Unhedged Position | Could SpaceX Mark The Peak Of The AI Mania?

The listing of SpaceX is historic for many reasons. Key among those is that there is a high chance that SpaceX, thanks to its invention of reusable rocket technology, will be among the few companies that will be remembered even a hundred years from now. It is only fitting that its listing could mark another milestone: the making of the world's first trillionaire, Elon Musk.

After all, the maverick inventor has shown that the way to achieve incredible goals is to make them audaciously, and keep pushing relentlessly even in the face of repeated failures - treating failure as the feature rather than the bug in his working model.

ALSO READ: SpaceX IPO Opens Today: Inside The Sci-Fi Vision Of Musk's Multiplanetary Future

SpaceX has also made a large AI play, which in part has lifted its valuations alongside other AI peers.

Its post-listing valuation goal of $1.7 trillion is staggering when compared to its revenue of about $19 billion.

This has led many to believe that the listing - combined with the expected upcoming listings of OpenAI and Anthropic - could mark the peak of the AI bubble.

The hypothesis is compelling, and could well prove to be true.

After all, valuations of AI companies indeed appear to represent the qualities associated with a bubble: typically built on a solid premise of disruption but stretched beyond what the medium-term reality can support by way of earnings growth.

Let's look at SpaceX in this context.

The standard way of valuing companies is the discounted cash flow model, where analysts make assumptions about long-term future profits and discount it to the present for valuation estimates.

But in cases of uncertainty, a better model is reverse DCF, where we assume a reasonable future PE ratio in the future, and then estimate how quickly the company must grow to justify its current valuations.

And according to one analysis, over the next 10 years, SpaceX will have to grow revenues from the current $19 billion to about $500 billion - a compounded annualised growth rate of over 40% while maintaining margins at around 45%.

No company generating more than $20 billion in annual revenue has ever sustained a 40% CAGR over a decade. This does not automatically mean it's not possible but just that practically everything will have to go right for SpaceX.

As an investor, it is generally foolhardy to bet on everything going right.

ALSO READ: SpaceX IPO Raises $75 Billion in Biggest Debut of All Time, Share Price Set At $135

Does that automatically mean that the listing of SpaceX and its ilk could pop the AI bubble?

The first point to make is that making precise predictions, both about an event and its timing, is an exercise fraught with hazard. A better model is to think probabilistically.

Which brings me to the bull case scenario -- my personal base case.

It has been commonly seen that bubbles tend to last longer than most people imagine. It is why George Soros famously said that when he sees a bubble forming, he buys. And, as the saying goes, bull markets don't end "till the last bear has thrown in the towel" -- there's plenty of skepticism over AI currently. This supports the case that there's a high chance the bubble continues to expand.

So, what will have to give for the bubble to pop?

All bubbles are psychological phenomena.

Investors buy because: (a) prices have risen recently and investors expect them to continue rising (recency bias); or (b) there is a belief that expensive assets can become even more expensive (the greater fool theory).

Market prices are often driven by self-reinforcing beliefs. (Say enough people believe that a stock crossing its 200-day moving average is important, and hence it becomes important - the stock crosses the level and people buy, causing the belief to become self-fulfilling.)

This means that how the SpaceX stock fares on listing day could dictate where the AI boom goes from there – and that's impossible to predict. 

But what can be predicted is the way things proceed depending on how SpaceX share price moves on the listing day. Here's how I look at it.

-    Blockbuster listing: The party likely continues.
-    A muted listing: There is a sense of sobering – even healthy consolidation – before this grows further for months, if not years.
-    Prices crash spectacularly: The AI bubble pops.

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Trump Cancels Iran Bombing, Pivots From Oil Seizure Threats To High-Level Talks

US President Donald Trump has cancelled the bombings planned on Iran on Thursday, citing discussions between the United States and the "highest level of leadership" in Tehran.

"Based on the fact that discussions with the Islamic Republic of Iran have been brought to the highest level of Iranian leadership and approved, I have, as President of the United States of America, cancelled the scheduled strikes and bombings against Iran this evening," he said.

In a Truth Social post, Trump said the main points of discussion were approved by all key stakeholders, including Israel and Arab states.

"Discussions and final points have been, in both concept and great detail, approved by all parties involved, including the United States, Israel, Saudi Arabia, UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, Egypt, and others," he added.

The remarks had an immediate impact on the oil market, with Brent futures sliding 3.3% to $90.2 a barrel.

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Trump claimed that a deal with Tehran would be announced shortly, but the US-imposed naval blockade in Hormuz will remain in force for now.

"The naval blockade will remain in full force and effect until this transaction is finalized — Time and place of the signing to be announced shortly," he stated.

The developments came hours after Trump promised to take over Iran's Kharg Island, and assert "total control" of the country's oil and energy market. 

"At some point in the not too distant future, we will be taking Kharg Island, and other oil infrastructure points, and assume total control of their Oil and Gas Markets, much like we have with Venezuela," he had stated.

Trump also vowed to launch "very hard strikes" on Iran later on Thursday, stating that the country needs to be punished for taking too long to negotiate a deal with the US. In an interview with Fox News, he noted that any agreement with Iran will leave no scope for the country to pursue its nuclear ambitions.

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Richa Ghosh's Knock In Vain As India Lose Final T20 WC Warm-Up Game To England

Richa Ghosh produced a breathtaking late assault but India's brittle top-order batting proved costly as Dani Gibson's sparkling all-round show powered England to a narrow five-run win in their final Women's T20 World Cup warm-up match in Cardiff on Wednesday. After Harmanpreet Kaur opted to bowl, England rode on half-centuries from Amy Jones (64 off 45 balls) and skipper Nat Sciver-Brunt (57 off 45 balls) before Gibson's unbeaten 30 off just 12 balls lifted them to 171 for 6. India's chase never quite gathered momentum as wickets fell at regular intervals, but Richa's stunning 68 off 36 balls nearly pulled off the impossible before left-arm spinner Linsey Smith (3/42) held her nerve to bowl India out for 166 in 19.5 overs.

Gibson also took the wickets of Bhatia and Fulmali in the crucial middle overs phase to return with 2/17 from her two overs, while Charlie Dean (2/1) and Tilly Corteen-Coleman (2/22) also provided fine support.

The defeat exposed a few concerns for India ahead of the T20 World Cup, with the top order misfiring once again, and fielding lapses allowing England crucial extra runs.

Gibson smashed Renuka Singh for two fours and one six to collect 19 runs in the last over, and that proved decisive.

Smriti Mandhana's lean run continued as she fell for one, extending a worrying sequence in which her highest score in seven innings since her 82 against Australia in February has been just 37.

Shafali Verma made a brisk 13 off six balls before miscuing Issy Wong, while Yastika Bhatia (15), skipper Harmanpreet (17) and Bharti Fulmali (18) also failed to convert their starts.

At 132 for 7 in 17.3 overs, India looked well out of the contest before Richa launched a spectacular counter-attack.

Needing 38 from the last two overs, the Bengal wicketkeeper-batter tore into Wong, smashing three fours and a six in a 21-run penultimate over to bring the equation down to 17 off the final over.

Richa continued her charge against Smith, first sweeping her for a four and then launching a massive straight six to reduce the target to six runs from three balls.

However, with victory within sight, Smith lured Richa out of her crease and wicketkeeper Alice Capsey completed the stumping.

Renuka then holed out while attempting a big hit as India were dismissed with one ball remaining.

Earlier, England's innings was built around a 70-run stand between Jones and Sciver-Brunt after India had kept things tight in the opening phase.

Jones punished anything loose during her 45-ball 64, while Sciver-Brunt, returned to rhythm with a 57-run knock with eight fours.

India's bowlers did well to control the scoring for large periods, especially around the rain interruption, but Gibson's late blitz tilted the balance decisively.

Shreyanka Patil was India's standout bowler, claiming 2/29 and striking twice in successive deliveries in the penultimate over to dismiss Sciver-Brunt and Dean.

Four other bowlers picked up a wicket each.

India also gave the new ball to Shafali Verma, an indication that the team management views her as a potential sixth bowler. The off-spinner returned figures of 1 for 18 from two overs, including the key wicket of Jones.

However, veteran spin all-rounder Deepti Sharma was not used with the ball as India rotated six bowling options, while Shreyanka and Radha Yadav (1/38) once again made strong cases with disciplined performances.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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Dylan Larkin Trade Rumors Continue To Grow

Dylan Larkin's trade request remains a major topic of discussion this offseason for the NHL, with some insiders suggesting the Detroit Red Wings captain could be headed to several different teams. Even if Detroit GM Steve Yzerman is focused on getting the best possible return, it's already bringing uncertainty for the Red Wings and other franchises watching the market very closely. Among those teams, the Minnesota Wild, Boston Bruins and Montreal Canadiens are among the clubs being mentioned, because recent reports have them tied to that veteran center again and again.

How Dylan Larkin's Trade Request Could Affect Detroit Red Wings Plans 

According to The Athletic's Pierre LeBrun, Larkin has given the Red Wings a shortlist of desired places to be, though the insider feels those choices could change as trade talks progress. LeBrun also pointed out that getting to some resolution before training camp would probably help both sides.

The uncertainty around Larkin's future has complicated Detroit's offseason strategy. The Athletic's Max Bultman reported that the Red Wings might now need to replace their first-line center, while still handling a bunch of other roster needs, like extra secondary scoring and more forward depth. The situation has even sparked questions about whether Detroit could reconsider its current competitive timeline if a suitable deal cannot be found.

A few teams already surfaced as possible landing spots.LeBrun pointed to clubs like the Boston Bruins, Minnesota Wild and Montreal Canadiens as potential suitors, but then Helene St. James from the Detroit Free Press reported that the Wild, Vegas Golden Knights and Florida Panthers are thought to be on Larkin's preferred list as well.

Could Montreal Canadiens Pursue Dylan Larkin This Offseason 

Montreal has reportedly shown some interest in Larkin as the organization evaluates other important roster decisions. Montreal Gazette reporter Stu Cowan suggested Larkin might be an ideal fit, as the Canadiens' second-line center, though any agreement would probably need a lot of significant assets coming back.

Meanwhile, goaltender Samuel Montembeault has emerged as a potential trade candidate, especially after Jakub Dobes started to rise inside the organization. And since the highly regarded prospect Jacob Fowler is also pushing for more NHL opportunities, Montreal might end up having some flexibility to look at the goalie market this summer.

Forward Kirby Dach's future is also drawing attention. As per TVA Sports Renaud Lavoie, there might be some league-wide interest if the Canadiens decide to move the former third overall selection. Dach is a restricted free agent, so Montreal has to sort out whether his injury background and qualifying offer fit, or not, into the club's longer-term plans.

As trade discussions start to warm up across the NHL, Larkin's situation could ultimately influence a lot more than just Detroit's offseason. A few franchises, including Montreal, might end up making their own roster calls depending on where one of the league's most discussed trade candidates finally ends up.

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