Shares of US technology megacaps, including Alphabet and Amazon, fell broadly on Monday due to increasing investor anxiety regarding the return on artificial intelligence capital expenditure. Alphabet dropped 5.32% to $348.45 and Amazon declined 4.05% to $234.49. This dragged the Nasdaq Composite down just under 1%, which underperformed the Dow Jones Industrial Average. The selloff highlights a growing debate among institutional investors about whether the capital deployed by hyperscalers for AI infrastructure will generate returns commensurate with the scale of spending. Compounding this, Bank of America and Deutsche Bank are now projecting a September Fed rate hike, which increases the discount rate applied to future AI earnings and negatively impacts technology stock valuations.
SpaceX extended its post-IPO decline for a third consecutive session on Monday, with its shares closing at $154.60, down 16.4% from the previous trading session. This marked a roughly 31.5% decline from its intraday high of $225.64 recorded after its record-breaking IPO on June 12. The company's market value dropped by $400 billion in a single day, falling to $2.03 trillion from about $3 trillion on June 16. This rapid correction has been attributed to fears of a Federal Reserve interest rate hike and increased scrutiny of SpaceX's valuation relative to its current free cash flow generation, particularly as retail-driven IPO demand gave way to institutional assessment.
Driving the negative sentiment for SpaceX was the news of its plans to issue up to $20 billion in corporate bonds. The proceeds from this bond offering are intended to repay a $20 billion bridge loan that Elon Musk incurred in March to merge AI startup xAI and social media platform X into SpaceX. This move, combined with a cautious "Sector Weight" rating from KeyBanc and a CCC ESG rating from MSCI due to governance concerns over Elon Musk's 82%+ voting control, further rattled investors. However, SpaceX also announced a multi-year contract with Reflection AI, valued at $1.8 billion annually, to provide access to its AI data centers, positioning itself as an AI computing provider. As of June 19, SpaceX reported having $144 billion in cash equivalents, but also noted a $7 billion loss in 2025 and an additional $6 billion net loss in the first quarter of this year.
