Transcript

Amada Agati:  

You’ve probably seen the chatter about a potential SpaceX IPO, but when you step back it fits into a much larger pattern. The AI story is not fading, it is expanding, and there are three reasons we know that.

First, look at what capital markets are telling us. The Cerebras IPO was the largest of the year so far. That matters because it signals that capital markets are back. There has been significant pent‑up demand from private equity and venture capital, and this deal suggests the IPO window is reopening, likely setting the stage for more activity in the second half of the year.

It is also notable that Cerebras is a direct competitor to NVIDIA, and both stocks moved higher on the day of the IPO. That is not what a “winner take all” market looks like. Instead, it suggests we are still in the early innings of a multiyear innovation cycle where multiple players can succeed.

Second, consider what earnings are telling us. The AI story is evolving beyond the largest technology companies and becoming something much broader. Even companies like Walmart are now being discussed in the context of AI. The next phase is about adoption and application: which companies can use AI to improve margins, drive productivity and create new revenue streams.

Sectors like industrials and materials are already putting AI to work to optimize operations. This includes improving supply chains, increasing efficiency and unlocking new demand. The market is beginning to reward these use cases, and earnings growth is broadening beyond the traditional leaders.

In the first quarter, earnings grew roughly 28 percent. Even excluding the biggest names, growth was still around 17 percent. That is not narrow leadership. More companies are contributing to growth, and expectations for the second quarter are moving higher across the board.

Third, the broader market backdrop is actually quite encouraging. Markets have rebounded strongly from late March lows, with technology leading the rally, which is exactly what you would expect in an innovation‑driven cycle. This is happening despite uncertainty around interest rates, persistent inflation and ongoing debate about the Federal Reserve’s next move.

Concerns about bubbles or excess often arise in this environment, but the data tells a more grounded story. Markets are near all‑time highs, yet the forward price‑to‑earnings ratio on the S&P 500 is around 21 times. That is elevated, but it is supported by real earnings growth. In other words, this market is being driven by fundamentals rather than speculation.

This brings us back to the potential SpaceX IPO, which reflects many of these same themes. SpaceX is not just a space company. It operates at the intersection of connectivity, data infrastructure and advanced technology.

Consider Starlink, a global satellite network that enables real‑time data access in areas that were previously unreachable. This has meaningful implications for deploying AI in remote, industrial and defense environments. If and when SpaceX comes to market, it would reinforce what we are already seeing: the innovation cycle is broadening and the opportunity set is expanding along with it.

It may even be the first deal where investors need both a discounted cash flow model and a launch window.

So where does that leave investors? First, stay anchored in the fundamentals. Earnings are doing the heavy lifting, and that is a healthy sign. Second, think beyond the obvious winners. The next phase of growth will come from adoption and application, not just infrastructure. Third, keep an eye on what is coming next, because the investable universe is evolving quickly.

We are still early in the AI cycle, but we are entering a phase where breadth, execution and earnings matter far more than hype. From here, the focus shifts from imagining what is possible to proving what actually works. That is where the real opportunity lies.