The Insider Cash-Out Continues

Let's try this again... AMD's 'not good enough' quarter... Investors don't want chipmakers spending so much, either... The spending, and the bull market, are going to continue... SpaceX's first earnings report... More insiders are about to cash out...

Stop us if you've heard this before...

The U.S. and Iran are set to announce a deal to reopen the Strait of Hormuz, according to a report from Axios.

The agreement would put a ceasefire back into place, and it includes a 60-day arrangement for Iran and Oman to jointly operate the Strait of Hormuz.

Later this morning, Iran's foreign ministry announced that it was in the final stages of an agreement with Oman over which country would control certain routes in the Strait of Hormuz.

Axios' report covers almost the same language that was included in June's "memorandum of understanding" that introduced the short-lived ceasefire. And it's the third headline in as many days this week that a deal is close with few details.

So forgive us if we take this latest news with a heavy dose of salt.

As we wrote yesterday, the market is treating any "Iran risk off" news as a tailwind for stocks right now. We saw that again today... The Dow Jones Industrial Average rose to new all-time highs and oil fell about 1%, though tech earnings weighed on both the S&P 500 Index and the Nasdaq Composite Index.

It's getting harder for chipmakers to beat lofty expectations...

Semiconductor companies have seen incredible growth in recent months. And while the stocks have cooled off from their tear to start the year, they're all still up big in 2026. Advanced Micro Devices (AMD) has been one of the faces of the AI chip boom...

From the start of the year through its June 30 peak, AMD's stock soared 171%. That's not just down to hype. AMD's business is thriving...

In the second quarter, revenue jumped 50% year over year to $11.5 billion. And AMD's data-center business saw its sales more than double to $6.7 billion.

Earnings followed suit... AMD's net income jumped 163% year over year and 66% from the previous quarter to $2.3 billion.

Investors didn't reward the company today, though, with the stock falling more than 7%.

All of the above metrics beat Wall Street's consensus estimates. But, according to analysts at Deutsche Bank, some Wall Street banks had even higher expectations – and AMD's quarter didn't quite match those.

One problem is that AMD faces the same pressure we've seen facing other AI stocks...

Chipmakers can't spend, either...

In recent weeks, we've written about how investors don't want to see companies spend aimlessly on AI. They want to start seeing returns on investment.

That's a big reason we saw Alphabet (GOOGL) and Meta Platforms (META) fall after earnings, while Amazon (AMZN) and Microsoft (MSFT) were rewarded. That same idea now applies to chipmakers...

In the second quarter, AMD's capital expenditures ("capex") surged to $800 million. That was nearly triple the $282 million in capex from the same quarter last year, and it was well above Wall Street's expectation for $300 million.

Also, while AI data centers are snapping up chips at elevated prices for now, increased capex could lead to a chip glut down the road.

The semiconductor industry is incredibly cyclical. Right now, with soaring demand for data-center chips, companies like AMD can raise prices and book higher profits.

But as they invest in building out capacity to meet that demand, the glut goes away, and demand no longer exceeds supply – leaving chipmakers without that pricing power.

Still, last week, semiconductor giant Samsung said that it expects the chip shortage to last until at least 2028. So it may be too early to worry about AMD's spending.

Whether investors like it or not, AI companies are going to spend...

On Amazon's earnings call last week, CEO Andy Jassy plainly said that the company is "not going to be conservative" in how it invests in the AI trend. And it's clear that the other hyperscalers are thinking the same thing.

As our colleague Brett Eversole wrote in last night's issue of The Total Portfolio...

We've seen more than $1 trillion in spending over the past few years... and this build-out is far from complete. Goldman Sachs estimates that AI capex spending will top $1 trillion next year alone. And it'll keep growing. Take a look...

According to these estimates, data-center spending could reach nearly $7 trillion over the next five years.

And there is some return, if you know where to look. Brett used Anthropic, the AI startup behind Claude, as an example. More from Brett...

As of late May, Anthropic reported an annual revenue run rate of $47 billion. To put that number into context, in January 2025, its revenue run rate was only about $1 billion. By the end of 2025, it had jumped to $9 billion.

That means in the first five months of 2026, the company has grown revenue more than fivefold... If you compare it with the beginning of 2025, revenue has exploded nearly 50 times higher.

That's why companies are spending so much on capex. And that demand will only fuel more spending in the coming years. As Brett wrote, that's all it will take for this bull market to continue.

Total Portfolio subscribers can read Brett's full report, including how the Portfolio Solutions Investment Committee is positioning for AI, right here.

SpaceX's first quarter as a public company is in the books...

In his free daily e-letter today, our colleague and Stansberry's Investment Advisory editor Whitney Tilson dove into the details.

You can read Whitney's full analysis of SpaceX (SPCX) here, but we're going to share a few highlights...

Year over year, revenue grew 92% – from roughly $4.1 billion to $7.8 billion. Meanwhile, losses from operations narrowed from about $970 million to $143 million. And "Segment Adjusted EBITDA" (earnings before interest, taxes, depreciation, and amortization) grew from around $1.2 billion to $3.5 billion.

But the company's cash flows are an issue – especially when you consider how SpaceX reported them. Whitney continued...

SpaceX also said that cash provided by operating activities rose from roughly $351 million to $3.5 billion. However, the company only reported "Selected Cash Flow Information" for the first six months of this year versus that period last year – which is totally unacceptable for one of the most valuable companies on the planet.

In short, SpaceX didn't disclose its itemized cash-flow statement – and instead just delivered the totals for cash provided by operating, financing, and investing activities. And even those numbers weren't stellar.

More from Whitney...

Take a look at the breakdown here on Page 3 of the release:

With capex at more than 8 times operating cash flow (roughly $28.5 billion versus $3.5 billion), SpaceX's free cash flow ("FCF") was a horrific negative $25 billion in the first six months of the year.

That huge cash-flow deficit is what has SpaceX shares down so much today – with the stock falling more than 13%, back near the lowest level in its short history.

But investors shouldn't try and catch this falling knife. SpaceX is still "the most overvalued large-cap stock ever," according to Whitney.

As he concluded...

Being extremely generous, I'll give SpaceX a $50 billion [annual revenue run rate] by year-end and an equally generous multiple of 10 times revenue. That's $500 billion.

With the stock price decline early this morning, that put the market cap at around $1.5 trillion. So that would mean the stock would be overvalued by at least 3 times – by roughly $1 trillion.

Another leg lower could be on the way very soon.

The next wave of insider selling is on the way...

When SpaceX went public in June, only about 5% of its total shares traded. But that wouldn't be the case for long. As our Director of Research Matt Weinschenk shared in a special report for Total Portfolio subscribers in June, SpaceX arranged a schedule to let insiders cash out much sooner than the typical 90- to 180-day lockup.

As Matt shared...

Tomorrow marks the second full day after SpaceX's earnings release – so another 911 million shares will be eligible to trade. At yesterday's closing price of $125 per share, that means insiders will be able to cash in on more than $113 billion in SpaceX shares.

It could've been even more... If SpaceX shares had been trading above $175 per share, another 456 million shares would be "unlocked."

Still, 911 million new shares is a lot more than the 639 million shares it offered in the IPO. And that'll take SpaceX's "float" (the percentage of total shares trading publicly) from about 5% to more than 11%.

A higher float means a higher weighting in indexes...

Matt discussed the effect of this change in the widely tracked Nasdaq 100 Index...

Now, the Nasdaq 100 weights companies by float. The float adjustment means SpaceX should only be given a value of $86 billion (the value of the shares it sold) when putting it in the index.

But the Nasdaq has another rule where companies with small floats (under 33%) can be weighted up to three times their float.

Given those advantages, SpaceX could land somewhere around a $240 billion weighting, or about 1% of the index.

Using that same math, SpaceX will have a total float of nearly $200 billion when those shares "unlock" tomorrow. And if Nasdaq continues to weight SpaceX at 3 times its float, it'll have a weighting of about $500 billion, based on yesterday's close price.

That'll put SpaceX at more than 2% of the total Nasdaq 100 index.

So not only will the new shares bring selling pressure to SpaceX itself, but they could also weigh on the broader tech sector because such a heavily weighted company is struggling.

As Whitney and Matt have warned before, because of SpaceX's weighting in index funds, passive investors might hold lots of SpaceX in their 401(k)s without realizing it. Given this stock's extreme valuation, they're putting a chunk of their portfolios in more danger than they realize.

Whitney has written that he believes SpaceX would be fairly valued at 10 times sales. Even after today's drop, SpaceX trades for more than 70 times sales. That means SpaceX shares would have to fall more than 80% to reach a "fairly valued" level in Whitney's eyes.

We'll close with advice that Whitney shared in his July 17 daily e-letter... "Avoid SpaceX."

New 52-week highs (as of 8/4/26): Arista Networks (ANET), Bristol-Myers Squibb (BMY), Berkshire Hathaway (BRK-B), Pacer U.S. Cash Cows 100 Fund (COWZ), Datadog (DDOG), iShares MSCI Spain Fund (EWP), Series B Depositary Shares of Alphabet's 6.25% Mandatory Convertible Preferred Stock (GOOGN), Global X MSCI Greece Fund (GREK), Garmin (GRMN), Keyence (KYCCF), VanEck Morningstar Wide Moat Fund (MOAT), Match Group (MTCH), Cloudflare (NET), NewMarket (NEU), Nucor (NUE), Palo Alto Networks (PANW), Packaging Corporation of America (PKG), State Street SPDR Portfolio S&P 500 Value Fund (SPYV), ProShares Ultra S&P 500 (SSO), Visa (V), Vanguard FTSE Europe Fund (VGK), State Street Industrial Select Sector SPDR Fund (XLI), and Zebra Technologies (ZBRA).

In today's mailbag, feedback on yesterday's Digest about the demand for digital "sovereignty"... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"I'd like to hear more from your team about the risk of losing intellectual property using AI. Which companies are at risk of suffering new competition who have simply copied a valuable technology or process by employees using AI? Can we expect large lawsuit coming?" – Subscriber Serge F.

Corey McLaughlin comment: Let me point out, this is a different angle from what we were writing about yesterday. We wrote about companies' interest in protecting their own AI "sovereignty," and how much they're paying Palantir Technologies (PLTR) to get it. But what you bring up is also interesting to think about...

If someone uses AI to proactively steal protected intellectual property ("IP"), that seems about the same as a person physically swiping blueprints from an office drawer or improperly sharing a digital copy.

That's different, though, from people or companies volunteering it away to the likes of OpenAI or Anthropic by using free or low-cost versions of their AI models... which lack data protections. It's like when newspapers began giving away all of their content for free in the early Internet era. For many, it was a fatal mistake.

Companies that are protecting their data now are being smarter than those media companies. If "data is the new oil" – and we think it is – you wouldn't want to give it away, especially if it's a uniquely useful blend.

Now, if a person or entity truly uses AI to "steal" IP, I can imagine AI providers that aid the theft could be included in any lawsuits that come from it.

But I'm not a lawyer... If any lawyers reading this want to share their expertise, send us a note: feedback@stansberryresearch.com.

Coincidentally, we do know that Sherwin R. – who sent in our next note – is a lawyer. But his mind is on other things stemming from yesterday's Digest headline...

"Selling Sovereignty? Sovereignty, last year's Kentucky Derby and Belmont winner, is running in the Whitney [Stakes] at Saratoga on Saturday." – Subscriber Sherwin R.

McLaughlin comment: Excuse me, we've got to go see a man about a horse.

All the best,

Nick Koziol
Baltimore, Maryland
August 5, 2026