The 'Relentless Bid' Grows Stronger
SpaceX's earnings boost the AI trade – and the rest of the market... Whitney's picks out of the Magnificent Seven... This could be the biggest investing opportunity of 2027... Contributions to Trump Accounts hit $8 billion... The stock market will always have a bid...
SpaceX's earnings gave the AI trade exactly what it needed...
Yesterday after market close, we got the second earnings report from mega-cap tech giant SpaceX (SPCX). Revenue surged 161% to $14.6 billion – coming in well ahead of Wall Street estimates. And SpaceX reported profits for both net income and operating income for the first time as a public company.
But, as with all companies tied to AI, those numbers only tell part of the story...
SpaceX's capital expenditures ("capex") more than tripled from the same quarter last year to more than $19 billion. So far in 2026, SpaceX has spent $48 billion on capex – up from $14 billion in the first nine months of 2025.
With an operating cash flow of $13 billion in the first nine months of 2026, SpaceX has a free-cash-flow deficit of $35 billion.
SpaceX burned through $25 billion in the first six months, meaning it had a free-cash-flow deficit of about $10 billion in the third quarter. (SpaceX doesn't break out its cash-flow statement into quarters, but we can estimate the number using its first-six-month cash-flow deficit.)
At the end of the quarter, SpaceX had about $53 billion in cash on its balance sheet. At 2026's average quarterly burn rate of $12 billion, SpaceX would have cash until the fourth quarter of next year... then it would need to raise capital again.
And then there was the earnings call...
CEO Elon Musk said that he believes there's "a lot of merit" to merging SpaceX with another one of his companies – Tesla (TSLA).
Shareholders would have to approve, but that may not be a problem... Musk controls 85% of SpaceX's voting shares and about 20% of Tesla's voting power.
And it's not the first time Musk has combined companies he's involved with. As our colleague Rob Spivey from our corporate affiliate Altimetry wrote in these pages in June...
He has used his massive voting power to his advantage in the past. For example, he caught the ire of Tesla shareholders after he "bailed out" another one of his companies, SolarCity, by acquiring it into Tesla for $2.6 billion.
He just pulled a similar maneuver by selling xAI into SpaceX at a $250 billion valuation... and selling social media network X (formerly Twitter) to xAI before that.
Musk will likely get more questions about a proposed merger after Tesla reports its own earnings tonight.
Then there are Musk's projections for how much money SpaceX could bring in by the end of 2027...
Musk said that SpaceX could have an annual revenue run rate of between $500 billion and $1 trillion by the end of next year. That means the company would have to rapidly accelerate its growth rate.
In a post on X, Substack contributor P Equity Research estimated that SpaceX would need to have at least one quarter with $125 billion in revenue next year to just hit the low end of Musk's goal. That would be nearly 9 times the record revenue the company just reported.
Only time will tell if SpaceX can meet Musk's projections, or if it's just another way for him to drum up excitement for his companies.
Still, potential merger and lofty expectations aside, SpaceX delivered exactly what the market (and AI megatrend) needed...
All three major U.S. indexes rose today, with tech stocks and the Nasdaq Composite Index leading the way higher, thanks to SpaceX's 8% jump after its earnings report.
We'll see if the AI trend can continue to boost the market as Meta Platforms (META) joins Tesla in reporting earnings this evening.
Tesla is in Whitney's 'Stinky Seven'...
In his free daily e-letter on Monday, our colleague and Stansberry's Investment Advisory editor Whitney Tilson updated readers on his thoughts about the Magnificent Seven stocks – Meta, Tesla, Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA).
While he is still bullish on Alphabet, Amazon, and Meta, Whitney remains bearish on Tesla. As he wrote in January...
With its tax-credit expiration in the U.S. and competition from Chinese manufacturers, I expect Tesla's vehicle sales to collapse. I'm also very skeptical that the company's Optimus humanoid robots and the nascent Robotaxi business will take off.
That's why Whitney added Tesla to his "Stinky Seven" list of stocks to avoid. And his view hasn't changed, as he wrote on Monday...
With the stock down to around $365, it's trading at 210 times this year's estimates and 168 times next year's (which I don't believe).
These are absurd multiples for a company whose top line has stalled out and profits have tumbled by 70% in the past five years.
In short, Whitney's view "remains the same as it has been – stay away from the stock."
While Whitney has expressed caution over AI becoming a "bubble" – mainly because of circular financing and the absurd valuations of startups like OpenAI – that doesn't mean there isn't money to be made.
And the recent sell-off in AI-related stocks has given investors the perfect opportunity to buy in. That's why Whitney is sitting down with legendary tech analyst Jeff Brown from our corporate affiliate Brownstone Research to talk about what could be the biggest investment opportunity of 2027.
It involves a new AI super chip that could change daily life as we know it... and Whitney and Jeff say the firm behind it could generate 1,000% gains. You can get all the details in their free special presentation on October 28. You can sign up to reserve your spot right here.
In other news, Trump Accounts have reached a new milestone...
Last year, President Donald Trump signed a bill establishing Trump Accounts – investment accounts for American children born between January 1, 2025, and December 31, 2028. As part of the bill, the government deposits $1,000 into each account upon activation and parents can continue contributing up to $5,000 per year.
The accounts have been expanded to all children under 18, but those born between the dates above are the only ones eligible for government deposits.
So far, folks are contributing...
According to the White House, there are around 70 million Trump accounts. In a post on X, Treasury Secretary Scott Bessent said that those accounts have now passed $8 billion in contributions.
Soon, these accounts could be expanded to anyone under 40, according to a report from Business Insider. That would open the door to another 100 million potential Trump Accounts.
That's a lot of money set to flow into the stock market...
Back in February, we wrote about the "relentless bid" from passive investing and 401(k) accounts.
Put simply, folks are blindly putting money into the market every two weeks. As Extreme Value editor Dan Ferris explained in a June 2025 Digest...
This is also referred to as passive investing, where investors don't actively research the stocks they buy. Instead, they passively own index funds, without regard for their attractiveness based on fundamentals like valuation or quality. Investors simply buy the same stocks every paycheck without any research whatsoever.
In February, Trump said in his State of the Union address that the government may look into matching 401(k) contributions up to $1,000 annually for workers whose employers don't contribute. Trump Accounts are just another example of the relentless bid. They represent even more money flowing into passive indexes and the market.
This isn't to say that we won't have pullbacks, corrections, and bear markets. But the rise in passive investing – boosted by these partly government-funded accounts – ensures that the stock market will always have a bid.
New 52-week highs (as of 10/20/26): AbbVie (ABBV), Automatic Data Processing (ADP), American Financial (AFG), Alpha Architect 1-3 Month Box Fund (BOXX), Berkshire Hathaway (BRK-B), Cintas (CTAS), Chevron (CVX), Exelixis (EXEL), Kimbell Royalty Partners (KRP), Eli Lilly (LLY), Lonza (LZAGY), Match Group (MTCH), Pfizer (PFE), Republic Services (RSG), SharkNinja (SN), Ternium (TX), Visa (V), Veeva Systems (VEEV), and State Street Health Care Select Sector SPDR Fund (XLV).
In today's mailbag, thoughts on the frozen housing market amid a "hot" economy, which we wrote about yesterday... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Currently 5,000 to 7,000 boomers pass away every day and it's accelerating. The only way to unload a house at 7.5% is to lower the price. Don't you think housing prices will start falling for the next 15 to 20 years? I'm 70, my Mom is 94. When she passes it's going to be hard to sell her house at all with 7.5% rates, unless I lower the price significantly. Homebuilders don't need to build more houses; they need to expand and remodel the one's we got." – Subscriber Mark N.
"To a simple retail investor like me, high rates in today's world don't signal a 'hot' economy. Increased revenue doesn't equate to better corporate earnings (after adjusting for inflation). Higher rates are a reflection of massive government debt (doubling in 10 years) and a debasement of the dollar and record printing of fiat money. Inflation is only going higher for now. The Fed's target of 2% is beyond a joke..." – Subscriber Jim V.
All the best,
Nick Koziol
Baltimore, Maryland
October 21, 2026