SpaceX’s IPO debut on June 12th was, by any measure, historic. For those less familiar with the story, SpaceX priced its IPO at $135 per share, selling roughly 556.6 million shares to raise ~$75 billion at a valuation near $1.75 trillion, the largest initial public offering ever completed. Shares opened at ~$150 and closed the first day ~$161, up roughly 19% from the offer price. The rally continued from there, and during its first week of trading SPCX reached an all-time high of ~$225, briefly pushing its market capitalization above $2.6 trillion. With Greek mythology having its moment at the box office this week, it’s hard not to draw a comparisons between the story of Icarus and SpaceX.
Since the IPO, SpaceX’s stock has pulled back, falling below its offering price intraday for the first time on July 15th and closing that day at ~$135, a decline of more than 40% from its peak. It has since lost almost $1 trillion in market value since its peak, and as of Friday, July 17th, the stock closed below $125 a share, despite analyst 12-month price targets averaging $240 a share.
Looking ahead, the bull case for SpaceX rests on its structural moat of over a decade lead in launch experience and payload volume, plus diversification across reusable rockets, Starlink’s broadband business, and an AI unit built around Grok and X following the 2026 xAI acquisition. The bear case centers on valuation and cash burn, the AI segment alone spent $7.72 billion and posted a $2.47 billion operating loss in Q1 2026, along with a governance structure where Musk holds 42% of shares but 85% of voting power, and lockup-related selling pressure.
Q2 earnings: Shaping Up to Be a Strong Quarter
Second quarter earnings season is off to an unusually strong start. Based on FactSet’s most recent data, 10% of S&P 500 companies have reported actual results for Q2 2026, and 88% have beaten EPS estimates, well above the 5-year average of 78%. Companies that have reported are beating estimates by 16.4% in aggregate, more than double the typical margin. That combination is driving the blended earnings growth rate for the index to 24.7%, up from 23.2% at quarter-end, which would mark the second straight quarter of growth above 20% and the seventh straight quarter of double-digit growth. Revenue trends look just as healthy, with 85% of companies beating estimates and blended revenue growth at 12.8%, which would be the strongest quarterly showing since Q2 2022.
Sector results are more uneven. Ten of eleven sectors are posting growth, led by Energy, Information Technology, and Materials, while Health Care is the lone sector expected to post a year-over-year decline. Financials has been the biggest source of upside surprise over the past week on strong results from the large banks. Growth also remains concentrated at the top: the “Magnificent Seven” are projected to post 31.1% earnings growth versus 22.8% for the other 493 companies, and Micron and Nvidia alone are the two largest contributors to the index’s overall growth this quarter.
Looking ahead, analysts are calling for earnings growth of 27.0% in Q3 and 24.6% in Q4, with full-year 2026 growth projected at 24.5%. The forward 12-month P/E ratio sits at 20.3, above both the 5-year and 10-year averages, though it has eased slightly from 20.4 at quarter-end. With 86 more S&P 500 companies reporting this week, the coming days should clarify whether this quarter’s unusually strong beat rate holds up as more of the index reports.
AI Capex : The Bill Keeps Climbing
Given the recent volatility in AI related stocks, we think the infrastructure buildout story is worth touching on. Amazon, Microsoft, Alphabet, Meta, and Oracle are on track to spend somewhere between $700 billion and $900 billion combined on capital expenditures in 2026, a roughly 36% increase over 2025. Amazon alone has guided to $200 billion in capex this year, while Meta raised its full-year guidance as high as $145 billion citing higher component costs and continued data center buildout.
The debate worth having isn’t whether the spending is happening, it clearly is, but whether it will continue and whether revenue can keep pace. Roughly 75% of 2026 capex is now AI-specific infrastructure, and some hyperscalers are spending 45% to 57% of revenue on capex, ratios previously seen in capital-intensive industries like utilities and telecom. That level of spending intensity raises the stakes considerably if AI-driven revenue growth disappoints, which is increasing the sensitivity of these hyperscaler stocks to potential pullbacks.
Hope you have a great week, and remember, volatility is the price of admission.
Morgan, Josh, and the entire team at Park City Wealth Advisors
