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Of all the data in the Goldman Sachs report on SpaceX, here's a line that really struck me. Quote : "We reaffirm our 'buy ' rating and raise our 12- month price target on SpaceX shares from $220 to $230." End of quote. I know, what can you really understand from this? Everything is simple. This increase, this $10 from 220 to 230, confirmed the original figure of 220, which means that when the stock was at 167, a lot had changed compared to the original 140.
What do I mean by " confirmed"? Well, when Goldman Sachs and a number of other firms first wrote about this company, they were full of epithets but short on numbers. It seemed like they were all just making them up, to be honest. SpaceX shares were trading at 120, so a price target of 220 seemed almost absurd.
I mean, who even knows where they got that number from? But when I saw the latest price target increase, I said to myself, “ Wait a minute. "Maybe there really is some logic in the analysis." When dealing with true speculative plays, you almost never see target prices increase until hot money covers the target price.
And by then it's too late. However, in the case of SpaceX, these Goldman analysts looked at all the incredible things happening right now and decided to get ahead of the curve . And you know, I understand them. They make so much money renting computing power from SpaceX that the company plans to borrow $40 billion to buy more chips from Nvidia, as I mentioned at the beginning of the program.
They can expand the business. Why not? Musk can monetize these chips immediately. At this rate, SpaceX could become Nvidia's largest customer. This is fantastic news for both parties. As I said, I don't think this is appropriate for our investment trust, but you know what, club members? I think you should keep an eye on this because it's becoming increasingly likely that SpaceX will succeed much sooner than Tesla.
Increasing the target price for space exploration technologies. We're going live this morning. He's just happy that it's Friday. Let's start with your general overview of the situation. Yes, perhaps this could have become a mantra for some traders this week. The situation was volatile and we saw some divergence between the major indices, right?
You mentioned this. The S&P 500 fell nearly a percent this week. The Nasdaq fell about 3%, more than 3% this week. So we saw pressure on this index. The good thing , Diana, is that we don't see investors exiting the market en masse in general. I think they come from maybe some of the leaders in technology.
We saw some tensions start to emerge within some of the big tech companies, in sectors within the tech market . But if you look at the S&P 500 index with equal weighting, it is up 0.9% since the beginning of the week. So, we see that the market is now becoming broader. Maybe that's what we needed , because some of these sectors, whether it's healthcare or consumer staples , were lagging a little bit.
So , what could be the reason for this? Isn't it that they are moving into less popular sectors, perhaps selling and taking profits in technologies that have led the markets for most of the year? Well, maybe. Well, maybe it's also a safe bet, Diana. We saw this in the bond market this week, where we saw higher- than-expected CPI inflation, and the CPI was significantly higher than Wall Street had expected.
So the inflationary pressures are there, but we actually saw bond yields fall this week because of this demand for the safety of Treasury bonds. We have an inverse correlation. You know, bond prices are rising, yields are falling. And I think we've observed that a little bit. Perhaps that's why investors have moved into healthcare security , consumer staples, perhaps moving slightly away from discretionary sectors, information technology and communications services.
But if you look at the sectors of the overall market that are under pressure. SMH, an ETF covering technology and semiconductors, has fallen 7.5% since the beginning of the week. The Philadelphia Semiconductor Index has fallen 8% since the beginning of the week. So, we had quite large drawdowns in the market leaders.
Now, will this continue? That's the question. We will get a lot of earnings reports next week. This is what investors will focus their attention on. Meta Platforms, Tesla, IBM, Lam Research. Netflix and United Airlines will report after the close of trading on Tuesday. We will receive reports from industrial companies , not only technology companies, but also industrial companies, as well as some blue chips.
So yes, I think investors' attention will shift directly to earnings reports during this volatile week as we have little economic data. And you also need to monitor geopolitical tensions. Crude oil has stabilized at $95–96 per barrel. This is not good for the markets at this point. So, yes, there are a lot of variables in this market.
So maybe it's a good day to end this week. Many variables. And let's talk a little bit about that rotation and companies that have fallen out of favor, like Coreweave and chipmaker stocks. We have the names of companies from the memory sector that have been under pressure all week. Let's delve into Coreweave.
Yesterday, it regained some of its lost ground. Today she is retreating again with Nabius. What are you paying attention to on this front? Well, I'm not going to brag, Diana, but I mentioned yesterday that if Jensen Huang made any positive comments about Coreweave , it could potentially stop the stock from falling.
Remember, stocks fell 15.5 percent on Wednesday. Yesterday the situation completely changed. The shares fell about five dollars, but at the end of the session rose by more than 5% thanks to Jensen Huang's statement. Their bonds have stabilized somewhat . They experienced a serious sell-off on the secondary market.
This pushed bonds to around 15% for five-year notes. Well, they have stabilized a bit. It helped everything. Then, sell-side analysts said it was exaggerated. This is an overreaction. They create the partnerships they have . Nvidia, Meta Platforms, OpenAI and others are kind of saving this company. You saw this reversal not only in Coreweave, you also saw Micron rise from the lows, which brought the stock into positive territory.
We are now seeing additional weakness in some memory chip manufacturers; Seagate and Western Digital received target cuts from Wells Fargo today. So perhaps this is a reboot of the parabolic movements of memory chip makers, CXMT and some other comments that have surfaced recently suggest that the peak could fall in 2029, although Micron and others have extended their forecasts into the future.
So if this boom-bust cycle starts to happen, and you have these stocks after parabolic moves over the last 12 months, that's probably going to create some pressure. But next week we'll start getting earnings reports, and some stabilization in the tech sector will likely help the overall market. Okay, and let's talk about Tesla.
When I saw the image of the car taking off, I felt like I was in the movie "Back to the Future," you know, the feeling that the future has already arrived. What is your opinion? Yeah, better late than never, maybe, for the second-generation Tesla Roadster , which was supposed to be delivered, well, about eight years ago, almost a decade ago, right?
This has been in development for a long time, but like you, Diana, I saw this video that Tesla released and thought: was this generated by artificial intelligence? This is madness. Nobody, I think, expected this , you know, combination of their engineering with jet propulsion, where the car creates suction, goes up a ramp, flips over , lands, zero to 60 in less than a second, jumps over, you see there, the Cybertruck and other vehicles, and lands .
Yes, it was, I think, much better than anyone expected. I think it's the coolest thing in the world. Now remember, they are going to start production in 2028 . They haven't set a price yet. There is speculation that it will be over 200 thousand for the base model alone , and up to 250-300 thousand. They are already taking orders.
But they were taking orders for this second-generation Roadster years ago, right? They had to refund many customers. But, despite this, it will not become profitable for Tesla. And I think everyone understands that. But the successes they have achieved in terms of technology are simply incredible. I think the event was really cool.
Yes, we'll see what happens next. I mean, the stock went up about 3% on this news. But I think this just highlights how far ahead of everyone else Elon Musk, Tesla, and SpaceX are . Engineering teams worked together to create this event and this car. And I just think, you know, if you're going to doubt Elon Musk, maybe you can doubt the terms he usually uses for products.
But at the same time, you can't deny the fact that it is way ahead of other automakers, tech companies, and everything it does. Yes, that's true. Uh-huh. . A new problem has emerged in the AI boom . It's not just about how powerful this technology can become . Now investors are asking a much more important question.
Who will pay for all this ? Coreweave, SK Hynix , Micron, Dell, and Oracle—all faced strong sales pressure. Coreweave alone reportedly lost about 13% in just six or seven trading days. And this fear extends to the entire semiconductor industry. But that's what makes this situation so interesting. The demand for AI computing remains high.
Companies make deals. Data centers continue to be built . So why are investors suddenly rushing to the exits? The answer perhaps boils down to one thing—the cost of capital. Let's figure it out. For years, investors have focused on how quickly demand for AI will grow. Now they are asking whether the companies building this infrastructure will be able to raise enough funds for further growth .
Building an AI data center costs billions of dollars. Companies need advanced chips, servers, power, cooling systems, and se costs depend on borrowed funds. When interest rates rise or lenders become more cautious, it becomes more difficult to finance such projects. Even if demand is high, the business case may become less attractive.
This is exactly the fear that has gripped the market now. Take CoreWeave for example. The company continues to sign large contracts, but investors are looking beyond them. They want to know how the company will finance its future expansion. A contract may guarantee years of profit, but companies still need money to build the infrastructure to provide these services.
If financing becomes too expensive, profits come under pressure. And if investors believe borrowing will be harder in the future , stocks could fall even as businesses continue to attract customers. And so this sale is not just about demand. It also concerns whether the money needed to support this demand will remain available at a reasonable price.
And CoreWeave is not the only company facing this issue. Oracle has also come under pressure due to concerns about its capital and debt needs. Discussions mention approximately $15 billion in debt at CoreWeave and about $167 billion at Oracle. These numbers help explain why investors pay so much attention to the cost of borrowing.
Higher interest rates affect each company differently. A company with strong cash flow and a healthy balance sheet can handle them. A company that is forced to borrow heavily to finance its growth has much bigger problems. But there is another side to this story. Loans backed by Nvidia chips have reportedly proven more resilient than some public debt instruments tied to AI infrastructure.
This is important as lenders try to understand the value of the equipment behind these loans. If chips retain their value for years, they can become useful collateral. This would help companies raise funds for equipment they already have. But there is one nuance. AI chips do not exist in a simple standard market, where each unit of equipment has the same cost.
Different companies will build and operate their data centers differently. The chips can be used under various contracts, and their value depends on how effectively they will work in the future. There is also a risk that new technologies will make older chips less competitive . So the real question isn't simply whether Nvidia chips have value.
The question is how much value they will retain, how easy it is to recover, and whether lenders are willing to accept them as collateral. If this funding model works, it could support further investment in AI infrastructure. If not, the entire system may face greater pressure. Now this brings us to a broader discussion.
Is the AI boom exhausting demand , or is it facing a funding problem? These are two completely different situations. If demand falls, companies that supply chips and servers could face weaker orders. But if demand remains high and financing becomes more expensive, the pressure could be greater on companies with weak balance sheets and large borrowing needs.
This distinction is extremely important because some of the companies causing the sell-off are not in the same financial position. CoreWeave and Oracle are in dire need of funding. Nvidia, Broadcom, and Micron have a different business model and financial profile. Their shares may fall during a general market sell-off, but that doesn't mean their core business has the same risks.
Investors need to separate companies that can finance their growth from those that depend on constant external capital . And now the market is trying to understand where this line is drawn. There is another important issue affecting sentiment— expectations for AI revenue. Much of the industry's future spending depends on a relatively small group of companies, including OpenAI and Anthropic.
These AI labs are expected to turn powerful models into products that generate enough revenue to cover the huge computing costs. If their revenues grow rapidly, demand for chips, servers, and data centers could remain high. But if their income doesn't meet expectations, investors may start to question the spending plans built around them.
And that's why the latest numbers from Anthropic have attracted so much attention. The company reportedly generated $16.8 billion in revenue in the third quarter. However, the market reaction was negative. Why? Because in a market driven by huge expectations, a big number isn't always a good enough number.
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