E-Paper
Wall Street AI boom faces reality check as SpaceX earnings and US jobs data arrive
SpaceX earnings, US jobs report and AI spending will test Wall Street’s rally as investors look for signs of real returns from the AI boom.
Wall Street is heading into another important week after a strong run for stocks. The coming week will bring several major events that could test whether the current stock-market rally, especially the AI boom, can continue. The biggest events include SpaceX’s first earnings report as a public company on Tuesday and the monthly US jobs report on Friday.
The S&P 500 rose 0.7% on Friday and gained about 1.1% for the week. The Dow Jones Industrial Average climbed 0.5% on Friday and also finished the week up about 1%. The Nasdaq Composite rose 1% on Friday and gained about 1.6% for the week, according to Yahoo Finance.
SpaceX earnings put AI spending in focus
Last week's heavy earnings calendar has set up an equally important week ahead. Investors will now look closely at whether companies are getting enough returns from the huge amounts of money they are putting into AI. The biggest test will come from SpaceX, which is part rocket company and part AI company.
SpaceX is preparing to release its second-quarter results on Tuesday. This will be the company's first earnings report after its record-setting IPO, making the event especially important for investors. Yahoo Finance said investors will want SpaceX to answer a question that has already become a major issue for other Big Tech companies: How much are you spending, and do the ends justify the means?
The company is expected to make huge investments in infrastructure, including AI-related projects. Investors want to know whether those investments can eventually produce enough revenue and profits to justify the massive spending.
SpaceX stock faces more pressure
SpaceX shares have fallen nearly 30% from their $150 market debut price last month. The stock is also down about 50% from its all-time high of $225.64, according to Yahoo Finance. That makes Tuesday's earnings report even more important because investors are looking for something that could help the stock recover.
SpaceX's lockup period expires on August 6. Under the company's lockup plan, as much as 20% of its shares could become available for sale. Investors are worried that this additional supply could put even more pressure on the stock.
Also read: Why are SpaceX investors asking Elon Musk to paint Starship pink?
Musk is reportedly still pushing for a possible merger between SpaceX and Tesla. The Wall Street Journal reported on Friday that executives are discussing how Tesla's China business could be handled if such a merger happens. SpaceX's government and national defense contracts could create concerns for the Chinese government.
SpaceX spending could rise sharply
S&P Global Visible Alpha analyst Melissa Otto said investors will be watching SpaceX's capital spending closely when the company reports its results. "SpaceX's capex numbers are expected to increase from $48.7 billion this year to $118.4 billion in FY 2028. … In addition, SpaceX's overall debt is also projected to grow over 5x from $41.7 billion this year to over $218.0 billion in FY 2028," Otto noted, via Yahoo Finance.
The concern is not simply that SpaceX is spending a lot of money. The bigger concern is whether those investments will eventually generate a healthy return. The same issue is facing major AI companies and large technology businesses such as Oracle, Alphabet and Meta.
Analysts are looking for an adjusted loss of $0.23 per share and revenue of $6.81 billion. Investors will therefore be looking beyond the headline numbers and paying close attention to spending, debt and future growth plans.
US Jobs report comes Friday
Economists expect the US economy to have added about 88,000 jobs in July, compared with 57,000 jobs in June. While that would still be below the more than 100,000 jobs being added per month in late 2025, economists generally view the expected level as healthy, according to Yahoo Finance.
If July's job growth comes in around 88,000 or weaker, it could support the Federal Reserve's decision to hold off on raising interest rates. But a much stronger report could create a very different situation.
If the jobs report is significantly stronger than expected, investors could worry about a combination of strong employment and sticky inflation. That could increase the case for higher interest rates and make it harder for the Fed to cut or keep rates low.
AI is starting to affect workers
The jobs data is important for another reason. Investors want to know whether the rapid adoption of AI is beginning to hurt workers. A study published last week by Apollo Global economists Torsten Sløk and Sania Edlich found that workers in fields with high AI exposure experienced slower wage growth. However, the researchers also found that AI exposure had little effect on employment itself.
"The evidence suggests that the first measurable labor market effect of AI adoption has been wage compression rather than employment displacement, with the burden falling disproportionately on the least economically secure workers," the economists wrote, via, Yahoo Finance.
The AI story has mostly focused on how much companies can grow and how much money they can make. But the latest labor-market research raises another question, if AI does not immediately eliminate jobs but puts pressure on wages, who is actually benefiting from the technology?
AI boom faces a reality check
SpaceX's earnings will show how one of the world's most ambitious companies is handling enormous spending and debt. Meanwhile, the jobs data will show whether the broader economy remains strong and whether AI is beginning to affect workers' wages.
The market has rewarded companies that are leading the AI race, but investors are becoming more focused on return on investment, cash flow, debt and actual earnings.
SpaceX's first public-company earnings report could therefore become an important test of whether investors are still willing to accept enormous spending in the hope of much bigger future returns. The AI boom is still one of the biggest themes in markets, but this week's data could show whether the market's huge expectations are supported by real economic and financial results.
