Elon Musk’s SpaceX blockbuster gets a market reality check

July 8, 2026 — 12:13pm

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Three weeks ago, Elon Musk’s SpaceX was valued by the market at more than $US2.5 trillion ($3.6 trillion). On its first day of inclusion in the Nasdaq index, which was expected to trigger a wave of forced index fund buying, its value fell below $US2 trillion.

The 6.83 per cent fall in its share price on Tuesday took the slump from SpaceX’s peak on its second day of listing last month to about 22 per cent. The forced buying of index funds to reflect its weighting in the Nasdaq index has failed to materialise to date.

Not even a wave of uber-bullish reports by six of Wall Street’s most prominent investment banks – Morgan Stanley’s “bullish” case for the company has a price target of $US600 a share, or a market capitalisation of more than $US8 trillion – helped.

In debt markets, the spreads on SpaceX’s $US25 billion raising are blowing out. Initially priced at 1.4 percentage points over US Treasuries, the spread has swollen to 1.65 percentage points. Debt that has an investment grade rating is trading in junk bond territory.

SpaceX isn’t alone. The uncritical enthusiasm for the mega-techs and all things artificial intelligence-related has faded.

ASX falls following Hormuz attacks, tech stocks slump

The “Magnificent Seven” mega-tech stocks are down 6.5 per cent from their recent highs in May, despite a rebound last month. The PHLX Semiconductor Sector Index has fallen 16 per cent in a fortnight after a massive 105 per cent AI-driven surge earlier in the year.

In the debt markets, a $US25 billion Amazon bond issue attracted only about half the interest shown in a previous issue in March and caused the prices of other AI-related debt to drop and their yields to rise (prices and yields have an inverse relationship) in a sign that the market is satiated with AI companies’ debt.

The equity and bond market conditions for AI issuance suggest a certain level of fatigue, and perhaps nervousness.

When SpaceX floated, investors were prepared to attribute extraordinary........

© The Sydney Morning Herald