Limitless: An AI Podcast

Ejaaz:
Last week on the show, we said August 4th was the day that SpaceX had to prove themselves.

Ejaaz:
The first earnings report, every analyst on Wall Street basically was bearish.

Ejaaz:
They said that Elon Musk could not pull this off, that this thing is a money vacuum.

Ejaaz:
Turns out the opposite was the case. SpaceX absolutely smashed it.

Ejaaz:
The revenue is up to $7.81 billion, which is 92% year on year,

Ejaaz:
which is crazy for the size that they're at.

Ejaaz:
And Starlink numbers doubled to 12 million subscribers. That being said,

Ejaaz:
the stock is still down this morning. People are worried about the major unlocks

Ejaaz:
that are happening tomorrow where $100 billion worth of SpaceX stocks goes live.

Ejaaz:
But Josh and I are here to tell you why that may not be the case and why the market could be wrong.

Josh:
Yeah, well, I understand why people are bearish. Like he was on the earnings

Josh:
call yesterday, which I sat in and listened to.

Josh:
And he's claiming he's like, all right, we're going to build robots with mass

Josh:
drivers on the moon and we're going to 1000XR economy on Earth because of it.

Josh:
And it sounds ridiculous. And I was looking through the numbers and as I was

Josh:
reading this, I was like slowly starting to inform myself on what large companies look like.

Josh:
And Ijez, I want to start with a question to you, actually. do you know what

Josh:
company had the most annual revenue ever? Like what company is making the most

Josh:
money every year? This was really surprising to me.

Ejaaz:
Like currently? Like right now? Yeah.

Josh:
Like total revenue per year. Like who's making the most?

Ejaaz:
I would have to say it is either like an NVIDIA or an Amazon.

Josh:
It's not even a tech company. It's Walmart. Walmart topped out at $680 billion

Josh:
of revenue, which seems outrageous.

Josh:
And I mean, it gets into the pricing thing. Walmart's not the biggest company

Josh:
in the world. Why is that? Well, because their profit margins are low,

Josh:
their multiples are lower.

Josh:
But SpaceX and Elon went on this conference call and he said,

Josh:
hey, we actually ran the numbers. And instead of 2031, by the year 2030,

Josh:
they expect to have a trillion dollars in revenue.

Josh:
That is 40% or 32% more than the largest company on earth today.

Josh:
I think we kind of have to unpack what that looks like because I mean,

Josh:
that is a tremendous amount of value given the fact that they actually just

Josh:
reported a net loss of half a billion dollars,

Josh:
which is an improvement, but still a net loss you could kind of break down the

Josh:
company's earnings report into these three pillars first it is connectivity

Josh:
which is like starlink and all their satellite situations then they have ai

Josh:
which was up 250 year over year and then they had space which was up 30 year over year and

Josh:
i mean the important thing that you noted you guys is that 32

Josh:
growth year over year is huge sorry 92 growth is huge because for companies

Josh:
with 30 billion dollars of annualized

Josh:
revenue, typical growth is like 5-10%. So clearly they're doing something right.

Ejaaz:
I was keeping an eye on his social media yesterday. And one of the things that

Ejaaz:
he said is we are on track for $100 billion ARR by the end of this year, 2026.

Ejaaz:
Now, the only other company that I've heard that projection being made for is

Ejaaz:
Anthropic. Now, when I look at SpaceX and look at Anthropic,

Ejaaz:
I'm saying, okay, they may be competing in the same sort of field,

Ejaaz:
but I don't think SpaceX is quite caught up on the AI side, but that's what most people miss.

Ejaaz:
SpaceX isn't just an AI company.

Ejaaz:
They are a computation company. They have the largest arsenal,

Ejaaz:
largest GPU footprint of NVIDIA GPUs, might I add. And he signed a major partnership

Ejaaz:
with Jensen, which we'll get to in a second.

Ejaaz:
But he's the only person that's launching these things into orbital space.

Ejaaz:
You know, he has the largest data center cluster on Earth, and he's also doing

Ejaaz:
the Starlink connectivity thing. So all of these are different revenue drivers.

Ejaaz:
And what I like about this report is he's proved a lot of the bears wrong simply

Ejaaz:
by the numbers. Let's actually walk through some of these numbers,

Ejaaz:
right? So revenue, the estimate was $6.93 billion.

Ejaaz:
He smashed it by earning almost a billion dollars more than that, right?

Ejaaz:
And then when you look at earnings per share, people were like,

Ejaaz:
okay, they're going to be at a net loss of 26 cents per share.

Ejaaz:
Nope, came in at 0.09. Is it profitable yet? No, but it is still much better than people expected.

Ejaaz:
Then the net income, as you mentioned earlier, people were expecting a $2 billion loss.

Ejaaz:
He shaved that down by 3x to half a billion dollars. Now, again,

Ejaaz:
Is this the best earnings report that they could have come up with?

Ejaaz:
Probably not. But these things take time for.

Ejaaz:
A CapEx-heavy company such as SpaceX, I'm really impressed with what they've been able to pull off.

Ejaaz:
And I think it just kind of shows that Elon has pretty crazy statements.

Ejaaz:
I remember when he pitched the Starlink robot GPUs in SpaceVision about,

Ejaaz:
what was this, like 12 months ago for the GPUs in space.

Ejaaz:
And everyone thought he was absolutely insane. But every step he takes,

Ejaaz:
every earnings report he takes, we're starting to see a different picture start

Ejaaz:
to form. And I'm not saying he's there yet.

Ejaaz:
I just want to be very clear. Like, I don't think we're anywhere near there.

Ejaaz:
But this is a step in the right direction. And I think that,

Ejaaz:
you know, after listening to the call yesterday and after seeing a lot of the

Ejaaz:
reporting, I think he might be there.

Ejaaz:
But of course, something that people are worried about is the unlock that is

Ejaaz:
happening tomorrow. And I don't know if you have any thoughts on this,

Ejaaz:
Josh, but like $100 billion is flooding the market.

Josh:
Yeah, well, I mean, there's going to need to be a lot of shares that are moving

Josh:
because SpaceX is also among the most shorted companies in the marketplace right now.

Josh:
So there's a lot of short positions on it. There's a lot of people that are bearish.

Josh:
There is a lot of unlocks happening. Whether or not those unlocks become bullish or bearish is TBD.

Josh:
But my expectation is like, I don't really care. Like as an investor over a

Josh:
long period of time, like, okay, maybe it sells off for the next couple of days.

Josh:
Maybe it sells off for the next week, maybe the next month.

Josh:
But I mean, the numbers are pretty amazing. And you could see why people are

Josh:
getting scared. You mentioned the CapEx.

Josh:
CapEx was 39% higher than what people thought. It came in at just under $18.5

Josh:
billion, which NASA's annual budget is $25 billion.

Josh:
So they spent almost the entirety of NASA's budget in a single quarter.

Josh:
That also means that they spend $2.35 for every dollar that they made in revenue.

Josh:
And you have to ask the question, where is that going? Why are they spending

Josh:
so much? Because this sounds like lunacy.

Josh:
Imagine a restaurant, you're investing in a restaurant, and they come and they spend $23,000 a night.

Josh:
Even though they're only making $10,000 a night, you say, what on earth is going on here?

Josh:
This makes no sense. But then they tell you, wait a second, we're,

Josh:
we're building out new restaurants.

Josh:
We're building a higher profit margin menu items. And that's kind of what SpaceX

Josh:
is doing on the data center front. So one of the smaller things that I think

Josh:
a lot of people overlooked is the fact that they already have a backlog of about

Josh:
$50 billion of revenue. That's already signed.

Josh:
Like no one even has to pick up a phone and they're collecting $50 billion just

Josh:
because of their ability to build these data centers.

Josh:
And this is where we kind of talk about data centers for a second,

Josh:
which is their very much an unfair advantage.

Josh:
On the earnings call, I was listening to their CFO, Brett Johnson, I think his name is.

Josh:
He said that all CapEx isn't the same. Sun CapEx is much more lucrative than

Josh:
others. In the case of SpaceX, it's about as lucrative as we've heard.

Josh:
A lot of companies, let's say you invest in an apartment building and you build

Josh:
this huge piece of real estate. It takes about 15 to 20 years to pay itself back.

Josh:
SpaceX's data centers paid themselves back in a single calendar year.

Josh:
So in terms of return not invested capital it's like this unbelievable opportunity

Josh:
where it feels like they they have this unfair advantage being that they're

Josh:
the only ones that could build these data centers quickly and efficiently and

Josh:
then go off and sell these huge unbelievably large contracts to companies

Josh:
that can't do the same and my favorite quote from the earnings call my favorite

Josh:
one by far is what elon was asked about terrestrial data centers this is after

Josh:
he concluded about the space data centers which we'll get up to in a minute

Josh:
But the terrestrial data centers he's like this is like the New York Yankees

Josh:
playing in a Little League.

Josh:
It feels like they're just night and day difference in terms of their ability

Josh:
to execute on these things. And their return on the invested capital

Josh:
Huge you can't buy a blackwell gpu

Josh:
period so that's why people are paying premiums in fact if you are currently

Josh:
signed to a blackwell contract you are trying to extend the length that as much

Josh:
as you can because if it renews it's going to renew at double the cost because

Josh:
the cost of this compute is so expensive

Josh:
the only people that are able to build it at scale as quick as they do is spacex

Josh:
and i mean return on invested capital on an investment this large being 12 months

Josh:
you can very quickly see why their revenue models are guiding towards something closer to a trillion

Josh:
than where we currently are over the next four years or so. It's unbelievable.

Ejaaz:
Just to focus on the GPU point for a second, right?

Ejaaz:
I think a lot of people are worried. The doomers for the AI bubble say that

Ejaaz:
the bubble is primarily formed in GPU CapEx specifically. So all these trillions

Ejaaz:
of dollars that is being committed and spent on NVIDIA GPUs, AMD GPUs, whatever that,

Ejaaz:
is where the bubble is inflating because these machines will eventually depreciate.

Ejaaz:
They won't actually be in demand once the cost of tokens go down,

Ejaaz:
et cetera, et cetera, et cetera.

Ejaaz:
What we've seen from every single quarterly earnings report from all of the

Ejaaz:
major hyperscalers, which are the ones that are investing the most,

Ejaaz:
including or aside to SpaceX.

Ejaaz:
So if you look at Amazon, Google, they're all reporting record revenue numbers.

Ejaaz:
In fact, all their cloud service provider platforms like Azure,

Ejaaz:
like Google Cloud, like AWS,

Ejaaz:
that not only is their revenue increasing by like, I think it's like 40 to 45%

Ejaaz:
compounded every single quarter, by the way. That's every three months.

Ejaaz:
I don't think people understand how absolutely insane that is.

Ejaaz:
Not only is it compounding their revenue specifically, but their margins are expanding even more.

Ejaaz:
So they're making more money on the money that they're earning,

Ejaaz:
which is just like an insanely good business. So Elon saw this and was like,

Ejaaz:
well, I have more GPUs than any of you, and I'm building these data centers faster than any of you.

Ejaaz:
It would make sense for us to become like a NeoCloud service.

Ejaaz:
And that's why he's selling upwards of $50 billion of AI compute to the likes

Ejaaz:
of Anthropi, Google, and whoever that might be going forward.

Ejaaz:
So he's seen that it's a hugely profitable business.

Ejaaz:
And what I love about one of the major announcements that he made yesterday

Ejaaz:
is he came out and said, wow.

Ejaaz:
We are going to be exclusive to Jensen. We're going to be exclusive to NVIDIA.

Ejaaz:
And verbatim, he quotes, going forward, we've decided to build exclusively on

Ejaaz:
NVIDIA because we think that the Vera Rubin architecture is the best architecture.

Ejaaz:
We think it's the best AI computer. And so we're going to be exclusive to NVIDIA.

Ejaaz:
Now, the craziest part about this is what he committed to buying.

Ejaaz:
He is basically going to double his existing or SpaceX's existing GPU fleet by the end of next year.

Ejaaz:
I cannot emphasize enough how crazy of an attempt that's going to be.

Ejaaz:
That is going to be in NVIDIA's pocket. Let's say he pulls this off,

Ejaaz:
right? Let's say he gets to the 10 gigawatts cumulative worth of GPUs by the end of next year.

Ejaaz:
That is $200 billion from SpaceX alone in NVIDIA's pocket by the end of next

Ejaaz:
year. Now, let's be realistic. Let's say he's at two, two and a half gigawatts,

Ejaaz:
he'll get to three by the end of this year.

Ejaaz:
Let's say he gets to like six gigawatts by the end of next year.

Ejaaz:
That is an extra $100 billion in NVIDIA's pocket.

Ejaaz:
He is going to be his number one customer, and he's taking a massive commitment.

Ejaaz:
With Jensen. And this is interesting because a few days earlier,

Ejaaz:
Anthropic signed this major deal with AMD. They're signing major deals with

Ejaaz:
other cloud service providers.

Ejaaz:
Elon has basically said, Jensen, if you can guarantee me the allocation,

Ejaaz:
we will take the compute. And that is my commitment to you going forwards,

Ejaaz:
even when we launch them into space, right? So I'm just massively bullish on

Ejaaz:
the cloud business, on the compute business that he's built.

Ejaaz:
I think even if everything falls to the wayside,

Ejaaz:
Elon still has a very profitable business, and people are discounting that massively right now.

Josh:
This deal is pretty interesting to me, too. It's because we're seeing a lot

Josh:
of these accelerator chips. We're seeing, like, the training chips and the TPU chips from Google.

Josh:
And everyone's kind of focused, even OpenAI is building their own vertically integrated chipset.

Josh:
And it's interesting to see SpaceX going the other direction.

Josh:
They're saying, well, we are going to build our own chips to some extent,

Josh:
but we're also going to work with NVIDIA to use their new architecture.

Josh:
And we've talked a lot about how this new Blackwell era of models is unbelievable

Josh:
the vera rubin era of models is going to probably be like remarkable and spacex

Josh:
will be using that exclusively which is

Josh:
very bullish because then i assume

Josh:
it works both ways right it's like nvidia gets this amazing showcase to share

Josh:
with the world like hey look what our gpus can do look how fast they can be deployed

Josh:
And the SpaceX team gets a much more tighter feedback loop with the team when

Josh:
it comes to development of the software architecture, the hardware architecture.

Josh:
And I assume that's going to turn into like a pretty nice partnership from both

Josh:
of these companies. I mean, both founders love each other.

Josh:
Both are at the top of their game. It's very exciting to see this happen.

Josh:
And the tangent of planning, as you were talking about how many gigawatts they

Josh:
were planning to deploy.

Josh:
On the conference call, Elon initially said 10 by the end of 2027.

Josh:
And then when people pressed him by the end of the decade, around 2030,

Josh:
he is guiding towards roughly 20 gigawatts of power with

Josh:
a floor of 15 gigawatts so he's like all right well even if everything goes wrong we can at least

Josh:
get to 15 gigawatts for reference we've talked about this a lot but like a singular

Josh:
gigawatt of power is equivalent to roughly 800,000 homes it's like cities worth

Josh:
of power and they're planning to do 15 of these in the next

Josh:
four years like that's that's really fast the other thing is i mean jensen has

Josh:
his own kind of rule of thumb when it comes to deploying gigawatts of energy.

Josh:
He says you can guide for around $40 to $50 billion of annual revenue per gigawatt.

Josh:
So if SpaceX does get 15 gigawatts of sold out capacity by the end of the decade,

Josh:
that alone is worth $600 to $750 billion of revenue.

Josh:
And that doesn't include the other pillars of this company, which are space and connectivity.

Josh:
So there's this like unbelievable bull case, even if you disregard all of the

Josh:
other pillars of the business.

Josh:
But in addition to this, there are these pillars like ai data centers in space which again

Josh:
They are being built with jensen huang and nvidia and the idea i found this

Josh:
really interesting for their ai1 satellites is

Josh:
they're basically going to build the same thing on earth as they are going to

Josh:
be in space the only difference is they're going to put some solar panels on

Josh:
this bad boy and send it off into space so this vertical integration of the

Josh:
hardware stack as it relates to terrestrial as it relates to space it's just

Josh:
remarkable and then if they actually figure out

Josh:
how to get payload into space at scale oh my god like you start to put the numbers

Josh:
together, you're like, wait a second.

Josh:
They actually could do this thing. And like, what is the stock gonna be trading at if they get

Josh:
terrestrial data centers 15 gigawatts online in four years and also they start

Josh:
putting mass into space at scale like this is gonna be a pretty huge opportunity

Ejaaz:
The biggest critique uh that i hear from a lot of you listeners and that watch this show is

Ejaaz:
that this vision this plan is just too insane to pull off and honestly like

Ejaaz:
i agree with you but you also have to look at the evidence of things that can

Ejaaz:
actually make the company money that will help fuel

Ejaaz:
elon and spacex getting to some of the more crazier visions, right?

Ejaaz:
And one of the main ones is this compute revenue business that he's kind of

Ejaaz:
showcasing and saying, hey, this thing makes money and we're going to be the

Ejaaz:
biggest bettors on this, right?

Ejaaz:
We're going to be able to pull this off. And if he's able to secure that capacity

Ejaaz:
with the likes of Jensen and NVIDIA, and Jensen loves Elon Musk so much.

Ejaaz:
He will be able to pull this off.

Ejaaz:
Now, just to kind of translate kind of like what this compute means for Elon,

Ejaaz:
it's not just a way to kind of like earn money by selling compute to competitors.

Ejaaz:
He's also very much using this to train some of the best AI models in the world.

Ejaaz:
And of course, like you might listen to that and like laugh.

Ejaaz:
But if you kind of like span out the timeline over the next kind of six to 12 months,

Ejaaz:
the only thing that is consistent across every single model,

Ejaaz:
different model architecture, whatever, like, you know, different weights that

Ejaaz:
you use, it is compute, you need more compute to pre train, you need so much

Ejaaz:
more compute to post train.

Ejaaz:
And then you need compute to serve this to people at like perfect speeds and

Ejaaz:
quality of service, you just need more compute. And in order to do that,

Ejaaz:
there's two things you need to look at.

Ejaaz:
You need enough capital to buy the GPUs, but you also need enough capital to

Ejaaz:
buy the best GPUs. Tuakash had an amazing blog post. I don't know if you read

Ejaaz:
it, Josh. He basically said the better the GPUs get,

Ejaaz:
the better AI models these GPUs can unlock, which means that NVIDIA will basically

Ejaaz:
sell these GPUs to the highest bidder. Who are the highest bidders going to be?

Ejaaz:
I like this example. There's two companies, okay? Company A wants to use 100,000

Ejaaz:
GPUs to cut down a bunch of, let's say, administrative workload at their company by 30%.

Ejaaz:
That is a really meaningful impact, right? And they'll save a ton of money and

Ejaaz:
they'll be able to generate millions of dollars. Great.

Ejaaz:
There's a problem. Company B wants those same GPUs to train and cure cancer, right?

Ejaaz:
Over a month. And they know that if they can do a one training run with their

Ejaaz:
data, they'll be able to cure cancer.

Ejaaz:
Who's going to bid more? It's going to be company B.

Ejaaz:
So these GPUs are like very, very scarce. And at the end of the day,

Ejaaz:
the people that have the most capital will buy those GPUs and train the best

Ejaaz:
models. They'll train the best features, product services, whatever that might be.

Ejaaz:
And Elon is at the front of all of this. It's not even Anthropic or OpenAI.

Ejaaz:
He has secured the most allocation. He has the largest arsenal of GPUs right now.

Ejaaz:
So it goes to say that he could potentially create the best AI model,

Ejaaz:
Grok 4.6, Grok 4.7, and Grok 5 is going to be coming out by the end of this year.

Ejaaz:
And he said it's going to be trained on all of SpaceX's data,

Ejaaz:
which would technically make it like the best engineering AI model.

Ejaaz:
So there's a lot of these things that are kind of like in the oven,

Ejaaz:
they're cooking, and we don't quite see them right yet, but it's good to be

Ejaaz:
just generally aware of i don't know i'm just very optimistic about like where

Ejaaz:
this could be in six to twelve months.

Josh:
Yeah there's a lot of really high quality shots on gold that they're taking

Josh:
where even if one completely and catastrophically fails there's still many others that are doing well

Josh:
and it's funny hearing a space company talk about terrestrial data centers they're

Josh:
talking about like they're actively trying to send these things into space that

Josh:
are actually trying to blow themselves apart and it's just like

Josh:
how easy is it that you could just drop these things on earth and it's easy

Josh:
and the atmosphere is easy to handle and and it just seems like going back to

Josh:
the baseball analogy it's like when you

Josh:
go up to bat with like a weighted bat and then you use like a normal bat and

Josh:
a normal bat is the data centers that are terrestrial and those will probably

Josh:
be used for training when we think about training

Josh:
where latency matters those are probably for training the satellite layer where

Josh:
there is like downlink latency happening that's probably more for inference

Josh:
where latency matters a little bit less but we're going to start to see this

Josh:
star mind constellation launch as soon as

Josh:
Next year with starlink version 3 being launched as soon as the next starship

Josh:
so the plan for the next starship launch is to follow up what they did with

Josh:
the previous launch which was get these starlink v3 satellites into orbit

Josh:
um now they're actually going to deploy them put them in orbit turn them on

Josh:
make them work and that takes us to the starlink part of the engine which is

Josh:
pretty unbelievable as well the growth curve of this service is the about as

Josh:
pure of an exponential curve as you can get

Josh:
they doubled their subscribers year over year they are now at 12 million they

Josh:
just added 1.7 of those 12 million this quarter alone so it is just a vertical

Josh:
hockey stick and i think this is one of the more underrated parts of the earnings report

Josh:
Gwen shotwell she had a lot or a little bit to say on this as it relates to the

Josh:
ability to deploy a network similar to a verizon or at&t i mean currently there's

Josh:
on earth there's about 5.5 billion users of the internet um so

Josh:
they are talking about being the pipeline for a large majority of that

Josh:
and totally removing dead zones and making it direct to sell and the starlink

Josh:
mobile fly i think is really interesting i remember last year we recorded an

Josh:
episode where they bought a fixed amount of spectrum to start deploying once they have

Josh:
their plan seems to be that they are going to continue to buy these dedicated

Josh:
pieces of spectrum until they own enough bandwidth to truly compete

Josh:
and then they have these ground base stations which are able to kind of handle

Josh:
a lot of the bandwidth and work in higher density areas

Josh:
and one shot well all she said on the call is that they have a foundational

Josh:
competitive advantage and won't really go into the like

Josh:
secrets and strategies that they're going to go with but what i expect is that this time next year

Josh:
on our iphones we will have like pretty high

Josh:
bandwidth internet connectivity and for that to happen that quickly seems like

Josh:
a very bullish thing to me and it's just like who wouldn't sign up for a service

Josh:
that has good internet anywhere in the world with no dead zones i just went

Josh:
to national parks the last two weeks. I had no service at all.

Josh:
The only thing connected me was Starlink terminals here in

Josh:
there. But direct to sell would be such an awesome thing. And the business is growing so quickly.

Ejaaz:
For context here, I couldn't reach Josh for like six to 12 hours at a time.

Ejaaz:
It was absolutely insane.

Josh:
Like he was in the dark surrounded by sequoias and redwoods.

Ejaaz:
I thought he'd, you know, suffered some kind of fatal injury or something like

Ejaaz:
that. I was, what was that movie? The 100 hours or whatever.

Josh:
Where you get lost out there.

Ejaaz:
I was like, damn, is Josh okay? Listen, on the, Starling side of things,

Ejaaz:
I think the thesis, put very simply, is,

Ejaaz:
in a world where you have these AI models, these AI agents running 24-7 on GPUs,

Ejaaz:
getting work done, you need reliability.

Ejaaz:
And reliability sits in the modern day world on the internet.

Ejaaz:
Now, you can't have lines going down, you can't have connectivity issues,

Ejaaz:
you can't have T-Mobile messing up some of their lines.

Ejaaz:
What are some of the most consistent ways of beaming internet down?

Ejaaz:
Well, you can do it via satellites, right? And I would love to have consistency

Ejaaz:
with my provider as well.

Ejaaz:
Like, to be honest, like if I could have an affordable Starlink connection right

Ejaaz:
now on my phone, mobile package, I would move to that because then I could just

Ejaaz:
use it on the plane or whatever that might be.

Ejaaz:
So I don't think that this is just a temporary trend. I think this is something

Ejaaz:
similar to AI where everyone's just going to want consistent,

Ejaaz:
strong, fast access to the internet. And Starlink is a very obvious win.

Ejaaz:
And it goes back to my earlier point, which is,

Ejaaz:
Elon has his hands in a lot of different things and they're actually working.

Ejaaz:
They're working well individually, but they're working well together as well.

Ejaaz:
And we're going to see that in future quarterly earnings reports.

Josh:
Right, EJ, as you mentioned agents and speaking of agents, we have to talk about

Josh:
a sponsor of the show Ledger because if you are building with AI agents and

Josh:
you're worried about security, which a lot of people should be,

Josh:
I mean, we've had a lot of AI models recently that have broken out of their

Josh:
sandboxes. It's a little scary.

Josh:
An agent with untracked access is very scary. So Ledger has this three-step

Josh:
process to solve this in which an agent proposes, a human approves,

Josh:
and then a Ledger signer enforces.

Josh:
This technology works with cloud code, codex, cursor, all of the things that we are used to using.

Josh:
And it's also open source to be fully audited. Basically, they use this thing

Josh:
called a Ledger agent stack, which has a series of four open source tools.

Josh:
There's a wallet, there's an enterprise solution, there's a multi-sig so that

Josh:
you don't get compromised for any of your transactions.

Josh:
And you could basically just talk to it normally. You could say,

Josh:
rebalance my wallet and it'll do all the math and do the transactions on your

Josh:
side while letting you approve and be in the loop the entire time.

Josh:
So I just want to shout out Ledger for a responsible way of building with AI

Josh:
agents. Thank you so much. You can find the link to the description down below.

Ejaaz:
So before we wrap up this episode, Josh, I...

Ejaaz:
We need to talk about the bear case of all of this going on.

Ejaaz:
Now, we've mentioned this on a previous episode.

Ejaaz:
There is a very constricted supply of SpaceX stock that is available for people to currently trade.

Ejaaz:
And the number one bit of critique is it's going to flood the gates tomorrow.

Ejaaz:
Actually, as you're listening to this episode, it should be today on the 6th,

Ejaaz:
$100 billion worth of SpaceX shares goes live.

Ejaaz:
And the big question in everyone's mind is, where's the buying power coming

Ejaaz:
for this? Because to keep the price at its current level, you need someone that

Ejaaz:
is buying all of those shares, right?

Ejaaz:
And what we've seen, and maybe this is reflected in the stock action today,

Ejaaz:
is people don't believe that that will be the case.

Ejaaz:
Now, whether they're thinking over a short-term period of time,

Ejaaz:
whether they're thinking of a long-term period of time is another question.

Ejaaz:
If you're common listeners of this show, you will know that Josh and I think

Ejaaz:
on pretty mid to long-term time horizons. So we're kind of bullish in SpaceX

Ejaaz:
over the long-term, of the short term we kind of like don't care too much we

Ejaaz:
want to kind of like see it as an opportunity to.

Josh:
Access it but

Ejaaz:
Nevertheless it is a concern or.

Josh:
Worry yeah no i understand why people are concerned and worried and in fact

Josh:
i remember viscerally feeling this with uh the tesla story

Josh:
because tesla i'm a lot of people don't know was the most shorted company in

Josh:
the stock exchange for two or three years like everyone was just pounding on

Josh:
it was just the the most diabolical company ever like no one was going to it

Josh:
was never going to work and

Josh:
now i haven't driven a car in

Josh:
like a couple years and these like seemingly sci-fi impossible things that

Josh:
are sold a lot of people are uncertain of their ability to happen and that's

Josh:
like totally fair there's the key man risk in the sense that like there is a

Josh:
singular person at the helm who is in charge of driving all this value that

Josh:
is a serious risk there is the

Josh:
risk on timelines oftentimes these timelines are very optimistic is there actually

Josh:
going to be 15 gigawatts of compute deployed by 2030 and

Josh:
If there's not, what does the revenue look like? But even if these things are

Josh:
fractionally wrong, the trajectory of this company is one way.

Josh:
And when I think about other companies, it's like, as a person who has like

Josh:
cash, if you have any cash sitting in a bank account, you have a problem because

Josh:
that cash needs to earn money.

Josh:
Otherwise you're going to get outpaced by inflation. And when you think of the

Josh:
places to deploy that cash, where the upside is the greatest and most exciting

Josh:
and most aligned with like an optimistic vision of the future,

Josh:
it's hard to find something more interesting and exciting and mispriced

Josh:
um than something like spacex is and it's not like things aren't working like

Josh:
we are seeing progress the starship launches you can go and watch you could

Josh:
literally go to texas and sit on the highway and watch them in person and they get better every time

Josh:
and the the um the heat shield which is the biggest part of rapid reusability

Josh:
finally works for the first time ever with the last starship launch

Josh:
and soon they're going to land both parts of the rocket

Josh:
and then at the very least that

Josh:
means they'll be able to deploy starlink version 3 satellites at scale.

Josh:
These things are already built. It's just a matter of a few more iterations to getting there.

Josh:
The data centers thing, we saw that they have a tremendous amount of data center

Josh:
capability to build these things quickly. So they can do it.

Josh:
Can they build 15 gigawatts worth? We don't know.

Josh:
But currently, I mean, I'm looking at the stock right now. It looks like it

Josh:
is trading down at the time of recording right now, about 9% down to $115 as

Josh:
the unlocks are happening today.

Josh:
And that seems to me just fine. It's like, okay, one and a half trillion dollars. That is about

Josh:
I don't know, a little more than one-tenth of their expected revenue in four

Josh:
years, it is very highly risky.

Josh:
In the case that they can figure out how to actually convert that into revenue

Josh:
and actually deliver on these timelines, there's no way this doesn't go absolutely

Josh:
nuclear. So it's mostly a matter of if, not when, or perhaps if and when.

Josh:
It's just like, I understand, I could understand the case for both people,

Josh:
for the bulls and for the bears. I think just as someone who has a very low

Josh:
time preference, seeing the progress that's being made and just very clearly mapping that out.

Josh:
It seems very obvious to me that barring any catastrophic problems,

Josh:
this is just going to be a one-way trajectory up. And sure, there will be bumps along the way.

Josh:
Sure, maybe they're unlocks and it sells off another 10% for a couple more times.

Josh:
But the reality is that a company five years from now who is just continuing

Josh:
on this trajectory without any of these optimistic outlooks is worth more than

Josh:
the company that they are today.

Josh:
And that's just kind of what I'm basing all this off of.

Ejaaz:
There's a key man risk with all of this, which is...

Ejaaz:
Can Elon focus all of his attention to actually be able to pull this off?

Ejaaz:
Does he have the chops to basically execute on the vision that he's kind of

Ejaaz:
like laid out on his earnings call?

Ejaaz:
That's pretty much the main thing that you have to kind of like believe in.

Ejaaz:
The other thing is on the point of like below time horizon, I think that you

Ejaaz:
can equally be very bullish SpaceX over the long term and be bearish over the short term.

Ejaaz:
And that could be an opportunity for you. It just depends on like how you want to frame it, right?

Ejaaz:
Like, for example, you might want to wait and see how the share unlocks happen

Ejaaz:
over the next couple of months. I think something like 25 to 36% of the entire

Ejaaz:
share supply gets unlocked in that period of time.

Ejaaz:
Maybe you expect to see a lot of volatility during that time.

Ejaaz:
And maybe that's like the time for you to kind of like load up to your point

Ejaaz:
earlier, Josh, like Tesla was one of the most shorted stocks ever.

Ejaaz:
And it was that case for two to three years. And maybe we'll see a similar profile

Ejaaz:
for SpaceX. You know, these valuations are huge.

Ejaaz:
Society is very unaware or uncomfortable with these large numbers.

Ejaaz:
And, you know, we saw the same transition when we saw the first $100 billion

Ejaaz:
company, right? So Meta went through this, Uber privately went through this as well.

Ejaaz:
And so we're probably going to see the same on SpaceX in particular.

Ejaaz:
But I agree with the trajectory in general. I think these companies are going to do very well.

Ejaaz:
SpaceX has a very bright future ahead of it. And to be honest.

Ejaaz:
In terms of like where the risk curve is, it is on the furthest end out there.

Ejaaz:
Like Elon could be doing this with just one company, but he's doing this with

Ejaaz:
like four or five combined into one.

Ejaaz:
And now there's like rumors that like they might merge with Tesla.

Ejaaz:
It might become a whole kind of like megacorp type situation.

Ejaaz:
So if that plays out, there's going to be even more scrutiny that's going to be placed on him.

Ejaaz:
But overall, I think I am very bullish long term, but maybe over the short term,

Ejaaz:
I'm going to say that I'm tentative. I'm sitting there with my cache and seeing

Ejaaz:
whether there is a better time to deploy and we'll see over the next couple of weeks.

Josh:
Yeah, you just maybe don't want to miss the repricing. I'm looking at that Tesla

Josh:
chart between 2020 and 2021 and how the stock 13X'd over the course of a year

Josh:
as it ripped in like the largest short squeeze ever.

Josh:
If you go to the all-time chart, that 2020 to 2021 is a pretty violent repricing.

Josh:
And that's just the world coming to grips with the fact that the technology

Josh:
and the thesis actually played out.

Josh:
In the case that that does happen again, that's the expectation,

Josh:
but there's lots of reasons to be bearish. I mean, just today for reference,

Josh:
there's 911 million shares unlocking. That's $100 billion of potential sell side pressure.

Josh:
They guided for 39% higher CapEx this year with no guidance given for next year,

Josh:
which is interesting. They didn't guide to where CapEx is. So that's a huge unknown.

Josh:
There's the like average revenue per user compression on the Starlink side,

Josh:
where Starlink revenue per user fell 22% as they doubled year over year because

Josh:
they're trying to move into cheaper international markets.

Josh:
So even though the subscribers are doubling, their revenue per user is decreasing.

Josh:
So there's a lot of these definitely things to look out for.

Josh:
But on the upside, I think of like moats and competition,

Josh:
Peter Thiel's the big monopoly guy. They have a monopoly on so many different

Josh:
industries, even if one of them works.

Josh:
This is a remarkable outcome for a one and a half trillion dollar company.

Josh:
So that's, I think it, that's the SpaceX update. That's the earnings report.

Josh:
I don't know, trying to be a little sober about how we view this,

Josh:
but like, God damn, there's no company in the world that's more exciting than this one.

Josh:
It's so sick. Like, okay, sure. The mass drivers on the moon,

Josh:
like that's a long shot. That's going to be like, I'll be excited to live through

Josh:
that and hopefully see that one day.

Josh:
But today, today, Starlink, incredible.

Josh:
Starship, incredible. their ability to deploy data centers at scale and break

Josh:
even after just 12 months.

Josh:
Incredible. There's no one else that can manufacture at the scale.

Josh:
So just in terms of manufacturing monopolies, it seems to me like there's China

Josh:
and then there is Tesla and SpaceX.

Josh:
And that's kind of the people who are most able to move the amount of atoms

Josh:
in a coherent way that generates value.

Josh:
And that is worth a lot. So yeah, I think that's everything.

Josh:
That's the SpaceX update. This went pretty long. If you listen to this,

Josh:
I, if you made it this far, like, please let us know how crazy this sounds to

Josh:
you? Like, is this a little too far over indexed on one side?

Ejaaz:
So for us, please. Yeah.

Josh:
Let's hear it either way. What's the strategy around SpaceX?

Josh:
How are we thinking about this $1.5 trillion company? Because listen,

Josh:
we're going to come back here.

Josh:
Couple years on the show and we're going to reference this episode and be like

Josh:
told you so or maybe not maybe we'll be poor maybe starship will blown up and

Josh:
the show wouldn't exist but you know what we

Ejaaz:
Just wouldn't have a camera in front of us yeah.

Josh:
Yeah i'd have to point off my camera so that might be a worst case scenario

Josh:
um but yeah that's that's the episode uh thank you so much for watching you

Josh:
just any final parting thoughts before we let everyone go

Ejaaz:
Yeah no if you are listening to us and you aren't subscribed to us please please

Ejaaz:
do it helps us out massively whether you're on apple music or spotify.

Josh:
Just on our way to 100k we're on our way to 70 i think subscribers on youtube

Josh:
which is exciting we have a bunch of subscribers on all the other platforms

Josh:
so like awesome thank you for the support so cool

Ejaaz:
Welcome to all of you i think we added like 2 000 subscribers over the last

Ejaaz:
28 days hello it's lovely to meet you um,

Ejaaz:
we are putting out shows and episodes about four times a week but we also have

Ejaaz:
a newsletter that goes out to

Ejaaz:
over a hundred thousand people we post twice one is a long form essay um,

Ejaaz:
and the other is kind of like the weekly recap but as i was saying earlier wherever

Ejaaz:
you listen to us leave us a comment give us feedback we're also on x dm us if

Ejaaz:
you have thoughts if you disagree with us we'd love to

Ejaaz:
hear from you even more give us a like thumbs up it helps us out massively and

Ejaaz:
yeah i guess that's it we'll see you on the next one.