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Good morning.
SpaceX reported better than expected revenue of $7.8 billion, up 92% year over year, in its first post-IPO earnings Tuesday. But shares fell 6.6% in after-hours trading when investors saw how much the company led by Elon Musk is spending on AI capabilities. While SpaceX’s net loss narrowed to $541 million from $1 billion a year ago, AI spending more than doubled to $15.8 billion from $7.7 billion in the first quarter.
The immediate path to profitability doesn’t go through the moon or Mars. It starts with AT&T, Verizon and T-Mobile. Executives said SpaceX’s connectivity unit, home to its highly profitable Starlink satellite internet service, will poach customers from the major wireless operators. In what could make it a full-fledged competing carrier, President Gwynne Shotwell added the company “definitely intend[s] to build out terrestrial components” to its network, noting that spectrum purchased from EchoStar last year already has some. Best lock your customers into contracts now before Elon offers them a rocket ride to the promised LAN.
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MARKETS
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Stock data as of market close on August 4, 2026.
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SpaceX isn’t the only company in the solar system to outperform Wall Street’s expectations this summer.
Corporate America has delivered enough stellar second-quarter financial reports to send the S&P 500 to a record high on Tuesday. Some 86% of reporting companies exceeded consensus earnings-per-share estimates as of Friday last week, according to FactSet data, well above the 67% historical average, and investors spread the love far beyond the typical market-carrying names. Still, there are plenty of potential pitfalls that could stop the rollicking party in its tracks.
Strait Flush
Undergirding the rally was belief that the Iran-US war is nearing a conclusion. Treasury Secretary Scott Bessent took to CNBC on Tuesday to declare “we may have a deal today or tomorrow to open the Strait [of Hormuz] and move towards a more normalized position in this conflict.” Yes, that may be the umpteenth time a looming resolution has been floated, but markets were happy to hear it nonetheless. The price of Brent crude, a global benchmark, fell below $80 a barrel for the first time in three weeks following Bessent’s remarks, while bond yields slipped on hopes that easing energy prices could tamp down future inflation.
While gains extended to all corners of the economy, tech led the way:
- The tech-heavy Nasdaq-100 climbed more than 3% on Tuesday, outpacing the S&P 500’s nearly 1.8% jump. The S&P’s surge was led by the blue-chip index’s tech sector, which leapt more than 4% on Tuesday.
- Still, all 11 major sectors tracked by the index have reported profit growth so far this year, according to FactSet data, and the equal-weight S&P 500 notched a record high on Tuesday, signaling broad-based support. On a more granular level, the same quarter that had future-flung Palantir experiencing “otherworldly” demand also featured furniture-seller Wayfair’s best sales growth in five years.
Traders lowered the odds of a September interest rate hike by the Federal Reserve from 67% to 56% on Tuesday, according to CME’s FedWatch tool, but some experts warn that high energy prices may nonetheless remain sticky for the near future.
  Magnificent Reversal: Meanwhile, the hyperscalers, who entered earnings season facing extreme doubts over soaring capital expenditure plans, are once again feeling the love. Amazon climbed into the $3 trillion market cap club on Monday, while Meta interrupted its worst losing streak in company history the same day. After hemorrhaging nearly 10% in June, the Roundhill Magnificent Seven ETF is now up more than 8% in the past five trading sessions.
Written by Brian Boyle
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Photo via Rise Robotics
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Nearly every crane, forklift and excavator you have passed runs on century-old, oil-filled hydraulics. They leak, waste energy and block a $750 billion industry from going electric.
RISE Robotics, founded by MIT engineers, has strong-armed its way into building the replacement, literally: a robotic arm that lifted over 7,000 pounds, setting a Guinness World Record. Its technology swaps fluid for belts and pulleys.
And the proof has left the lab, securing a pilot with a food and beverage distributor and a $3 million Air Force contract extension.
RISE’s latest funding round has passed its goal, but there’s still time to invest and join the likes of Techstars and MIT’s Engine Ventures. The difference: You can back it for a few hundred dollars, not a VC-sized check.
Invest in the firm replacing a century-old technology.
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Caterpillar, it seems, has grown wings. Thanks to the massive buildout of AI data centers, the construction, mining and engineering equipment giant is booking customers faster than 4 Charles Prime Rib.
Shares in the industrial bellwether have gained 48% this year, symbolic of wider bets many investors are placing on companies that stand to benefit from the real-world infrastructure needs of hyperscalers. But despite its latest earnings beat, some notable analysts and investors say Caterpillar isn’t giving them butterflies.
Bulldozers for Buildouts
Caterpillar’s second-quarter sales rose 24% year over year to a record $20.5 billion in the second quarter, with operating profit climbing 50% to $4.3 billion. Crucially, the company’s backlog surged to $72.1 billion, up 92% from a year ago. CEO Joe Creed said on a call with analysts that some orders run to 2030, offering years of locked-in revenue. That mirrors the continued AI capex spending spree that McKinsey estimates could require up to $7 trillion in data center investments by that year, and Caterpillar is seen by many as a major beneficiary. The construction division, the provider of equipment to build those data centers, reported sales of $8.4 billion in the quarter, a 35% increase.
The stock briefly sputtered during last month’s AI selloff, with investors speculating that lavish capital spending by hyperscalers would prove unsustainable. But affirmations last week from Amazon, Microsoft, Alphabet and Meta that their aggressive spending plans are undeterred relieved the considerable anxiety. Bears, however, point to the emerging hurdle of political backlash:
- Data centers are facing one-year moratoriums in Seattle and New York state. A new Florida law bans public utilities from passing on the costs of serving large data centers to consumers.
- According to data compiled by investor Will Manidis, 18 of the 50 US states have restricted or are advancing legislation to restrict data centers, and another 16 are considering it. Baird analysts wrote last week that this new environment “raises costs, adds new development approval hurdles, limits site availability, and likely slows future investment.”
Structural Bet: Freedom Broker analyst Sergey Glinyanov told Fortune last month that Caterpillar’s doubters are overlooking an emerging structural theme: energy demand flowing to the company’s power division. Sales at the unit, which sells turbines, natural-gas generators, backup power systems and other equipment to customers looking for alternatives to aging and stressed grids, rose 17% to $8.2 billion in the second quarter.
Written by Sean Craig
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Photo via Betterment
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Ba da ba ba ba, Wall Street’s not lovin’ it.
McDonald’s on Tuesday reported 0.8% growth at its US restaurants in the second quarter, its slowest pace in over a year, and sales of $7.1 billion that slightly trailed the $7.13 billion analysts had been expecting. The fast food giant’s earnings per share of $3.38, however, topped the $3.32 average estimate from Wall Street.
The mixed results came with the announcement that the company named Skye Anderson, who became the chief operating officer earlier this year, to take over as the president of the US arm of McDonald’s business. The appointment “will bring focus and urgency” to McDonald’s goal of accelerating performance in its largest market, CEO Chris Kempczinski said in a statement. McDonald’s stock gained a little more than 1% Tuesday, though it’s still down roughly 12% year to date.
Not-so-Happy Meals
McDonald’s has long been identified by its foundational promise to customers: value. But by raising prices during and after the COVID-19 pandemic due to the higher costs of food, labor and operations, the chain began losing ground with many middle-income Americans. If a meal at Chili’s or Applebee’s costs just a few dollars more than a meal at the Golden Arches, a customer might as well opt to sit down and get table service. On the other end, with low-income consumers grappling with still-high inflation and surging gas prices, McDonald’s cheapest offerings didn’t do as well as expected:
- Pulling back on digital offers and removing the “Buy One, Add One for $1” feature meant fewer visits from some of Ronald McDonald’s most loyal customers.
- On a call with analysts following the earnings report, Kempczinski said that only about 60% to 65% of its system had implemented the “under $3” menu, which should include 10 items. Franchisees set their own prices.
Supersized Asks: McDonald’s has thrown a lot at both franchisees and customers of late, Kempczinski admitted. This year, restaurants had to pivot between offering the KPop Demon Hunters meal, a McValue program, new beverages and a FIFA World Cup promotion. “It’s tough to drive awareness when you’re sort of jumping around and giving those two-, three-, at most four-week windows,” the CEO added. The company will work on balancing those new menu items better moving forward, he added.
Written by Mallika Mitra
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- Buzzkill: Amazon shares fell 1.8% Tuesday after Chairman Jeff Bezos filed to sell $4 billion in stock, stalling a rally one day after the company hit a record high.
- Tank Half-Full: US Treasury Secretary Scott Bessent said a ceasefire deal with Iran that would reopen the Strait of Hormuz could come as soon as today; draft proposals are being circulated.
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