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I don't think AI will lead to significant job losses. Right now the supply and demand ratio for chips is 13 to one, and you've seen it with Nvidia, you've seen it with AMD. I think investors continue to underestimate the scale and scope of this AI revolution. But investments in AI create inflationary pressure on memory and energy consumption.
Um, these are bottlenecks. The reality is that raising Fed rates will not slow down spending on AI. It is technology that will push this market up, and I think that is what is happening in the spotlight right now. What are you following in the technology field? I'm actually looking at the income of the "magnificent seven." If they don't make money from advertising, from their devices, from cloud services, then I'm worried, because that's what pays for all the chips that go into data centers for AI.
But they make money , right? They are making money, and that's good news—they are growing at double-digit rates. I mean Google Cloud, 80% year-over-year growth. I want to say that these numbers that companies show are double-digit. 85% of Fortune 500 companies don't even have double-digit growth. They all have single-digit indicators , and only technology ensures this growth.
Does this worry you, or do you take it in stride, because technology is the future and should be what keeps us all afloat? It doesn't really bother me, but it shows the difference between regulated and unregulated industries. The technology sector is unregulated and it can grow. As opposed to whom, for example, utilities, which are strictly regulated?
I mean, they're all limited. Healthcare, government. Public sector. I want to stay on the topic of big tech and talk about SpaceX. Lou, Mike and I were discussing this: they plan to go back into the debt market, raise about $40 billion, and that will go to finance Nvidia's new chips. The deal will be led by Apollo Global Management .
They plan to raise about $10 billion in bank loans and $30 billion in investment debt . They have a rating of around triple B, so this is the lower limit of investment grade . But this is the second time they've entered the debt market since that colossal IPO. But hey, at $160 per share, Elon Musk is a trillionaire again, and that's okay.
This is crazy, right? I mean, are chips the new Bitcoin? So we essentially jump on the bandwagon, evaluating chips, then AI, and then tokens on the backend. And that's why first-mover advantage matters . If you were Anthropic or OpenAI, you would say, "Oh my god, what a shame we weren't first." Yes.
Have we missed the bottom on SpaceX? Everyone told me, and he did too: "Wait until it drops below 100." "Wait until it drops below 100. It drops to 90. It drops to 80." You know, after an IPO, a year later, stocks usually don't show good results at the start. You blink—and you miss everything. No. It's like Facebook, when after the IPO the price fell below the initial price and then started to soar.
It's the same thing, you all said the same thing back then. Like, "this thing is going to take off now." And why should it take off ? It's not just about the AI story. Space history has n't even begun yet. True. I mean, Elon is buying 5G spectrum from TV channels to switch to terrestrial coverage.
So, I want to go back to "The Magnificent 7," because everyone thought of it as the one monolithic trade, right? You could have just bought the whole basket. I argue that it's like a boy band that broke up, and now you have to choose your own Justin Timberlakes. Among the Magnificent 7, who is your favorite or who is best positioned for the next phase of AI growth?
I like Google because they have everything: from a chip to an agent. On one hand, there are TPUs that people are starting to switch to. They have generative AI, the cloud—everything is running at full capacity. YouTube, search, and what does Google Cloud do? There is absolutely everything there. Besides, is n't Google a call option on quantum technology?
We've been hearing for over 20 years that quantum computing is the next big breakthrough. So if it ever happens, who will be the leader in quantum computing in the world? Ultimately, it will be Google and IBM. Why? IBM, wow. IBM is the company that created this category. They were pioneers. And they are the ones making these investments now.
We just met with Arvind on Monday, and he was talking about where the quantum realm is headed. So Google is a safer bet on quantum technology than smaller, more volatile stocks that can jump 10% one day and fall 10% the next. We are in the early stages of developing quantum technologies like Quantinuum.
They have a great model. This gives you the opportunity to change, evolve, and continue to grow, as it is essentially their version of getting chips and stability. That's it . So, creating a qubit is what they are trying to achieve. They are already there. Is n't that right? But the question is , what are you using quantum technology for?
We will find out in about 2 years. The Financial Times reported today that SpaceX is in talks to raise about $40 billion in funding led by Apollo Global Management with one goal in mind— buying more Nvidia chips. The deal structure involves about $10 billion in direct , meaning debt considered safe enough for conservative investors like pension funds to hold.
The deal is reportedly set to close sometime in 2027. That's why it's such a big number. Last month, Musk said SpaceX's Colossus 2 supercomputer the end of this year. During SpaceX's August earnings conference call, Musk told investors that the company had decided to build exclusively on Nvidia, specifically touting the Vera Rubin platform, Nvidia's next-generation chip and processor combination, as the best available artificial intelligence architecture.
SpaceX CFO Bret Johnson also noted that capital expenditures for the year will approach $65 billion. So, this $40 billion investment is not a minor project. That's a huge portion of SpaceX's total spending for the year, and it all goes to a single supplier. And the relationship between Musk and Nvidia is two-way here, which is worth dwelling on in more detail.
Nvidia isn't just selling chips to SpaceX and its AI venture xAI. She actively helps finance these purchases. Earlier this year, Nvidia reportedly committed up to $2 billion of its own capital as part of xAI's $ 20 billion funding round , specifically to help XAI acquire more Nvidia GPUs for the same Colossus 2 facility.
Additionally, Nvidia separately owns a stake in SpaceX itself, which was recently valued at around $21 billion . So you have Nvidia investing in SpaceX, which invests in XAI, and now SpaceX is turning to outside lenders for tens of billions, which then turns into chip orders going back to Nvidia. The market reaction suggests how investors perceive it .
SpaceX shares, which only began trading publicly in June after an $86 billion IPO, fell about 1% in over-the-counter trading on the news, while Nvidia shares rose half a percent. One trader on StockTwits summed up the sentiment succinctly: “Bearish for SpaceX’s balance sheet , bullish for Nvidia’s backlog.” That's the essence of this compromise.
SpaceX is taking on serious debt, while Nvidia is getting a guaranteed buyer, securing billions in future chip sales. It's also worth considering this in the context of SpaceX's overall financial health . The $40 billion raise is equivalent to about 1.8 % of SpaceX's current puts the company on the verge of investment grade.
One analyst also calculated the burden of interest payments. Each percent annual interest on $40 billion of debt equals $400 million per year in interest payments alone if the entire amount remains outstanding. This is the true price of being at the forefront of AI computing power. And it's part of something much bigger than just SpaceX.
This year, Nvidia has built an entire funding ecosystem around itself, partnering with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR to mobilize over $500 billion in outside capital specifically for AI infrastructure. SpaceX's request for $40 billion is just another element that fits into this mechanism.
By the way, this is not the first such deal for Apollo. In June, the company led a separate $35 billion financing package, although it involved chips from Broadcom, one of Nvidia's real competitors. So Apollo is playing on both sides of the “ chip wars,” funding Nvidia’s biggest customers while supporting its competitors.
A quick addendum to yesterday's news as it continues to spread. Reflection AI's Beam open-weight model continues to appear in leading publications today, and its formulation is becoming clearer. The basic message has not changed. A 501 billion parameter model that uses only 23 billion parameters for a single task, making it three to four times cheaper to operate than the Chinese counterparts it competes with.
But it's remarkable how many different publications now use the same headline . An American open-source model backed by Nvidia, designed specifically to challenge China's dominance in the field of free AI tools. This repetition matters. When one publication covers a story, it's news. When five or six independent media outlets report it the same way within 48 hours, it's a signal that the AI industry and policy circles view this as a real turning point in the open-source AI race, not just the launch of another model.
Reflection positions Beam less as a product and more as a manifesto. This is proof that an American company, backed by money and Nvidia chips , can match what DeepSeek, Kwai, and Z.ai were giving away for free. So today, SpaceX is borrowing $40 billion to continue powering its data centers with Nvidia chips, and Nvidia doesn't even have to lift a finger to make a profit.
The company has already invested in a buyer on both sides, and in the meantime, China's open source response is gaining momentum in the news headlines. No matter which way you look at it, it all leads back to the same company. Let me know what story you want me to explore in more detail.
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