# Earnings Special: SpaceX’s AI Splurge Puts a Damper on Debut Earnings After IPO

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 4 Aug 2026, 20 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/3782b71f-3f4f-4ec4-8772-b49c0174760a/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

SpaceX stock fell after the company disclosed higher-than-expected spending on its artificial intelligence business, dampening an inaugural quarterly report that broadly surpassed Wall Street forecasts. Shares of Elon Musk’s rocket, satellite and AI conglomerate tumbled as much as 8.8% in US postmarket trading after it said capital spending jumped to about $18.4 billion in the second quarter. For instant reaction and analysis, Bloomberg Businessweek Daily hosts Carol Massar and Tim Stenovec speak with: • Ed Ludlow, Bloomberg Tech co-host • Mandeep Singh, Bloomberg Intelligence Global Head of Technology Research See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is a breaking
[0:10] Speaker 1: news update from Bloomberg instant reaction and analysis from our
[0:15] Speaker 1: three thousand journalists and analysts around the world. The SpaceX
[0:20] Speaker 1: the company out with its first report as a publicly
[0:23] Speaker 1: traded company. Revenue exceeded Wall Streets expectations reported seven point
[0:27] Speaker 1: eight billion dollars. The company reporter and operating loss though
[0:30] Speaker 1: of one point twenty six billion dollars from its AI business.
[0:32] Speaker 1: That's better than the consensus expectation. Shares a plunge since
[0:36] Speaker 1: that IPO raising more than a trillion dollars in market
[0:38] Speaker 1: value from their peak.
[0:39] Speaker 2: All right, let's get to it with our team. We've
[0:41] Speaker 2: got a great team too.
[0:42] Speaker 3: Mandy Pep Singh is with us right here in studio
[0:44] Speaker 3: in our Bloomberg Interactive Brokers studio is Bloomberg Intelligence, Global
[0:47] Speaker 3: head of Technology Research, and out there in our San
[0:50] Speaker 3: Francisco news bureaus, of course, our own ed Ludlow, host
[0:53] Speaker 3: of Bloomberg Tech. Let me just kick it off with you.
[0:57] Speaker 3: What jumps out here? I know you're also on the
[0:58] Speaker 3: live blog, but you know, investors just kind of reading through.
[1:02] Speaker 4: Yeah, I mean overall revenue and sales came in above consensus.
[1:07] Speaker 4: But you go into this saying, this was the first
[1:09] Speaker 4: quarterly earnings for SpaceX since they became a public company,
[1:12] Speaker 4: and it will be their first earning school and there
[1:14] Speaker 4: was a lot of acceptance that the consensus numbers out there.
[1:18] Speaker 4: There was a bit of skepticism, Right, they're a bit
[1:19] Speaker 4: squishy because we don't have a whole lot of contemporaneous data.
[1:24] Speaker 4: But it's really interesting, you know that the status quo
[1:27] Speaker 4: is still that starlink is the is the driver on
[1:30] Speaker 4: the top line, and also sort of the cash cow.
[1:34] Speaker 4: But they really improve the economics of this business in
[1:37] Speaker 4: the quarter of yes, it's a rocket company, but renting
[1:41] Speaker 4: compute capacity to other technology companies, you know, that has
[1:45] Speaker 4: proved to be a strong business for them. There's a
[1:47] Speaker 4: lot of discussion in that in what's a very limited
[1:50] Speaker 4: earnings release.
[1:51] Speaker 1: Mandy, if I want to bring you in here, if
[1:52] Speaker 1: you were to look at the three different segments the
[1:55] Speaker 1: reportable segments ed mentioned the cash cow and in terms
[1:59] Speaker 1: of where the revenue is still coming from in terms
[2:02] Speaker 1: of growth in your view, which segment is the most important.
[2:05] Speaker 5: I mean, they reported a backlog number of forty seven
[2:09] Speaker 5: point five billion that tells you most of the backlog
[2:13] Speaker 5: is likely coming from AI and what is not captured
[2:16] Speaker 5: in this print is the Entropic and Google deals.
[2:21] Speaker 1: Said, yes, okay, that's what I was going to ask you.
[2:23] Speaker 1: When you say a backlog that means companies like Anthropic
[2:26] Speaker 1: and Google coming to xai part of SpaceX and renting compute.
[2:30] Speaker 5: That's right, yes, And in fact we know some of
[2:33] Speaker 5: the deal terms. Entropic will be paying SpaceX about one
[2:39] Speaker 5: point two five billion dollars a month. So next quarter
[2:43] Speaker 5: when they report, there will be at least three point
[2:47] Speaker 5: seventy five billion dollars from Entropic and another probably two
[2:52] Speaker 5: billion plus from Google when the report, so six billion
[2:55] Speaker 5: bump just from these two deals x quarter. That sound
[2:59] Speaker 5: pretty important, I think. So that's why the backlog number
[3:02] Speaker 5: is very important because in that forty seven billion dollars
[3:06] Speaker 5: is that Anthropic deal and the Google deal and there's
[3:09] Speaker 5: one more company, I think, Reflection.
[3:12] Speaker 1: And what what can XAI offer these firms that that
[3:17] Speaker 1: Mandeep mentioned that like a Google Cloud and Microsoft Azure
[3:21] Speaker 1: and AWS or even a Neo cloud can.
[3:24] Speaker 4: Offer space that they're not currently using. So it is
[3:27] Speaker 4: what it's a commodity, a little bit. So like in Tennessee,
[3:31] Speaker 4: Xai now Space Xai set up a number of data
[3:34] Speaker 4: centers in very quick order, Colossus one, Colossus two, and
[3:38] Speaker 4: Colossus three. And what was explained to me in great
[3:41] Speaker 4: detail by sources is that once they had built all
[3:44] Speaker 4: of them, they were like, Okay, how do we use
[3:45] Speaker 4: this ourselves? And they realized that in Colossus one, which
[3:49] Speaker 4: is a big tin Can data center, they had multiple
[3:52] Speaker 4: generations of Nvidia GPUs all mixed together. Some were Hopper generation,
[3:57] Speaker 4: some were Black Well, some were even as old as
[3:59] Speaker 4: the A one hundred generation, and so they decided the
[4:02] Speaker 4: best use of that capacity was to rent it out
[4:05] Speaker 4: with attractive economics for those renting it at a premium.
[4:08] Speaker 4: Many would say, I think Mandy has been over that
[4:09] Speaker 4: really well in the past, and for them, like they
[4:13] Speaker 4: run it really operationally efficiently, it can be a high
[4:16] Speaker 4: margin business. But it was all born out of the
[4:19] Speaker 4: fact that for their own models and running them, not
[4:21] Speaker 4: just training later generation models, they couldn't work out how
[4:24] Speaker 4: to use that capacity for themselves to best effect.
[4:30] Speaker 2: Yeah, I mean.
[4:33] Speaker 3: The worries that we've had man deep about this company
[4:36] Speaker 3: and feeling like we didn't know some things should investors.
[4:40] Speaker 3: I know, we never give investment advice, but feel all right,
[4:43] Speaker 3: we're getting more information about the business that we can
[4:45] Speaker 3: kind of figure out and cross with kind of where
[4:49] Speaker 3: this company's going. The valuation means the valuation is still
[4:53] Speaker 3: a little crazy.
[4:54] Speaker 5: Right, it is crazy. But what I think may work
[4:58] Speaker 5: in their favor is this is a company that will
[5:00] Speaker 5: likely have accelerating top line growth at least for the
[5:04] Speaker 5: next three or four quarters with margin improvement, and that
[5:09] Speaker 5: is a type of story that investors typically like. I mean,
[5:13] Speaker 5: we just saw what Pealantier did today, you know, with
[5:16] Speaker 5: their quarter partly because of that accelerating top line growth,
[5:20] Speaker 5: and there is no doubt in my mind, given that
[5:23] Speaker 5: forty seven point five billion dollar backlog number, SpaceX will
[5:27] Speaker 5: have accelerating top line growth at least for the next
[5:31] Speaker 5: three quarters.
[5:32] Speaker 1: We're speaking with Man deep saying our Bloomberg Intelligence global
[5:35] Speaker 1: head of Technology Research. Also with us Ed Lovelow out
[5:38] Speaker 1: there in San Francisco. He's the host of Bloomberg Tech.
[5:40] Speaker 1: I want to remind everybody, if you have questions about
[5:42] Speaker 1: SpaceX's earnings, the company's report, send us a question Bloomberg
[5:47] Speaker 1: dot com, slash Ask Radio. That's bloomberg dot Com slash
[5:50] Speaker 1: Ask Radio. It's only for Bloomberg dot Com subscribers. You
[5:53] Speaker 1: can submit questions for us or for any of our
[5:55] Speaker 1: guests this afternoon.
[5:57] Speaker 3: You know, I'm just looking at you know, you pull
[5:58] Speaker 3: up the SpaceX, do the ticker. Do you know cnbn
[6:02] Speaker 3: spacexa's business growing across all three segments. SpaceX exceeds revenue
[6:06] Speaker 3: estimates in the first quarter, first earning since IPO. You know,
[6:11] Speaker 3: SpaceX's first earnings offer a chance to reverse the stocks
[6:14] Speaker 3: plunge that was earlier in the day, top of mind
[6:19] Speaker 3: and come on back in because.
[6:20] Speaker 2: I'm just thinking, how much of what we we didn't know?
[6:23] Speaker 3: So this is kind of our first real picture of
[6:27] Speaker 3: a lot of what the business is about. There were speculations,
[6:29] Speaker 3: certainly coming off the IPO, and there was numbers and
[6:31] Speaker 3: there were estimates, but how much of this is.
[6:33] Speaker 2: Like, oh, okay, so this is the business at least now.
[6:38] Speaker 4: Yeah, yeah, So what you can do is you can
[6:40] Speaker 4: compare with the backward looking data we have from the
[6:43] Speaker 4: IPO perspectus, the S one and the amended versions of it,
[6:46] Speaker 4: just the two Aikey points because I think it's really
[6:49] Speaker 4: interesting to get Mandiv's take on this is AI is
[6:52] Speaker 4: probably inflecting a little bit faster than the street expected.
[6:55] Speaker 4: So the AI revenue are two point five six billion dollars, right.
[6:59] Speaker 4: Compare that to the first quarter, which is data we
[7:01] Speaker 4: got in the perspectives about eight hundred million, so it's
[7:04] Speaker 4: quite a jump sequentially quartered a quarter and then on
[7:07] Speaker 4: an adjusted ebit DAR basis, which you know, let man
[7:09] Speaker 4: deep into this one because I know how the street
[7:11] Speaker 4: feels on adjustedy a bit DAR, but AI adjusted ebit
[7:15] Speaker 4: DAR did term positive AI specifically, and so like right now,
[7:21] Speaker 4: with the knowledge that all of these other business lines
[7:23] Speaker 4: are futuristic, orbital data center, the space economy, and enterprise AI,
[7:28] Speaker 4: what they have done is move pretty quickly on their
[7:30] Speaker 4: AI instructure business. And you know, Mandiep's outlined the deals
[7:33] Speaker 4: that they did to get there.
[7:34] Speaker 1: Okay, let's just reset here a little bit, because we're
[7:36] Speaker 1: seeing shares of SpaceX down about six and a half
[7:39] Speaker 1: percent after the company reported results. Starlink growth continues to
[7:43] Speaker 1: be a revenue driver. Shares are slumping though as investors
[7:46] Speaker 1: digest this. Mandy, what's the sort of I don't know,
[7:51] Speaker 1: from a guidance perspective, the expectations about what we'll hear
[7:54] Speaker 1: on the call that's different from what's in the press release. Again,
[7:57] Speaker 1: first time we've had a call for this company, so
[8:00] Speaker 1: we can kind of only go with what Tesla has
[8:02] Speaker 1: done in the past. But what do we expect in
[8:04] Speaker 1: terms of guidance.
[8:05] Speaker 5: I mean, when I look at this Starlink number, to me,
[8:08] Speaker 5: that's slightly misconsensus in terms of number of subscribers. And
[8:13] Speaker 5: given we talk about how that's the cash cow that's
[8:16] Speaker 5: funding you know, the other businesses, that is probably the
[8:20] Speaker 5: number one question that I feel they're going to get
[8:24] Speaker 5: on the earnings call, but along with that backlog, which
[8:27] Speaker 5: I think will help them in the quarters upcoming quarters,
[8:32] Speaker 5: but clearly that Starlink business was slightly below consensus.
[8:37] Speaker 3: All right, we're going to continue watching shares the SpaceX,
[8:40] Speaker 3: as we mentioned, definitely down right now about eight and
[8:43] Speaker 3: a half percent, so giving kind of everything back that
[8:45] Speaker 3: they got in the regular trading session. In the meantime,
[8:49] Speaker 3: I want to since we've got Elon, we have Elon here. Hey, Elon,
[8:53] Speaker 3: thanks for calling it. We've ed here, and of course,
[8:55] Speaker 3: man Deep, let's also bring in AMD into the mix.
[8:58] Speaker 2: Hey, it could happen. You don't ever know right, I
[9:01] Speaker 2: could see him probably careful what you wish for.
[9:03] Speaker 3: I know, let's take a look at shairs of AMD,
[9:05] Speaker 3: because we've seen them under pressure as well, down about
[9:08] Speaker 3: eight percent as we speak. And this is after let's
[9:10] Speaker 3: just go to the red headline here on the Bloomberg.
[9:13] Speaker 3: The company sees third quarter revenue of twelve point seven
[9:16] Speaker 3: billion to thirteen point three Street estimate was twelve point
[9:19] Speaker 3: fifty one. Says data center sales to accelerate in the
[9:22] Speaker 3: second half of twenty twenty six. Cees third quarter justin
[9:25] Speaker 3: griss margin of about fifty six percent. Street estimate was
[9:28] Speaker 3: just a hair higher at fifty six point two percent,
[9:32] Speaker 3: And if you look back at the quarter that was actually,
[9:35] Speaker 3: let me give you one more on the third quarter,
[9:37] Speaker 3: so the outlooks he's third quarter revenue actually I said
[9:39] Speaker 3: this twelve point seven to thirteen point three billion. Street
[9:42] Speaker 3: estimate was twelve point fifty one billion. But looking backwards,
[9:46] Speaker 3: second quarter just at EPs was four cents better than
[9:49] Speaker 3: the street was expecting. Second quarter justed operating margin was
[9:52] Speaker 3: twenty seven percent, slightly above the twenty six point nine
[9:55] Speaker 3: percent the street was expecting, and second quarter revenue it
[9:57] Speaker 3: was eleven point five to four billion. That two was
[10:00] Speaker 3: above street estimate of eleven point thirty one. But again
[10:03] Speaker 3: that stocks down within seven percent here, yeah.
[10:05] Speaker 1: Down at this point eight percent as we speak. You
[10:08] Speaker 1: mentioned the numbers. I want to bring in, Man Deep
[10:10] Speaker 1: in ed who are watching this closely, Man Deep, your
[10:12] Speaker 1: first reaction to AMD's report.
[10:14] Speaker 5: I mean, it seems to be an in line print.
[10:17] Speaker 5: And you know, with all these stocks, the visper number
[10:20] Speaker 5: is much higher than what you see in consensus. So
[10:24] Speaker 5: to my mind, the fact that data center number is
[10:28] Speaker 5: mostly inline is or slightly two percent above consensus is
[10:34] Speaker 5: not enough. And you know Nvidia is going to post
[10:38] Speaker 5: a quarter that will be you know, eleven twelve times
[10:41] Speaker 5: bigger than AMD's number when it comes to data centers.
[10:45] Speaker 5: So clearly they're not kind of catching up to Nvidia
[10:49] Speaker 5: in anywhere right now.
[10:50] Speaker 1: And what's that jumps out to you about AMD's reports.
[10:52] Speaker 1: Shares am down about nine percent.
[10:54] Speaker 4: You know, there's there's no massive out performance in the print.
[10:57] Speaker 4: I just note that going into today's close, AMD's are
[11:00] Speaker 4: one hundred and forty percent year to date, and they're
[11:02] Speaker 4: telling the story to investors that in the second half
[11:05] Speaker 4: of this year, data center sales are going to accelerate,
[11:08] Speaker 4: but there's nothing sort of outstanding in the sales outlook
[11:12] Speaker 4: for the third quarter that kind of is additive to
[11:16] Speaker 4: that sort of commentary, and that the last bit, the
[11:19] Speaker 4: only bit I see really is that they see gross
[11:22] Speaker 4: margins of fifty six percent in three Q and consensus
[11:27] Speaker 4: was a touch higher fifty six point two. That you know,
[11:31] Speaker 4: doesn't account necessarily for the drop in after hours.
[11:35] Speaker 2: It's also up what one hundred and forty percent year
[11:37] Speaker 2: to date.
[11:38] Speaker 1: Yeah, I get that's kind of what I'm thinking, right Yeah, Hey,
[11:41] Speaker 1: I want to get back to SpaceX. We're still watching
[11:45] Speaker 1: what's happening with all of these companies, and we're lucky
[11:47] Speaker 1: to have both of you guys with us who can
[11:48] Speaker 1: speak to AMD and SpaceX shares a SpaceX down about
[11:51] Speaker 1: six percent in the after hours. I mentioned that we
[11:54] Speaker 1: have Bloomberg dot com slash Ask Radio as a way
[11:57] Speaker 1: for our subscribers to get in touch with us and
[11:59] Speaker 1: ask questions not just to us, but to add and
[12:02] Speaker 1: man deep in all of our guests. SpaceX's a question
[12:05] Speaker 1: about SpaceX coming in right now, guys. Sanjay out in Irvine,
[12:09] Speaker 1: California writes that the fact that SpaceX is valuation is
[12:13] Speaker 1: already high. Does that make today's earnings more or less
[12:16] Speaker 1: in line with the high expectations? I want to send
[12:19] Speaker 1: that one over to man Deep first valuations question. We
[12:22] Speaker 1: talked with Max Chafkin earlier about the so called Elon
[12:25] Speaker 1: premium and the idea that Tesla is valued more than
[12:28] Speaker 1: any other carmaker despite the fact that you know, in
[12:31] Speaker 1: terms of revenue it doesn't even crack the top ten.
[12:34] Speaker 1: Valuation question about SpaceX, what do you make of it?
[12:37] Speaker 5: Yeah, I mean at one point five trillion, you know,
[12:39] Speaker 5: for a company of SpaceX size, there is a lot
[12:44] Speaker 5: embedded in that number in terms of, you know, growth
[12:48] Speaker 5: expectations and how investors see margins improving. So that's why,
[12:54] Speaker 5: you know, even though I feel like they will do
[12:57] Speaker 5: very well over the next three quarters and in terms
[13:00] Speaker 5: of top line driven by AI, but at this valuation,
[13:04] Speaker 5: and you know, it hypeered at even a higher valuation,
[13:07] Speaker 5: So it's always hard to keep up with the expectations.
[13:12] Speaker 5: And unless you come out and show positive surprises the
[13:18] Speaker 5: way Nvidia has done that constant consistently, I think it
[13:22] Speaker 5: will be hard for SpaceX just to kind of keep
[13:25] Speaker 5: this multiple. So they really have to grow into that multiple,
[13:29] Speaker 5: which I think they should be able to given the
[13:32] Speaker 5: backlog number we are seeing. I mean, all the cloud
[13:34] Speaker 5: companies had backlogs of four hundred billion dollars plus you
[13:38] Speaker 5: know when they reported, and they had an excellent quarter,
[13:42] Speaker 5: all of them, you know, Google, Amazon, and Microsoft. So
[13:44] Speaker 5: from that perspective, SpaceX reporting a forty seven point five
[13:48] Speaker 5: billion dollar backlog. If they keep growing that I think
[13:51] Speaker 5: will be positive for that SpaceX story.
[13:53] Speaker 3: I also want to mention we're getting some additional headline
[13:56] Speaker 3: SpaceX second quarter AI segment cap x a fifteen point
[14:00] Speaker 3: eighty three billion versus an estimate on the street of
[14:02] Speaker 3: thirteen point zero nine billion. I know ed you were
[14:05] Speaker 3: on a live blog like looking for more insight when
[14:08] Speaker 3: it comes to Capex.
[14:11] Speaker 2: Yeah.
[14:11] Speaker 4: No, I think they have positioned this in the CFO
[14:15] Speaker 4: commentary about having a really strong liquidity position. Right, they
[14:20] Speaker 4: have the proceeds of the IPO and then they immediately
[14:23] Speaker 4: went to the corporate debt market and so they have
[14:26] Speaker 4: one hundred billion dollars to play with. But you again
[14:30] Speaker 4: can go back to the prospectus on how capital expenditures
[14:33] Speaker 4: were tracking in the first half of this year. The
[14:36] Speaker 4: consensus number, again there's a note of caution on all
[14:38] Speaker 4: the consensus numbers because this is their first ever quarterly
[14:41] Speaker 4: earnings as a public company. The expectation was they'd spend
[14:45] Speaker 4: about forty five forty six billion dollars this year. A
[14:49] Speaker 4: lot of that's still to come right this, you know,
[14:51] Speaker 4: it's really key information because across those nascent business lines
[14:57] Speaker 4: Starship as a launch sister, orbital data center, and then
[15:02] Speaker 4: the business of like actually selling ais the software at scale.
[15:06] Speaker 4: It's still going to take a lot of spending.
[15:09] Speaker 1: And is this is this report? Are we getting the information?
[15:14] Speaker 1: It's sort of an inside baseball question, but is the
[15:16] Speaker 1: information coming at a cadence that's on par with what
[15:18] Speaker 1: we get from Tesla?
[15:20] Speaker 2: No?
[15:21] Speaker 4: So this I find this really interesting. So, you know,
[15:23] Speaker 4: Tesla presents a pretty detailed shareholder deck each quarter, and
[15:31] Speaker 4: it is multiple pages long. It has a lot of information,
[15:35] Speaker 4: for example, the headwinds and tailwinds to the top and
[15:38] Speaker 4: bottom line, the macro impacts they felt, any political impacts.
[15:44] Speaker 4: They're sort of forward looking strategy as it relates to
[15:47] Speaker 4: software in different markets, et cetera. This is a very
[15:49] Speaker 4: modest release where there's zero commentary from Elon Musk, who's
[15:53] Speaker 4: the CEO of space X. There's zero commentary from Gwyn Shotwell,
[15:56] Speaker 4: who's the president and COO and de facto runs the company,
[16:00] Speaker 4: just the CFO commentary from Brett Johnson, and it's you know,
[16:03] Speaker 4: it's very modest, so there's a lot still to learn.
[16:07] Speaker 4: You know, there's not the same level of detail. There
[16:09] Speaker 4: are fair questions like will Elon must be on the
[16:12] Speaker 4: Earning School? You know, we just we have no definitive
[16:15] Speaker 4: answer in that one assumes. So what kind of role
[16:17] Speaker 4: to Gwyn shot Well and Brett Johnson play on the
[16:19] Speaker 4: Earning School? Are like are they the stars of the
[16:21] Speaker 4: show or is it like Tesla where Elon's still the
[16:24] Speaker 4: star of the show. We just don't know, and that's
[16:26] Speaker 4: kind of fun.
[16:27] Speaker 2: So do we have an idea man deep of how
[16:30] Speaker 2: much cash they're burning through?
[16:32] Speaker 5: I mean, they are investing fifteen billion plus in capex
[16:37] Speaker 5: every quarter and they're not generating any free cash flow
[16:43] Speaker 5: as of now. I mean, the startling business is the
[16:48] Speaker 5: only one that seems to be generating free cash flow
[16:51] Speaker 5: and that seems to have misconsensus. So from that perspective,
[16:55] Speaker 5: I mean, they have this challenge in terms of meeting
[17:00] Speaker 5: expectations around free cash flow, unlike the hyperscalers that clearly
[17:05] Speaker 5: have strong balance sheets to invest in, you know, capex.
[17:10] Speaker 5: So from that perspective, I feel there is a ceiling
[17:13] Speaker 5: to how much higher they can go in terms of
[17:15] Speaker 5: capex increases. I do think they will raise the capex,
[17:20] Speaker 5: but even at sixty billion dollars rund rate, how high
[17:23] Speaker 5: can they go given they don't have the balance sheet
[17:28] Speaker 5: and the free cash flow that the other hyperscalers.
[17:30] Speaker 4: Have ed Come on in, you have a question, Yeah,
[17:35] Speaker 4: so I have a question with it. I rely on
[17:37] Speaker 4: man Deep's expertise and he's modeling. So in the first
[17:41] Speaker 4: half of the year, SpaceX had about three point five
[17:45] Speaker 4: billion dollars operating cash flow, but the capital expenditures for
[17:49] Speaker 4: the first half of the year were like twenty nine
[17:51] Speaker 4: billion dollars. So you just do the operating cash flow
[17:54] Speaker 4: minus the capex and that gives you a sort of
[17:57] Speaker 4: an approximation on the negative free cash flow overall? Am
[18:00] Speaker 4: I doing the maths right on that?
[18:02] Speaker 5: That's right? Yeah?
[18:03] Speaker 4: So I see again like this is me doing math
[18:06] Speaker 4: in my head and though in my high school teachers
[18:08] Speaker 4: it wonn't my strong point, but I see, let's say,
[18:12] Speaker 4: let's say twenty five billion dollars of negative free cash
[18:15] Speaker 4: flow and aggregate across those businesses in the first half.
[18:19] Speaker 5: Yeah, Look, I think what you will see is the
[18:23] Speaker 5: cloud rental business is going to be a lot better margins.
[18:27] Speaker 5: So that's the part that you know, when you do
[18:31] Speaker 5: the first half calculations and analyze it, you you're expecting,
[18:37] Speaker 5: maybe you know there will be negative fifty billion dollars
[18:39] Speaker 5: for the full year, But my guess is that cloud
[18:43] Speaker 5: rental business is going to be positive in terms of
[18:46] Speaker 5: the margin profile. Now, it's not going to be as
[18:49] Speaker 5: high as the hyperscalers. So Hyperscalers, as we have seen
[18:53] Speaker 5: this quarter, they have mid thirty percent margins when it
[18:56] Speaker 5: comes to their cloud businesses. In the case of space.
[19:00] Speaker 5: Even in a best case scenario, that AI segment would have,
[19:04] Speaker 5: you know, low to mid teens margins, but at least
[19:07] Speaker 5: it's positive. So from that perspective, if you see AI
[19:11] Speaker 5: business at the end of the year around a twenty
[19:14] Speaker 5: five billion dollar run rate with low to midteens margins,
[19:18] Speaker 5: then it will offset some of that negative twenty five
[19:21] Speaker 5: billion dollar you know, burned that you've seen for the
[19:25] Speaker 5: first half. And that's where I think there's a good
[19:28] Speaker 5: story to tell in terms of margin improvement driven by
[19:31] Speaker 5: that cloud rental business.

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