 per share.

With worries about this “share overhang” having abated – though they are not eliminated – SpaceX stock has gotten its head above the $135 IPO price.

The lockups prevent SpaceX insiders from selling their shares, but SpaceX has already cleared two of those lockup expirations, and a few more remain in the coming months:

• August 6, 2026: Two days after SpaceX’s second-quarter earnings were reported, about 20% of eligible shares were available to be sold.

• August 21, 2026: About 7% of shares became eligible for trading.

• September 10, 2026: About 7% of shares will become eligible for trading.

• September 25, 2026: About 7% of shares will become eligible for trading.

• October 10, 2026: About 7% of shares will become eligible for trading.

• October 25, 2026: About 7% of shares will become eligible for trading.

With just 5% or so of the total shares outstanding issued in the IPO, that first expiration unlocked nearly four times as many shares for sale. Now, about 28% of shares are due to be unlocked for sale over the next two months.

For now, the stock has found its footing, with a relatively lower percentage of shares newly available for trading through October (28% soon-to-be available shares versus about 32% now). The negative expectations from the share overhang should subside even further.

That’s why I believe the stock has further upside during the next few months and could climb back to $165 again, as I outlined. The stock was trading at that level just weeks ago.

This catalyst looks like the next best opportunity for short-term traders to make money on the stock. Long-term fundamental investors still see a stock that’s massively overvalued, run by a CEO with a history of broken promises. So, the stock will stay up only as long as the market wants to believe Musk’s hype in the face of a different reality.

Regards,

James Royal, PhD

Editor’s Note: Elon Musk revived the electric car, pioneered reusable rockets, and beamed down internet to the four corners of the Earth. But his new initiative – “XPANSE” – could be bolder… more transformative… and far more lucrative than all of these innovations combined. And, like Tesla and SpaceX, it could make early investors incredibly wealthy. Click here for the details… 

The post SpaceX Is Planning a $100 Billion Louisiana Spaceport – But AI Is the Real Must-Win appeared first on MarketWise.

Index funds can be a great way to invest in the stock market, and the best index funds allow you to earn attractive returns. The largest and most popular index funds track major stock indexes such as the Standard & Poor’s 500 (“S&P 500”) and the Nasdaq 100 Index.

The S&P 500, Nasdaq 100, and Dow Jones Industrial Average are stock indexes that include America’s largest publicly traded companies and come with a strong long-term track record. The funds based on these stock indexes deliver nearly the same return as the indexes themselves. So, they’re an attractive way to achieve the index’s return with minimal analysis and work.

Top index funds also typically charge low expense ratios, the annual cost of the fund as a percentage of your investment. Top funds might charge $2 to $3 annually for every $10,000 invested in a fund, so you’re not paying a lot for the fund’s advantages. Index funds can charge low fees because they’re passively managed, meaning that they simply replicate the stocks in the index rather than paying analysts to actively find and invest in stocks.

Here are the best index funds for the major indexes, including both exchange-traded funds (“ETFs”) and mutual funds.

(Looking for a step-by-step plan to help you use AI in your own investing? Here’s how the N.E.W. System works.)

Top S&P 500 Index Funds in 2026

Fund (ticker)	Five-year annual returns	Expense ratio	Minimum investment
Fidelity ZERO Large Cap Index (FNILX)	12.9%	0%	None
Vanguard S&P 500 ETF (VOO)	13.1%	0.03%	None
SPDR S&P 500 ETF Trust (SPY)	13.1%	0.095%	None
iShares Core S&P 500 ETF (IVV)	13.1%	0.03%	None
Schwab S&P 500 Index Fund (SWPPX)	13.1%	0.02%	None
Vanguard 500 Index Fund Admiral Shares (VFIAX)	13.1%	0.04%	$3,000
Fidelity 500 Index Fund (FXAIX)	13.2%	0.015%	None

These funds track the S&P 500, which includes around 500 of the largest stocks traded on American exchanges, such as Nvidia (NVDA) and Apple (AAPL). So, it shouldn’t be surprising that these funds have basically the same average annual return of 13.1% over the previous five years. Therefore, the key differentiator here is the fund’s expense ratio, which ranges from 0% to 0.095%.

While ETFs are usually available to buy and sell wherever you can trade stocks, not all brokerages give you access to the entire mutual fund universe. Mutual funds often charge a minimum initial investment, too.

Three of these S&P 500 funds are ETFs, while four are mutual funds. Just one fund – the Vanguard mutual fund – charges a minimum investment, while its counterpart – the Vanguard S&P 500 ETF – charges a lower expense ratio and does not have a minimum investment. So, it makes sense to buy the Vanguard ETF or another lower-cost ETF unless you can’t access them.

Some of these funds also appear on this year’s list of the best ETFs.

Top Nasdaq Funds in 2026

Fund (ticker)	5-year annual returns	Expense ratio	Minimum investment
Invesco QQQ Trust (QQQ)	14.9%	0.18%	None
Invesco Nasdaq 100 ETF (QQQM)	14.9%	0.15%	None
Victory Nasdaq-100 Index Fund   (USNQX)	14.6%	0.42%	$3,000
Fidelity Nasdaq Composite Index ETF (ONEQ)	13.3%	0.21%	None

These funds track the Nasdaq, with three following the Nasdaq 100, which includes the 100 largest non-financial firms on that exchange. The other fund tracks the Nasdaq Composite, which measures the performance of all stocks trading on that Nasdaq exchange, including Microsoft (MSFT) and Amazon (AMZN).

While the Invesco QQQ Trust has long been the most popular ETF, the recently introduced Invesco Nasdaq 100 ETF has delivered the same performance at a lower expense ratio.

Meanwhile, the Victory Nasdaq-100 index fund is a mutual fund tracking the Nasdaq 100 and requires a $3,000 minimum investment. The Fidelity fund here tracks the Nasdaq Composite rather than the Nasdaq 100, giving it broader exposure and less concentration in the largest tech stocks.

The Nasdaq Exchange includes the world’s largest tech companies, such as the recently debuted SpaceX (SPCX). (CEO Elon Musk is working on a way to disrupt the global financial system, here’s how.)

Top Dow Jones Industrials Funds in 2026

Fund (ticker)	Five-year annual returns	Expense ratio	Minimum investment
SPDR Dow Jones Industrial Average ETF Trust (DIA)	10.6%	0.16%	None
Invesco Dow Jones Industrial Average Dividend ETF (DJD)	11.9%	0.07%	None

Fewer funds track the Dow Jones Industrial Average and its 30 stocks, including Goldman Sachs (GS) and Caterpillar (CAT). The SPDR Dow Jones Industrial Average ETF is the key name to watch here. Meanwhile, the Invesco ETF here focuses only on dividend-paying stocks in the Dow Jones Industrials.

Investors looking for more dividend-paying investments should review the best dividend ETFs.

Which Index Fund Is Best for You?

In general, if you’re searching for an index fund for a major index such as the S&P 500 or Nasdaq 100, you have several fund choices. Since funds tracking the same index deliver very similar performance, the best pick is often the one with the lowest expense ratio.

Any of the funds on these lists are cheap or reasonably priced. The S&P 500 funds here offer the lowest expense ratios overall, but even funds in other categories are still fairly priced.

If you go with the Fidelity ZERO fund above, which charges no expense ratio, it’s important to know it does so by avoiding the S&P branding and the related fees. The fund still tracks the index, but Fidelity can’t market it as an S&P 500 fund.

In general, unless you need to buy a mutual fund – say, you’re investing in a retirement account – an ETF is often the better choice. They tend to have a lower expense ratio and don’t require a minimum initial investment, unlike mutual funds. Plus, they trade throughout the market day, unlike mutual funds, which are priced and traded only at the end of the day.

As mentioned above, not all mutual funds are available at all brokers. For example, the Fidelity fund with no expense ratio is not available at many brokers. However, any of the ETFs above should be available at any broker that offers stock trading.

Reasons to Invest in an Index Fund

The key advantage of an index fund is that investors can earn strong returns without spending much time or energy analyzing stocks.

Investors in an S&P 500 Index fund get exposure to the 500 or so stocks in that index, and the funds closely track the index’s performance, which has been about 10% over long periods and even more recently. Each share of the index fund lets investors own a small slice of all the companies in the index, and it charges one low management fee that is deducted seamlessly from the account.

Index funds offer immediate diversification, lowering the risk of investing in an individual stock. Diversification is the idea that your money is spread out across many different investments, so that the performance of one stock doesn’t hurt your overall performance too much.

Of course, there’s a flip side to diversification, too. An index fund’s performance is just the weighted average performance of all the stocks in it. So, it’s necessarily an average. In other words, some stocks will perform much better than the average.

If you can find outperforming stocks, your overall return can do drastically better than an index fund’s average. So, it can be worth your time and money to search out high-flying stocks.

Regards,

James Royal, PhD

Editor’s Note: Whitney Tilson called the rise of Apple, Amazon, and Netflix… as well as the collapse of dozens of companies that went bankrupt. Now the former $200M hedge fund firm manager is stepping forward with what he calls the most important financial warning of his 30-year career. He’s sharing two free stock recommendations  (one to buy, one to sell immediately) along with details of a new proprietary system fueling his predictions. See it all in his free presentation.

The post Best Index Funds: Top Funds For the S&P 500, Nasdaq, and Dow Jones appeared first on MarketWise.

Anthropic is on the verge of acquiring Decart AI, a company that increases the efficiency of artificial intelligence (“AI”) chips, as Anthropic seeks to lower operating costs in a brutally competitive market. Anthropic is racing toward what its investors insist will be a $2 trillion initial public offering (“IPO”), and the company needs a compelling story showing how it can get on a path to profitability.

The deal would be worth about $6 billion, according to Bloomberg, making it the AI lab’s largest acquisition ever. Decart provides optimization software that helps squeeze more performance from chips, lowering the cost of training AI models. The startup also builds “world models,” a kind of simulation that mimics the real world and helps AI models navigate it effectively.

Besides the potential to lower costs, the acquisition of Decart could allow Anthropic to serve more users on existing hardware. That may prove useful as AI labs say they’re capacity-constrained by the fast-rising demand for services and the relatively slow build-out of AI data centers.

Anthropic and its key American rival, OpenAI, face rapidly increasing cost pressures, as low-cost Chinese AI model companies such as DeepSeek and Moonshot churn out high-quality models that may cost just 5% to 10% of what their American rivals charge. As a result, Chinese models have been rapidly growing their market share.

OpenAI has responded by slashing prices on one of its newest AI models by up to 80%, a move that threatens to heat up a simmering price war in the industry. OpenAI’s move shows AI labs lack pricing power and threatens the company’s ability to ever go public.

Anthropic feels the price pressure as well. As the AI industry’s dynamics rapidly shift and costs become ever more important, Anthropic is rushing its IPO across the finish line. Reports suggest that the company is still targeting an October debut, and it has been touting its sales growth in recent months to keep investors warm for the offering.

Media Pumping Anthropic $2 Trillion IPO Rumor

Have you ever gone to a restaurant and paid for a meal before you even knew what you’re being served? Of course not, but that’s what a few investors are doing for the Anthropic IPO, trying to attach a $2 trillion price tag to the offering before the public knows what they’re getting.

Unfortunately, the Financial Times is helping them do it. The pink paper quoted a half-dozen Anthropic investors who said the AI lab could hit a $2 trillion valuation for an IPO. That would make Anthropic the largest IPO of all time, surpassing SpaceX’s (SPCX) recent public offering.

Sharp investors should be highly dubious and consider this primarily as an approach to pump the stock of an upcoming IPO:

Anthropic’s backers say booming demand for the lab’s advanced AI models and tools justifies their lofty expectations. Investors expect the Claude maker’s annualised revenue to be between US$100 billion and US$120 billion by the end of 2026 — using the start-up’s preferred measure, which infers full-year sales from recent performance — up by more than 10 times over the course of 2026.

Incredibly, the Financial Times goes on to quote one investor who posits a $3 trillion valuation on Anthropic.

Let’s unpack some of what’s happening here.

• The $2 trillion IPO valuation is insiders’ price target. Insiders are trying to normalize a $2 trillion figure for the investing public, so it looks reasonable. A $3 trillion valuation, also tossed around, helps make $2 trillion look less extreme.

• The public is being fed this info by highly interested insiders.This valuation data is being fed to the media by insiders who have an investment interest of millions to billions in an Anthropic IPO, so they want to use the largest number possible.

• No detailed financial information is public yet. Anthropic’s financial info remains high-level in this FT article, so the public can’t clearly know what it would get for $2 trillion. How much money is Anthropic losing, and what is its trend toward profitability?

• Annualized revenue is not defined. While insiders provide a target for annualized revenue, the formula isn’t clearly defined. A guess might be that it’s 12 times the last month’s revenue, but that is not really clear. This lack of clarity works well for those who want the investing public to be ready to buy the IPO stock at any price.

• Annualized revenue is not revenue.Annualizing revenue is a forecast of what revenue would look like over the course of a year. So it’s not a statement of realized revenue, as the figures on financial statements filed by publicly traded companies are. For a high-growth company, annualized revenue will generally look much higher than actual revenue.

In short, the Financial Times is offering readers the best possible image of Anthropic – full of make-up, doused with perfume, and with a photo filter on. The point of this kind of “media plant” is to get the investing public excited about AI as “the wave of the future,” so that it uncritically buys whatever the big investors are selling BEFORE they see the financials.

And if OpenAI’s financials are anything to go by, Anthropic could be burning cash at a fearsome rate.

Billionaire Elon Musk used a similar strategy with the SpaceX IPO. Musk publicized a $1.5 trillion IPO figure in late 2025 and early 2026 before detailed financials were made public – indeed before even filing the IPO paperwork. The pre-IPO figure rose to $1.75 trillion, and company officials even briefly worked $2 trillion into the conversation before the IPO.

While SpaceX went up briefly in the wake of the IPO, it has been mostly down since then. The pre-IPO jawboning helped the company price the stock at a massive overvaluation.

So, investors should carefully review Anthropic’s financials when they’re released to see what they’d be getting for their money. Insiders are using the media to normalize a huge valuation before the public is forced to see Anthropic’s actual – quite likely terrible – financial figures.

Regards,

James Royal, PhD

Editor’s Note: Could a major AI company’s “silent IPO” end up overshadowing both SpaceX and Anthropic?  

According to Marc Chaikin — the 60-year Wall street legend who called Nvidia before it shot up 45,000% — a tech firm that been called “the unseen winner of the AI race” could soon break itself up into three separate companies.  

If it does, the next Netflix… the next Tesla… and the next Amazon are all poised to spin off just from this one stock. That means, if you simply make one trade today, you could could automatically get your hands on shares of all these potential spinoff IPOs with no more work on your part. 

Click to see how you can get in on this “silent IPO” before it’s too late… 

The post Anthropic in Talks to Buy Decart AI in Push to $2 Trillion IPO While Financials Remain Murky appeared first on MarketWise.

Shares of Circle Internet Group (CRCL) and Coinbase (COIN) both moved higher on Monday after the Treasury Department proposed new rules for the GENIUS Act, the stablecoin law enacted in July 2025. The proposal will be open to public comment for 60 days, with a final rule expected before January 2027.

Although stablecoins won’t suddenly become mainstream simply because the Treasury Department published its proposal, something more important has already happened.

Stablecoins are getting boring.

For most of crypto’s history, that would have sounded like an insult. Now, it may be stablecoins’ investment case.

The original crypto pitch involved overthrowing banks, replacing currencies, and cutting out financial intermediaries. Stablecoins are turning into something much less dramatic – a form of payments infrastructure. Mastercard (MA) is building around them. Payments app MoneyGram uses them. Businesses can settle payments at midnight on a Sunday instead of waiting for the banking system to open.

In short, stablecoins are becoming part of our ordinary world.

The GENIUS Act’s Impact on Stablecoins and Crypto Stocks

That leaves investors with a more useful question than whether crypto is “the future.” The question now is: If stablecoins become ordinary financial plumbing, who gets paid for it?

Circle and Coinbase have two very different answers…

A stablecoin such as Circle’s USDC is a digital dollar that can move across blockchain networks at any hour. The useful part of that idea has little to do with a person buying a cup of coffee… Electronic payment networks such as Mastercard and Visa (V) already handle those types of transactions just fine.

The bigger opportunity is where the existing system gets expensive or slow. Again, with traditional finance, those drawbacks happen with things like cross-border payments, remittances, corporate treasury, and settlement outside banking hours.

On stablecoin rails, the payment and settlement can become the same event rather than a message followed by money moving a day or two later. The hope is to fix these inefficiencies.

That gets us to Circle.

Circle issues USDC and holds reserves against those coins. It earns interest on the reserves it holds. In the second quarter, reserve income was $667.7 million, or 95.2% of Circle’s total revenue. Average USDC in circulation reached about $76.5 billion, up from $61 billion a year earlier.

The attraction is obvious. If more businesses and consumers use USDC, Circle gets more dollars to hold in reserve and potentially more reserve income.

But there’s a catch.

Circle’s economics depend heavily on interest rates. Lower rates mean lower returns on those reserves. Circle’s own filing estimates that a one-percentage-point decline in rates, if USDC circulation remains constant, would cut annual reserve income by roughly $737 million.

Then there’s Coinbase.

Coinbase is fascinating because it sits on the other side of Circle’s economics. It distributes USDC and gets paid handsomely for doing it.

Circle paid Coinbase $324.6 million in distribution costs in the second quarter alone. Coinbase says its customers held a total of $20 billion in USDC in Coinbase Products, on average, during the quarter – more than 30% of the total supply of USDC.

Coinbase captured roughly half of all USDC economics (meaning the yield earned by the investments USDC holds and who benefits from it) over the past year.

That gives investors two very different stocks tied to the same trend.

Circle makes more money when USDC circulation and reserve income grow… while Coinbase gets a large piece of the economics for putting USDC in front of customers.

Stablecoins also give Coinbase something it badly wants: revenue that doesn’t require customers to trade bitcoin constantly. Subscription and services revenue reached $555 million last quarter, or 48% of net revenue.

The Next Test for Stablecoins Is Real-World Use

There’s plenty of room for stablecoins to disappoint, however.

Most stablecoin activity still has little to do with buying goods or paying workers. The figures I have been watching put actual payments at roughly $390 billion out of about $35 trillion in stablecoin-network activity over a recent 12-month period (annualized for 2025 in December). Call it 1%. Trading, arbitrage, and machines moving liquidity still dominate the industry.

I keep coming back to the other side of that number, though.

The payments portion is tiny, but it more than doubled from 2024 to 2025.

The GENIUS Act will not make stablecoins mainstream by itself. The Treasury cannot force people to use USDC. What stablecoin regulation can do is remove one of the primary reasons banks, payment companies, and large businesses have hesitated to build around it.

That creates competition, too. Circle and Coinbase will not have this market to themselves.

But the investment question has become much more concrete. We no longer have to ask whether blockchain will someday find a use beyond crypto trading.

Money is already moving over these networks, and we’ll soon get to find out who exactly stands to gain when stablecoins become part of the main financial plumbing.

Good investing,

Eric Wade

Editor’s Note: Whitney Tilson … hedge fund legend, Harvard grad, and the investor CNBC called “The Prophet” … just stepped forward not just as a financial expert, but as a father and an American. He says we’re entering the most chaotic six months this country has seen in a generation. The signs are already everywhere. And he believes most people have no idea what’s coming for their money. His warning (and the one move he says can make all the difference) is in his free presentation. 

The post Circle and Coinbase Are Turning ‘Boring’ Stablecoins Into Great News for Investors appeared first on MarketWise.

Neocloud stock CoreWeave (CRWV) has sharply risen by about 54% from its one-month low of $60.55, making now a good time for investors to consider heading to the sidelines after the latest rally.

The artificial-intelligence (“AI”) data-center company is both debt-heavy and relies on continual financing to stay afloat. Worse, the people who know the company best – executives and other insiders – have been unloading the stock as fast as they can.

In short, if the AI bubble bursts, there are reasons to think that CoreWeave could go to zero.

If you look at the surface of CoreWeave’s results, you might think that nothing’s the matter. In fact, the company’s rapidly increasing sales in recent quarters would seem to nullify any bearish fears. But a closer look shows why I said CoreWeave is one of five AI stocks that could go bust.

Period	Sales growth	Operating margin	Interest expense	Net margin
Q1 2025/2026	112%	-2.7%/-6.9%	$264/$536*	-32.1%/-35.5%
Q2 2025/2026	112%	1.6% / -1.9%	$267/$640*	-23.9%/-24.3%

On the top line, CoreWeave grew sales 112% year over year in both the first and second quarters of 2026. For any normal company, such rapid sales growth would quickly translate into much higher operating margins, but the improvement has been less obvious here.

We didn’t see higher operating margins in the first quarter, as they fell from negative 2.7% last year to negative 6.9% in the first quarter of this year. Second-quarter operating margin also fell, from 1.6% last year to negative 1.9% this year. However, operating margin improved sequentially from the first quarter to the second quarter, so it’s important to see whether this trend continues.

While operating margin is a key financial factor, CoreWeave’s heavy use of leverage makes the net margin especially important. Despite CoreWeave’s stellar sales growth, it’s taking on significant interest expense to finance that growth. As a result, net margin is not improving much, especially in the second quarter.

For example, CoreWeave paid $267 million in interest expense during the second quarter a year ago. In the second quarter this year, interest costs ballooned to $640 million. So, despite CoreWeave’s 112% sales growth, net margin actually worsened year over year, from negative 23.9% to negative 24.3%.

While CoreWeave reports those fast-growing sales figures in its press releases, it leaves out the fast-growing liabilities that finance them. To see that, you need to turn to Form 10-Q, where you can see just how much the company relies on liabilities.

Of the company’s $77.1 billion in assets as of June 30, 2026, about $72 billion are financed by liabilities. That leaves a meager $5 billion in shareholders’ equity supporting that pile of assets. In other words, CoreWeave is massively leveraged. If the value of those assets is written down by 6.5% or more, the company will have zero or negative shareholders’ equity.

Zero or negative shareholders’ equity might be fine for a company that has a strong history of turning a profit, but that’s not CoreWeave. It must keep financing its assets and paying interest.

With the company’s market capitalization of about $51.4 billion, investors are willing to pay about 9.1 times the book value of the company. Put another way, the market is saying the company’s assets are 9.1 times as valuable as their book value.

Despite huge growth, this valuation doesn’t make sense given the lack of profitability.

CoreWeave Insiders Are Selling Aggressively

But this analysis is not the only thing telling you CoreWeave’s valuation doesn’t add up. Key company insiders have been telling you all year that CoreWeave is overvalued, selling hundreds of millions of dollars in stock as fast as they can. The company’s recent addition to the Nasdaq 100 Index gave the stock another boost that insiders could sell into.

Before we run through some numbers, CoreWeave bulls will point out (rightly) that insiders may sell for many reasons. They sell to diversify their own portfolios, because they need cash elsewhere, and because they’re raising money to pay taxes on stock grants. At the same time, they typically buy only when they believe the stock is poised to go up.

Or as the old investment saying goes, “insiders sell for many reasons, but they buy for only one.”

But you rarely see the depth and breadth of selling that’s evident at CoreWeave. It’s the kind of thing that you should be terrified of if you own the stock. Insiders have been selling at a furious pace since August 2025 – when the company’s lockup on insider selling expired as part of its initial public offering. They’ve been selling every month since then, too. Plus, there has not been a single insider buy over that time, according to MarketBeat.

Let’s look at selling from the company’s CEO, Michael Intrator, over the past few months.

Insider	July (Sales/$)	June (Sales/$)	May (Sales/$)
CEO Michael Intrator	7 sales / $75.4 million	10 sales / $174.5 million	9 sales / $136.2 million

Intrator sold shares in seven separate batches in July for a total of $75.4 million, according to MarketBeat. That followed 10 sales for $174.5 million in June and nine sales for $136.2 million in May.

The CEO’s sales pattern goes back to August 2025.

But it’s not just the CEO selling shares. Rather, it’s a “Who’s Who” of CoreWeave that has been getting rid of shares at a brisk pace:

• Brannin McBee, chief development officer

• Nitin Agrawal, CFO

• Kristen McVeety, general counsel

• Brian Venturo, co-founder, director

• Jack Cogen, director

• Chen Goldberg, senior vice president of engineering

• Jeff Baker, chief accounting officer

• Sachin Jain, COO

• Karen Boone, director

The amounts of stock they’ve sold differ, of course, from relatively small sales of a few shares to gargantuan amounts, such as the $49.4 million from Brannin McBee in September 2025 or the $105.3 million from Jack Cogen that same month.

All those sales and literally zero insider buys. Nothing is illegal, but as an investor (or potential investor) in CoreWeave, it’s an unambiguous signal that’s quite valuable.

Insiders selling CoreWeave stock this aggressively tells you almost everything you need to know about it as an investment. Tack on a business that can’t even budge its net profit margin despite 112% sales growth, and you have a stock that could plummet if the AI bubble bursts.

Regards,

James Royal, PhD

Editor’s Note: Whitney Tilson — the hedge fund manager CNBC called “The Prophet” — says America has reached its “Ripping Point.” The old financial order is being torn apart, and he believes most investors have no idea what’s coming in the next six months. He’s named the stocks he thinks will be destroyed in the chaos — and the ones he believes will soar. Watch his free presentation while it’s still available.

The post Despite CoreWeave’s Recent Rebound, Here’s How the Neocloud Stock Could Go to Zero if the AI Bubble Pops appeared first on MarketWise.

The best dividend stocks offer solid payouts that investors can rely on for years. They help investors build wealth over time, offer a growing dividend, and are backed by the safety of a company with a solid track record. With a sizable portion of their returns paid out in cash, these top stocks are a great choice for retirees or anyone seeking income.

Top dividend stocks can offer investors the following benefits:

• Strong, long-term returns, with attractive capital gains and not just a high payout

• A high dividend, with yields higher than 2%, much greater than the S&P 500’s yield

• A growing dividend, with a payout that grows at least at the target rate of inflation

• A solid business, a larger company that has survived and thrived, often for decades

• Lower volatility, meaning the stock fluctuates less than the average stock

The best dividend stocks give you the chance to build wealth while offering a growing stream of dividends for decades, giving you the cash to spend however you like. Certain investors prefer dividend stocks with high yields and some growth over time, while others prefer a lower yield today but higher growth potential over time.

This list of 11 dividend stocks offers options for both approaches.

Best Dividend Stocks: How They Compare

Stock (Ticker)	Dividend yield	Five-year annualized dividend growth	Five-year annualized return
Verizon Communications (VZ)	5.9%	2.0%	2.0%
Edison International (EIX)	5.0%	5.7%	8.6%
Kimco Realty (KIM)	4.4%	8.6%	5.7%
Fidelity National Financial (FNF)	4.3%	8.4%	4.5%
Lamar Advertising (LAMR)	4.1%	19.9%	10.9%
Paychex (PAYX)	3.8%	11.9%	4.2%
CareTrust REIT (CTRE)	3.7%	6.0%	15.0%
Public Storage (PSA)	3.7%	8.5%	4.7%
NextEra Energy (NEE)	2.9%	10.7%	2.8%
McDonald’s (MCD)	2.7%	7.3%	5.0%
Coca-Cola (KO)	2.4%	4.5%	11.1%

Some of these stocks are also included in MarketWise’s list of best retirement stocks for 2026.

1. Verizon Communications (VZ)

Everyone knows Verizon as one of the major U.S. telecom players, but maybe less well known is that it pays a massive dividend of nearly 6%. The trade-off for that high current yield is slow dividend growth, but investors can decide for themselves how they want to play the dividend game. The stock has not had a great five-year run, but its higher current yield gives investors plenty of reason to stick around and wait for the stock to catch a bid.

Market cap: $201 billion

Dividend yield: 5.9%

2. Edison International (EIX)

Electrical utilities can be great dividend picks because they enjoy stable, growing demand for their key product. They also tend to increase prices year after year, and their stock tends to be relatively stable because of these advantages. For California-based Edison, that has resulted in an attractive dividend and a history of raising it quickly.

Market cap: $27 billion

Dividend yield: 5.0%

3. Kimco Realty (KIM)

Kimco Realty is a real estate investment trust (“REIT”) that owns grocery-anchored shopping centers and mixed-use properties in major metro areas. Kimco’s “must-visit” properties generate reliable rents that grow over time, and as a REIT, it must pay out most of its income as dividends.

The company’s meaty current yield doesn’t come at the expense of strong dividend growth over the past five years either.

Market cap: $16 billion

Dividend yield: 4.4%

4. Fidelity National Financial (FNF)

Fidelity National Financial may not be a familiar name for many investors, but if you’ve ever bought or sold a house, there’s a good chance you’ve used the company for its title insurance. It’s the leading player in this oligopolistic industry, and it has delivered excellent returns over time, even if the past five years have been ho-hum.

It offers a high current yield, and management hasn’t been stingy about increasing the payout over the past half-decade, giving investors reason to hold the stock for a while.

Market cap: $13 billion

Dividend yield: 4.3%

5. Lamar Advertising (LAMR)

It seems like artificial intelligence (“AI”) or tech is disrupting nearly every business these days, so it’s refreshing when you find a business such as Lamar’s – billboard advertising – that seems largely unaffected. The company has some 360,000 billboards in the U.S. and Canada that advertise local and national brands to travelers.

The company has grown its meaty dividend nearly 20% annually over the past five years, on the way to putting up nearly 11% annualized returns.

Market cap: $16 billion

Dividend yield: 4.1%

6. Paychex (PAYX)

Paychex offers human resources management and payroll processing for small- and medium-sized businesses, among other related services. It has delivered tremendous returns for investors over time, even if the past five years have been a bit mediocre.

But that may be just a brief pause before another period of exceptional performance. Today’s investors can lock in a strong dividend and look for signs that management will raise that payout aggressively moving forward.

Market cap: $43 billion

Dividend yield: 3.8%

7. CareTrust REIT (CTRE)

CareTrust may not be a household name like others on this list, but it has delivered solid returns to investors, with a high yield and a growing payout over time.

As a REIT, it must make sizable dividend payments, and its business of leasing out healthcare facilities on long-term leases with annual rent escalators ensures the stable revenue that’s a prerequisite for a top dividend stock.

Market cap: $9 billion

Dividend yield: 3.7%

8. Public Storage (PSA)

Public Storage is the behemoth in the self-storage space. As a real estate investment trust, it has to pay out most of its income as dividends. It offers a high current yield that has grown at a brisk 8.5% annually over the past five years, meaning you’re getting the best of both worlds.

The REIT has redesigned its executive incentive system to help drive stock outperformance, a move that should help keep the dividend AND share price growing.

Market cap: $61 billion

Dividend yield: 3.7%

9. NextEra Energy (NEE)

NextEra is one of the largest North American electric utilities, with about 80 gigawatts of generation and storage capacity. NextEra is almost the definition of a “must-have” asset, with a product that will always be in demand, even while offering strong upside as AI-driven power demand pushes prices higher.

The stock’s above-average dividend has been growing quickly over the past half-decade, and recent price weakness may be a long-term opportunity.

Market cap: $179 billion

Dividend yield: 2.9%

10. McDonald’s (MCD)

McDonald’s may be famous for its Big Mac, but the firm makes much of its money from franchise fees and leasing out the real estate that sits beneath its thousands of restaurants.

As one of the most popular consumer businesses, the Golden Arches has shown notable durability, helping drive a solid dividend that’s grown at a fast 7.3% over the past five years.

Market cap: $193 billion

Dividend yield: 2.7%

11. Coca-Cola (KO)

While everyone knows the company’s namesake drink, Coca-Cola is a drink distributor that can deliver whatever consumers want – sodas, water, sports drinks, and juices. Coca-Cola has proven that it can thrive over decades, while increasing its dividend for 64 straight years.

Although its yield is on the lower side of our list, it has grown at a reasonable 4.5% annualized clip, while the stock has returned about 11% annually on average over the past five years.

Market cap: $377 billion

Dividend yield: 2.4%

Another Top Dividend Stock to Consider for Retirement Investors

The best dividend stocks offer strong returns over time that investors can rely on year after year, and Wall Street veteran Whitney Tilson has spent decades hunting for a business so durable that an investor could build an entire retirement portfolio around it.

Now, he says he has found a business that could deliver even bigger, more durable returns than the legendary business of Berkshire Hathaway and keep delivering for decades.

Whitney calls it “America’s Greatest Retirement Stock.”

Most investors have never heard of this company, and it only has around 100 employees. The company doesn’t exactly sit in a major metropolitan area either, doing business on a stretch of West Texas and New Mexico bigger than the size of Rhode Island.

That might make you think of oil, but this company doesn’t drill wells and doesn’t own a data center or generate any power. Instead, it owns the ground beneath one of the largest industrial build-outs in modern American history.

And every single time someone wants to use that ground, this company collects a payment.

Whitney recently took a helicopter out to see it for himself… Click here to watch his exclusive investigation.

Regards,

James Royal, PhD

The post 11 Best Dividend Stocks for 2026: High Yields and High Growth appeared first on MarketWise.

It is looking increasingly likely that SpaceX (SPCX) will acquire carmaker Tesla (TSLA), with even SpaceX and Tesla CEO Elon Musk not denying the possibility. While the move could make some sense for operational and business reasons, Musk’s insatiable ego is the driving factor.

But as pessimistic as I was about the rationale for the merger, I still failed to account for a key reason for Musk to merge the two firms: He stands to earn megabucks in performance bonuses from Tesla as part of the $1 trillion compensation package he signed with the carmaker last year.

For investors in Tesla and SpaceX, the ultimate question is really: Will SpaceX vastly overpay for Tesla, hurting SpaceX investors for the benefit of Tesla investors? Or will SpaceX offer a fair price for Tesla, thereby reducing the stock price of the massively inflated Tesla and benefiting SpaceX investors?

The best prediction is probably to look at Musk’s compensation package and determine the circumstances in which he benefits most.

Here’s How Elon Musk Benefits in a SpaceX-Tesla Merger

Musk benefits in the event of a takeover of Tesla, due to his 2025 CEO Performance Award Agreement with Tesla. The agreement laid out 12 different awards that Musk could earn for achieving various operational goals, such as delivering 20 million Tesla vehicles, or by market capitalization goals such as Tesla being valued at $2 trillion or $2.5 trillion, for example.

For each of the 12 levels, Musk could earn more than 35.3 million shares of Tesla, which are currently worth about $11.5 billion at a stock price of $326.

But achieving the operational goals is not necessary in the event of a change of control, such as if SpaceX acquires Tesla. In this case, all that needs to happen is for Tesla’s market cap to exceed one or more of the thresholds for Musk to achieve at least some of the shares.

At a share price of $500 – where Tesla’s market cap is about $2 trillion – each 35.3-million-share tranche is worth nearly $18 billion. So, the bigger the size of the deal, the larger his payday could become, as he earns more shares at a higher valuation.

Because Musk owns supervoting stock in SpaceX that gives him effective control of the company, he has a strong ability to decide whether SpaceX acquires Tesla and at what price. So, he has both the incentive to overpay for Tesla and the means to make a merger occur.

Given his strong voting position in SpaceX, he can even overpay for Tesla using SpaceX stock while still maintaining effective control of the newly merged firm, as a Wall Street Journal article shows. Even if SpaceX pays at the top of the compensation range for Tesla – a whopping $8.5 trillion – Musk would still hold control of the merged company, with about 56% of the vote.

At that level, he’d add more than $800 billion to his personal wealth, soaking SpaceX investors by massively overpaying for Tesla stock. Again, there’s that conflict of interest.

This level of self-dealing – It may all be too much for even the most ardent Musk fans, despite all the opportunity inside the company: rocket ships, Starlink satellites, Optimus robots, Terafab, as well as the hidden financial business inside SpaceX.

Tesla Explores Divesting Its China Business

A SpaceX-Tesla merger might require Tesla to separate its Chinese business in some form, and Tesla has been exploring that possibility, according to the Wall Street Journal. While Musk called the article “fake news,” a divestiture would prove problematic, given Tesla’s enormous valuation.

The concern here is that SpaceX is a significant defense contractor, with the federal government making up 20.9% of its 2025 sales. With SpaceX units such as top-secret satellites, the U.S. would want some separation between the company and China. At the same time, China would take a close look at a SpaceX merger if it led to a U.S. contractor controlling Tesla factories.

Tesla executives have been told to prepare for the Chinese unit to be hived off, whether that’s a spinoff, a sale, or even a closure. A sale or spinoff could prove particularly problematic because it would cause a standalone Chinese unit to be valued separately from Tesla as a whole.

A standalone valuation of the China unit will prove problematic because Tesla is so overvalued to start with. Tesla might actually be worth 80%, 90%, or maybe 95% less than today’s value, about $1.3 trillion, but Tesla enjoys a Musk premium, a price boost because Musk is at the helm.

But a strategic acquirer such as another car company will not purchase Tesla China at a price that’s 5 to 20 times higher than its actually worth, as the stock market is doing. So, a sale of the China unit at something near fair value necessarily means that the remaining non-China units are being priced by the market at an even more massive overvaluation, given their assets.

In this case, a SpaceX acquisition of Tesla near its current price implies a huge overpayment for the remaining Tesla assets. In other words, SpaceX investors get hosed, while Tesla investors enjoy a huge windfall by selling their overinflated assets – one reason Tesla is too risky to short.

A spinoff of Tesla China into a separate publicly traded company isn’t likely to solve the problem either. If the market is not willing to award the spinoff a Musk premium, it’s not going to fetch the kind of price that it’s currently doing inside Tesla today, where it’s likely 5 to 20 times overvalued. In this case, SpaceX would again vastly overpay for the remaining Tesla assets, soaking investors.

Given the huge difficulties created by Tesla’s overvaluation, the company has been exploring other ways of “firewalling” the Tesla China unit from the rest of the business.

Why SpaceX Is Likely to Acquire Tesla

Besides the personal payday for Musk, Musk may seek to combine SpaceX and Tesla for a variety of other reasons:

• Musk has a history of merging companies to paper over bad news: Tesla bought the debt-laden SolarCity in 2016, of which Musk owned 20%. The move bailed out Musk’s personal investment in the renewable energy company, which his cousins managed.

• A merger puts Musk in total control:Musk runs the whole ship at SpaceX through his supervoting stock, and a purchase of Tesla may mean that he can simply ignore investors who want to challenge his decisions or compensation, for instance.

• A SpaceX-Tesla merger stokes Musk’s ego:A merger would put the Musk-helmed company among the world’s largest companies by market capitalization.

Investors should expect to see more of Musk and his team laying the groundwork for a potential merger in the coming quarters, much as he did in the last earnings call:

Well, as you can tell from all the many collaborations on so many fronts with SpaceX, there’s more and more overlap, especially with Terafab, that’s really going to be a gigantic project. Obviously, we can’t talk about combining companies and that kind of thing on an earnings call. It’s got to be done with the appropriate process.

This kind of non-denial shows that Musk is likely to be actively pursuing a merger, and it’s only a matter of time before we get the details. As we’ve seen in Musk’s recent deals, he’s going to come out of it just fine. The real question is which investor group – SpaceX’s or Tesla’s – gets worked over harder. It looks like Musk’s money is riding on SpaceX to pay up for Tesla.

Regards,

James Royal, PhD

Editor’s Note: Elon Musk revived the electric car, pioneered reusable rockets, and beamed down internet to the four corners of the Earth. But his new initiative – “XPANSE” – could be bolder… more transformative… and far more lucrative than all of these innovations combined. And, like Tesla and SpaceX, it could make early investors incredibly wealthy. Click here for the details… 

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