Dan Niles

Founder of Niles Investment Management, Tech Nerd, Bad Tennis Player, Proud Dad. Posts are for information purposes only & never investment advice.

[Dan Niles @DanielTNiles]

@jeffsheehan @SpaceX Thanks Jeff. I am glad you found it useful.

[Dan Niles @DanielTNiles]

$SPCX: Thoughts on SpaceX IPO (typos corrected from pre-mkt post)
The company says its total addressable market is the largest “in human history,” at $28.5 Trillion. But this requires SpaceX to be thought of as a vertically integrated AI and connectivity infrastructure platform versus the rocket and satellite company which it is today.

The $28.5 Trillion TAM Breakdown is as follows
AI $26.5T: Enterprise Applications ($22.7T), AI infrastructure ($2.4T), consumer subscriptions ($760B), ads ($600B)
Connectivity $1.6T: StarLink Broadband ($870B) and Starlink Mobile ($740B)
Space $370B: Traditional launch services and space-enabled solutions

Elon Musk is the Thomas Edison of our generation and SpaceX also has no other comparable in the technology industry at this scale. But unfortunately, the SpaceX IPO valuation at ~90x CY25 revenues at a IPO price of $135 is priced as such. $TSLA, another Elon Musk company, is valued at 16x CY25 revenues as a comparison.

For those that think valuation does not matter given this is a long-term play, I would point to the $ARKK innovation ETF as a warning. Since its peak on 2/12/21 during the Meme stock mania through 6/11/26 (yesterday), it is down 51% including dividends.
$TSLA is up 47% during that time but the S&P is up 103% including dividends.

Revenue growth at SpaceX also slowed from 35% y/y in C24 ($14.0B) to 33% in C25 ($18.7B) to 15% ($4.7B) in the most recent quarter while the Net Income losses increased from $4.9B in C25 to $4.3B in just Q1:26. Free Cash Flow losses also increased from $14.0B in CY25 to $9.1B in just Q1:26 driven by capex increasing from $20.7B in CY25 to $10.1B in just Q1:26.

SpaceX says that multi-hundred-billion-dollar capital expenditures over the next five years will be required to build the infrastructure—specifically data centers and AI training capacity— to chase this theoretical market.

The stock market is clearly not responding well to
$GOOGL (down 6% in June month-to-date through 6/11) or $AMZN (down 11% in June mtd through 6/11) raising capital to chase this market or to $ORCL
results where capex guidance was higher than expected (down 18% in June mtd through 6/11 and 9% yesterday). $META’s stock is down 15% since raising capex and operating expenses on their Q1 results on April 29th vs the S&P up 4% through June 11th. Meanwhile, SpaceX will be pivoting their business to compete with the established hyperscalers above as well as enterprise software companies while currently not having a leading AI model.

In addition, I worry that the large sums of money that have already been raised by others in the equity market such as Google is reducing the amount of capital available to everyone else. Money looks infinite right up until it doesn’t. Between SpaceX, then Anthropic this fall followed potentially by OpenAI, there is likely to be $200B in capital raises this year through just these three IPOs. This will put to the test the liquidity available when 30 year treasury yields have reached levels last seen two decades ago.

As for SpaceX’s stock, I expect the stock to trade well initially given it is likely to be added to different indices soon after going public such as the Russell in 5 trading days, MSCI in 10 and Nasdaq100 in 15. This will result in a lot of forced buying by index funds. In addition, some “closet indexers” in the mutual fund community will market weight the name to avoid the tracking error relative to the indices that they are benchmarked against. After the initial 15 trading days, however, I think it gets a lot more dicey. While Elon always seems to deliver on his forecasts, they are rarely in the time frame initially envisioned. When you are doing things hardly anyone thought possible, this is understandable.

Currently the stock is trading at ~$180 in the perpetual futures contracts on Hyperliquid vs the $135 IPO price which already implied ~90x CY26 revenues. I believe the risk vs. reward is very poor at these valuation levels with capex ramping up once you get beyond the initial 15 trading days when it can be added to indices.

[Dan Niles @DanielTNiles]

@Rxchai21 Sometimes the stock market gods smile on you :)

[Dan Niles @DanielTNiles]

On June 4th I posted “Coming into today, I was concerned over the increasing near-term bubble like behavior in the which the SOXX was up a staggering 95% from the market closing lows on March 30th through yesterday June 3rd which drove a 19% rally in the S&P.” There were numerous signs of near-term froth and I believed they would need to be worked off.

However, coming into today, the morning of June 11th, the S&P is now down 4.5% from its recent closing high while the SOXX is down 12.3%. While the SpaceX IPO tomorrow in which a staggering ~$75B will be raised in the largest IPO in history may cause some of their large cap peers to be sold, I think that should be the final negative catalyst in the near-term.

I also wrote on June 4th, “I remain bullish over the long-term given 1) S&P earnings are expected to increase 25% this year driven by the advent of Agentic AI, 2) I believe oil prices will come down, and 3) new Fed Chairman Warsh is likely to push back against calls to raise rates.”

$ORCL results last night once again pointed out how the spending on AI continues driven by the token generation required by Agentic. Capex was guided to $90-95B including pre-payments for FY27 from $56B in FY26. While not good for Oracle cash flows or their hyperscale competitors which are locked in a capex war, it is great for the beneficiaries of that spend in semiconductors. I believe starting to add back positions in this sector once again makes sense and that the sell-off in the overall market is near an end.

I believe this is the pause that refreshes.

[Dan Niles @DanielTNiles]

@ETFProfessor You are so right Dan that it is never a smooth ride. Trying to manage around the short-term extremes of overbought and over-sold is challenging as the "market can stay irrational." We both have the scars to prove it :)

[Dan Niles @DanielTNiles]

@tjbevi You are welcome and thanks for the kind words.

[Dan Niles @DanielTNiles]

@TimInBostonMass Early next year is how I am thinking about long-term. That is when we anniversary the formalization of OpenClaw on January 30th which kicked off the move to Agentic AI from Chat-based AI.

[Dan Niles @DanielTNiles]

After shrugging off $AVGO -12.6% on Thursday, the strong jobs report drove the 2yr yld +10bps to the highest levels since early 2025 & S&P -2.6% on Fri. For the wk, S&P/Nas/SOXX/Mag7 were -2.6%/-4.7%/-4.7%/-5.8% despite oil -3% to $91.

This is what I posted on X on last Sunday night “Over the near-term, the overall market at some point will need to take a breather from increasingly overbought technical conditions. After nine straight weekly gains, the S&P is now up 19% from its recent closing low on March 30th. But I feel like any losses will be contained to the typical ~5% pullback which is typically seen three to four times per year.”

After being up for nine straight weeks, the S&P went from an all-time closing high on Tuesday June 2nd and 14-day RSI of 75 to an RSI of 49 on Friday June 5th and down 3.0% from that Tuesday level.

During the internet infrastructure buildout between December 31, 1994 and the peak on March 10, 2000, the S&P tripled, the Nasdaq went up 6.7x and the SOXX Index advanced 9.5x. The S&P during this time had its 14-day RSI cross below 70 (overbought level) fifty times. 36% of the time, that day was the low point before it crossed back above 70 again. 42% of the time the low was reached within 2 trading days and 62% within three days. The average was 10 trading days to hit a short-term low and down 2.5% on average from the overbought level before the advance started to the next overbought reading.

Next week, there will be several potential market moving events. The $AAPL WWDC is on Monday. With the stock price surge into this event, a sell the news reaction would not be surprising much like with recent tech results. But I am bullish longer-term given after a 2 year wait we should finally get an AI infused iPhone. I am also very bullish on the larger form factor of a foldable phone that has driven major upgrade cycles in the past. Samsung introduced a foldable in 2019.

CPI on Wednesday will be closely watched along with how bond yields react. $ORCL results are also that day which should be solid given recent commentary from major customer OpenAI as well as related hyper-scaler cloud results. Having said that, a new CFO may want to set very achievable initial FY27 guidance that could disappoint.

The ECB is likely to raise rates on Thursday since being on hold after cutting rates in June of 2025 to 2.0%. Commentary will likely set the bar for the Fed in the following week.

Over the long-term I remain bullish given: 1) S&P earnings are expected to increase 25% this year driven by the advent of Agentic AI, 2) I believe oil prices will come down to the $80ish level given the political toll it is extracting on the US administration every day that the Strait of Hormuz is closed, and 3) new Fed Chairman Warsh is likely to push back against calls to raise rates. I view this recent pullback as well needed to work off the recent froth versus marking "the top."

All the best in the week ahead.

[Dan Niles @DanielTNiles]

@c_rifinc @KellyCNBC @SullyCNBC One of the hardest parts of investing is the wait, as unforeseen events often intervene before a thesis plays out. I will take fortunate timing any day :)

[Dan Niles @DanielTNiles]

As I discussed on this CNBC interview earlier today with @KellyCNBC @SullyCNBC semiconductor investors should be thrilled today.

This is what I posted on X on Sunday night “Over the near-term, the overall market at some point will need to take a breather from increasingly overbought technical conditions. After nine straight weekly gains, the S&P is now up 19% from its recent closing low on March 30th. But I feel like any losses will be contained to the typical ~5% pullback which is typically seen three to four times per year.”

But then the $SOXX (semiconductor index) gained 8.5% in just the first three days of this week!

Coming into today, I was concerned over the increasing near-term bubble like behavior in the which the SOXX was up a staggering 95% from the market closing lows on March 30th through yesterday June 3rd which drove a 19% rally in the S&P.

Other signs of near-term AI/Semiconductor froth included:
1. $MU +19% in a day off of an analyst upgrade
2. $DELL +33% in a day in reaction to earnings
3. $HPE +19% in a day in reaction to earnings
4. $MRVL +33% in a day in reaction to comments at Computex

I thought the big decline in the pre-market by the stock of $AVGO due to just reiterating their AI guidance would hit the SOXX which in turn would hit the S&P.

Instead, $AVGO declined “just” 12.6%, the SOXX lost only 2.2% and the S&P gained 0.4%. Oil declining 3% today certainly helped along with bond yields heading lower. Nevertheless, semiconductor bulls should be thrilled at the resiliency of a sector that looked ripe to get crushed from technically extended levels when one of the bell weathers got hit.

While I believe this sell-off in semis could continue for several days given the exuberance coming in, I think this will be a short-term move in the SOXX to work off overbought conditions vs “the top.”

Names I like on a dip include:
1) $INTC & $AMD (1 GPU per 1 CPU w/ Agentic vs 8 to 1 prior)
2) $NVDA 25x CY26 PE for 80% rev growth
3) Analog semiconductors given power requirements of next gen GPUs

To reiterate prior posts, the reason why I am still bullish through early next year is Agentic AI. This arguably kicked off with the formalization of OpenClaw on January 30th and requires 10-100x more token production versus chat-based AI.

My biggest concern remains oil prices and their impact on inflation, bond yields, economic growth and the Fed. Given mid-term elections coming up in early November, I believe President Trump wants to extricate himself from this war as soon as he can.

In my opinion, oil needs to get back down into that ~$80 range versus the mid-$60 level prior to the war. Historically, when oil has spiked and has stayed there for around two quarters, the odds increase dramatically for a recession. Investors forget that oil prices more than doubled in 1999.

In summary, I remain bullish over the long-term given 1) S&P earnings are expected to increase 25% this year driven by the advent of Agentic AI, 2) I believe oil prices will come down, and 3) new Fed Chairman Warsh is likely to push back against calls to raise rates. Time as always will tell.

[Power Lunch @PowerLunch]

"Broadcom is -12%. The semi index is -1%. That totally blows my mind," says @DanielTNiles. "If you're a bull, this should make you feel like you're bulletproof." $AVGO $SOXX
https://t.co/VbiQMqMixj

[Dan Niles @DanielTNiles]

@smdcapital @KellyCNBC @SullyCNBC Appreciate the kind words.

[Dan Niles @DanielTNiles]

I really enjoyed this pod with Dan Nathan @RiskReversal with a focus on the big picture and why I believe 2026 is similar to 1997 & 1998.

[RiskReversal Media @RiskReversal]

Fan favorite @DanielTNiles returns to the RiskReversal Podcast 🎙️

🫧 Why Bubbles Are Bullish
📈 Rates High, Valuations Still Reasonable
👐 Strong Convictions w/ Loose Hands
🤖 Intel's Agentic AI Comeback

YOUTUBE: https://t.co/d4aSf9Xluu
APPLE: https://t.co/y8m7L1pycz
SPOTIFY: https://t.co/lAU6G1rQuL

[Dan Niles @DanielTNiles]

@AleksandarGenov $TKO has a On Location division that sells hospitality tickets for events including for the World Cup this year.

[Dan Niles @DanielTNiles]

Last wk, S&P +1.4% its 9th straight up wk as oil fell 10% to $87 w/ bond yields down 9-12 bps across 2/30yr curve supporting the move. Tech led w/ Mag7 +2% w/ $SMH +4% & $IGV +8% w/ some notable earnings from $DELL +43% and $SNOW +48%.

Headline and core PCE (the Fed’s preferred metric prior to current chairman Warsh) coming in below expectations was also welcome. This follows some higher than expected inflation readings of PPI and CPI over the prior two weeks.

One macro positive for the AI trade was Anthropic raised $65B at a valuation of $965B at $47B in annualized revenue run-rate vs $9B at the end of 2025. This shows the continuing availability of capital to fund AI capex. This follows the news two weeks ago that Anthropic expected to be profitable in Q2. That helped answer the question on the ROIC on that capex. Computex 2026, which starts tonight (EST) in Taipei, will also give us some more interesting AI related data.

On the negative side, Blue Origin had a rocket blow up on the launch pad and SpaceX’s target valuation for their IPO on June 12thseems to have moved down from $2 trillion to $1.8 trillion. This is the first trillion dollar IPO before year-end with Anthropic and OpenAI likely following before year-end. Given these companies can now be included in major indices in as little as five days, it will be interesting to see their impact on stocks. Is this supportive or does this take money out of other related tech names as passive funds rebalance along with mutual funds that are closet indexers?

Given the sharp move lower in oil over the past two weeks from $109 on May 18th to $87 on Friday and decline in bond yields from levels last seen in 2007 for the 30yr, it will be important to see continued progress with Iran.

Over the near-term, the overall market at some point will need to take a breather from increasingly overbought technical conditions. After nine straight weekly gains, the S&P is now up 19% from its recent closing low on March 30th. But I feel like any losses will be contained to the typical ~5% pullback which is typically seen three to four times per year.

As a result, I am looking for beaten down stocks in the consumer discretionary sector for good risk adjusted ideas for the short-term that should benefit from lower oil prices and less turmoil in the Middle East. This S&P sector is up just 4% year-to-date due largely to the increase in oil prices.

I mentioned three new names in a @LizClaman interview last week as an example that were down an average of roughly 10% year-to-date at the time:
1) $TTWO with the pent-up demand for the long awaited Grand Theft Auto VI coming in November 2026 vs the initial GTA V in 2013
2) $DIS with ~50% of guests driving to the theme parks that should be helped by gas prices hopefully going down in the future,
3) $TKO which is impacted by the current reduction in events in the Middle East but helped by the upcoming World Cup.

Having said that, over the long-term, I feel much the same as I did at the end of last week. There are reasons to remain optimistic for the rest of 2026 as the Iran situation winds down much like following the macro scares in 1997 & 1998. Those years finished up 31% and 27% respectively following intra-year selloffs of 11% and 19%.

Positives for the rest of 2026 include:
1) oil prices likely declining through year-end,
2) S&P earnings expected to increase ~25% in 2026,
3) AI related capex growing ~70% driven by the advent of Agentic AI, and
4) the desire of incoming Fed Chairman Warsh to cut rates which should somewhat offset the pressure from the bond market pricing in a rate hike by year-end.

Best of luck in the week ahead.

[Dan Niles @DanielTNiles]

@Ahm9170 You are welcome.

[Dan Niles @DanielTNiles]

@skhentigan I love watching Wemby so got to root for them. Knicks winning in 4 and being well rested vs 7 games for the Spurs though is going to make this a tough ask.

[Dan Niles @DanielTNiles]

@Michael02826582 Thanks. You too.

[Dan Niles @DanielTNiles]

@AsonRags I am glad you like it.

[Dan Niles @DanielTNiles]

@JohnPicksStocks Thanks. I am glad you find it useful.

[Dan Niles @DanielTNiles]

@aveer30 You are correct that even with a resolution given the shut-in capacity that will take some time to restart, the rerouted shipping routes, and the number of ships waiting to transit it will take months to get things back to normal in the Strait. That is why I said by year-end.