Tech investors got two conflicting signals about artificial intelligence on Tuesday. On one hand, chipmaker Nvidia got a high-profile endorsement from Elon Musk, who said SpaceX will build its AI services exclusively on Nvidia systems. On the other, SpaceX's latest earnings report showed capital spending surging to $18.37 billion in the second quarter, a stark reminder that the AI boom comes with a hefty price tag.
SpaceX shares fell more than 12% after the company disclosed the spending figure, even as it beat expectations on other metrics. The selloff underscores a growing tension in the market: companies are pouring billions into AI infrastructure, but investors are starting to question whether the returns will justify the costs.
Musk's Nvidia endorsement
Elon Musk's comments about Nvidia were a bright spot for the chipmaker, whose stock climbed on the news. Musk said SpaceX will rely exclusively on Nvidia systems for its AI services, a vote of confidence that carries weight given Musk's track record with high-tech ventures like Tesla and xAI.
Nvidia has become the dominant player in AI chips, with its graphics processing units (GPUs) powering everything from large language models to autonomous vehicles. The company's products are in such high demand that customers often wait months for delivery. Musk's endorsement reinforces Nvidia's position as the go-to supplier for AI compute, even as competitors like AMD and Intel try to gain ground.
For everyday investors, this is a reminder that Nvidia's fortunes are tied to the broader AI spending cycle. When big companies like SpaceX commit to Nvidia, it signals continued demand. But it also means Nvidia's stock can be volatile if that spending slows.
SpaceX's capex shock
SpaceX's capital expenditure—money spent on long-term assets like equipment and infrastructure—jumped to $18.37 billion in the second quarter. That's a massive number, especially for a company that's still privately held but whose shares trade on secondary markets.
Investors reacted negatively because high capex can squeeze cash flow and delay profitability. In the AI race, companies are spending heavily on data centers, chips, and other infrastructure before they see meaningful revenue from those investments. SpaceX is no exception, as it builds out satellite internet and other AI-driven services.
The 12% drop in SpaceX shares reflects a broader market mood: investors are rewarding companies that show AI revenue growth, but punishing those that spend big without clear near-term payoffs. This dynamic has played out across the tech sector, with some stocks soaring on AI optimism and others tumbling on cost concerns.
What it means for investors
For those watching the AI trade, the key takeaway is that the story is no longer just about potential—it's about execution and cost control. Companies that can demonstrate efficient AI spending are likely to be rewarded, while those that burn cash may face selloffs.
Nvidia's endorsement from Musk is a positive signal, but it doesn't change the fact that the chipmaker's stock is priced for perfection. Any sign that AI spending is slowing could hit Nvidia hard. Meanwhile, SpaceX's capex jump is a cautionary tale for investors in any AI-heavy company: growth often comes with a price.
Retail traders have already shown interest in buying the dip in SpaceX shares, snapping up $22.7 million in the first hour after the drop, according to a separate report. That suggests some investors see the selloff as an opportunity, but it also highlights the volatility that comes with high-growth, high-spend companies.
For those looking at the broader tech landscape, the lesson is to keep an eye on capital expenditure trends. When companies like SpaceX or Nvidia report earnings, the capex numbers can be just as important as revenue and profit. Investors should also watch how companies like Anthropic's in-house chip team and others respond to the AI supply crunch, as that could shift the competitive dynamics.
Ultimately, the AI boom is still in its early innings, but the market is becoming more discerning. The days of blindly rewarding any company with an AI story may be ending. Instead, investors are starting to ask hard questions about when the spending will translate into profits.
For now, Nvidia's nod from Musk is a win, but the market's reaction to SpaceX's capex shows that the AI price tag is still a source of anxiety. As more companies report earnings, expect the debate over AI costs to intensify.
