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Good morning and happy Friday.
Jeff Bezos opened up about a stealthy new artificial intelligence project on Thursday. Prometheus, the startup where he’s co-CEO alongside former Google executive Vik Bajaj, said it raised $12 billion at a $41 billion valuation from investors including the Amazon co-founder himself.
Bezos told media outlets that Prometheus, which launched in November and has no ties to Amazon or his space firm Blue Origin, is developing what it calls an “artificial general engineer,” or an AI to work on the engineering side of physical products. The details are still mum, but Bezos suggested Prometheus AI models could develop and refine prototypes for everything from jet engines to buildings to consumer electronics to medical devices. This, Bezos said, would reduce the time it takes for human engineers to complete complex projects. Think big, Jeff: Start with a McDonald’s McFlurry machine that doesn’t break down and take it from there.
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In case you just returned from an extended silent retreat, the biggest business news of the year is about to blast off. SpaceX starts trading on the Nasdaq today in what’s priced to be the largest IPO ever.
The rocket launch/internet satellite/social media/AI chatbot company set its share price at $135 and expects to raise $75 billion in its public debut, after which its estimated value will land at roughly $1.77 trillion. SpaceX could immediately be worth more than Elon Musk’s other baby, Tesla, as well as Meta and Berkshire Hathaway.
The stock has massive thrust from eager investors propelling it toward the stars, but analysts are questioning if and when its shares could come back down to Earth.
Gravitational Pull Felt By Everyone
The hottest IPO ever has huge demand. BlackRock is reportedly on the books for at least $5 billion worth of shares, while sovereign wealth funds including Saudi Arabia’s Public Investment Fund have placed orders for stakes of $1 billion or more. Altogether, about 1,000 institutional investors want a piece of the IPO.
SpaceX is expected to set aside 20% of its shares for retail buyers who’ve placed bids for more than $100 billion worth of shares, Bloomberg reported Thursday morning. Many of them will have to jostle for shares once the company starts trading.
But SpaceX’s stock will touch other less obvious investors, too:
- Universities have invested in SpaceX via their endowments, with some poised to hold outsized positions because of early investments. The University of North Carolina’s 17-school system is said to have about a tenth of its endowment tethered to SpaceX, while Washington University in St. Louis’s holding percentage sits somewhere in the mid-teens.
- Passive investors could see SpaceX stock touch their retirement accounts quicker than usual. SpaceX’s fast-tracked entry into the Nasdaq 100 and the FTSE Russell means the company will find its way into index funds soon after its launch. But the S&P 500 isn’t bending the rules for SpaceX. The stock’s potential for volatility could be a concern for passive investments.
  SpaceX Oddity: SpaceX is about to be more exposed than a full moon on a clear night. Analysts are concerned that the same hype pushing the stock to infinity and beyond could make it break up in the atmosphere. Morningstar analysts said this week they think SpaceX is worth less than half its IPO target because its chances of one day turning a profit hinge on “novel and untested” tech. Goldman Sachs, however, expects SpaceX’s AI division to pull through, predicting the unit’s revenue will jump from about $3 billion last year to $322 billion by 2030 to make up the majority of the company’s total revenue. Historically, companies have tended toward volatility when they’re fresh out the gate (indexes typically wait to add them for a reason). Add Elon Musk’s antics to the mix and SpaceX could face occasional geomagnetic storms post-lift off.
Written by Jamie Wilde
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Photo via Plaid
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If you had told a Silicon Valley venture capitalist five years ago that the future of artificial intelligence would depend on a Texas coal-and-nuclear utility, a sovereign wealth fund from the Persian Gulf, and the world’s most dominant microchip monopoly sitting around the same table, they would have laughed. But that is precisely the unusual syndicate behind Helix Digital Infrastructure.
Launched Thursday by KKR, Helix is backed by $10 billion from a superteam of investors: Kuwait’s sovereign wealth fund, Nvidia, which is supplying digital infrastructure expertise, and, perhaps most importantly, Texas-based energy producer Vistra. The aim is to build data centers with fully integrated power supplies, an end run around one of the biggest bottlenecks bedeviling the broader AI buildout.
We Have The Power
There’s a reason big money firms keep teaming up with power producers to build and scale AI infrastructure (for more examples, see Blackstone’s joint venture with energy firm PPL and Brookfield’s $5 billion JV with fuel cell-maker Bloom Energy last year). “Compute is recognized as being directly linked to power, and yet, the traditional firms are not well equipped to navigate the power access process. Conversely, the power companies aren’t really great at selling to the hyperscalers,” Everett Thompson, CEO of data center real estate advisory firm WiredRE, told The Daily Upside. “Thus, these partnerships serve both firms’ needs: [power companies] get new clients, and Helix in this case gets power development support.”
To meet massive new demand from data centers, energy players are scrambling to get new capacity on the grid. In the meantime, planned data centers are languishing in development limbo:
- Nearly 40% of data center projects in development this year are at risk of facing significant delays, according to an April Financial Times analysis of data provided by satellite group SynMax. Lack of access to sufficient power was cited as a leading reason for the delays, as well as labor and other supply shortages.
- An even more recent analysis by Goldman Sachs published in May found that as little as 50% of data center capacity scheduled to come online in the next two years is on track to do so on time amid delays and shortages.
Now Vacancy: Helix, which is led by former Amazon Web Services chief Adam Selipsky, will almost certainly be well-rewarded if its combined expertise allows it to bust through the bottleneck and reach the insatiable demand on the other side. North American data center vacancy rates were at a record low of 1% at the end of last year, according to real estate firm JLL’s sector report card. The group also found that 92% of capacity currently under construction was already precommitted. Another Goldman Sachs report published in May, meanwhile, predicted that agentic AI alone will account for a 24-times increase in token consumption by 2030.
Written by Brian Boyle
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Photo via United States Tungsten Corp.
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Another week, another White House declaration that the US and Iran are ready to broker a truce. If your coffee tastes spiked with déjà vu this morning, it’s because you’ve drunk this exact vintage before.
President Donald Trump on Thursday claimed the US has “made a great settlement of the war with Iran” that will end the conflict that’s roiled energy markets and stoked inflation since February. The S&P 500, Nasdaq and Dow surged, closing up 1.7%, 2.5% and 1.8%, respectively. Brent crude, the international oil benchmark, fell 4.2% to $89.21 per barrel. Iran’s foreign ministry on Friday pushed back against the notion that a deal is imminent, but the country’s semi-official Mehr news agency said a memorandum that would suspend US sanctions on Iranian oil and reopen of the Strait of Hormuz, while giving both sides 60 days to hammer out a final agreement, is in the draft stages. Whether or not this latest purported deal comes to pass, new evidence suggests the future US role in global energy markets could be significantly transformed.
Main Street Hits a Wall
Brent remains well above its $70 price before the war in late February, as does the $4.12 per gallon price of gas in the US, up from $2.98. This has been miserable for Main Street, with consumers reporting unprecedented levels of pessimism and dealing with 4.2% inflation, according to the latest consumer price index (CPI). Fifth Third Commercial Bank chief US economist Bill Adams noted businesses may be feeling pressure, too, as they appear to be absorbing “higher input costs in narrower margins” because they may “think consumers are unwilling or unable to absorb further cost increases.”
Wall Street, on the other hand, has been comparatively sanguine, betting the Iran war will end without significant escalation. Adapting to the risk has unleashed a bullish equities run, bolstered by a strong earnings season, with the major indices setting new closing milestones earlier this month (jitters have emerged this week around the AI investment boom as SpaceX lists today).
Experts, officials, and executives have all warned that, even if the US and Iran patch things up, oil markets will take until next year to normalize, which could prolong the pain on Main Street. On the upside, there is evidence the US could exit the conflict in an emboldened position on energy markets:
- According to ship tracking data from Vortexa cited by Reuters, the US has led the world in crude and fuel exports for three months, most recently shipping 10.5 million barrels per day in May, compared to 7 million exported from Russia and 5.9 million from Saudi Arabia. Russian exports have declined because of sanctions over its invasion of Ukraine, while Saudi business has been disrupted by the US-Iran war.
- The US also saw liquefied natural gas and liquefied petroleum gas exports to India triple in May, making it the largest supplier of both to the world’s most populous country, according to Kpler data noted by CNBC.
Too Exposed? After seeing what’s happened to nations that were too reliant on one energy source in the wake of the Ukraine and Iran conflicts, policymakers may be averse to putting all their eggs in the US basket. For example, regulators for the import-reliant EU, writing about LNG imports in May, cautioned that the bloc’s “reliance on U.S. LNG [which makes up 58% of imports] may raise questions of dependency on a single supplying country.”
Written by Sean Craig
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- En Lagarde: The European Central Bank hiked interest rates for the first time in three years as the Iran war keeps accelerating inflation past targets.
- Big Promotion: President Donald Trump said he’s nominating Jay Clayton, currently Wall Street’s top cop as US attorney for the Southern District of New York, to be the next director of national intelligence.
- Mindstream Is Built for Busy People Who Know AI Matters but Don’t Have Hours to Figure Out What’s Real and What’s Noise. Every issue translates what’s happening in AI into what it means for your business, your industry, and your decisions. Calm, credible, and genuinely useful. Subscribe today.**
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