SpaceX equity volatility reflects broader tech sector correction and monetary policy concerns
Shares dipped below the $150 debut level, erasing $600 billion in value, before recovering 2.4 per cent as investors reassess artificial intelligence infrastructure costs and US interest rate trajectories.
SpaceX shares fell below their market debut price of $150 per share on Tuesday, wiping out $600 billion in market value before recovering 2.4 per cent. The decline follows a 16 per cent slump on Monday that erased $400 billion in market value for the Elon Musk-led aerospace company. Despite the volatility, shares remain trading 10 per cent above the $135 per share initial public offering price set in June 2026.
The company’s recent market movements occur against a backdrop of broader technology sector sell-off, with the Nasdaq Composite index tumbling 1.4 per cent in morning trading. This correction is driven by investor concerns over elevated artificial intelligence spending and expectations of tighter monetary policy from the US Federal Reserve. Six of the seven "Magnificent Seven" technology stocks were under pressure, reflecting widespread caution regarding the return on investment for massive infrastructure commitments.
Chipmakers and memory stocks led the decline, with Micron down 9 per cent and Advanced Micro Devices down 5.7 per cent in midday trading. Intel fell 2.4 per cent and Nvidia dropped 2.8 per cent. SanDisk also dipped 9 per cent. These declines highlight the market’s scrutiny of the hardware sector, which has otherwise led market gains this year but now faces questions about the sustainability of current capital expenditure levels.
Despite the equity volatility, SpaceX has secured significant revenue-generating agreements to support its AI ambitions. The company recently locked in a deal with AI startup Reflection AI, granting access to its Colossus 2 data centre for $150 million per month. This follows an earlier agreement with Google, under which the tech giant pays SpaceX $920 million per month. These contracts underscore the company’s growing role in the data infrastructure market.
Market analysts suggest the sharp sell-off and subsequent bounce could indicate a setup for the stock to move higher. Michael Monaghan, partner portfolio manager at FounderETFs, noted that the company’s balance sheet is strengthening and revenue is increasing. He attributed the volatility to the stock’s premium valuation and low float, which magnifies price movements in both directions.
Aleksandar Tomic, associate dean for strategy, innovation and technology at Boston College, described the current market conditions as driven by jitters about AI profitability. He noted that while hyperscalers have committed billions to ramp up AI infrastructures, clearer evidence that these products can generate returns justifying the spending remains elusive. The situation could represent a temporary blip or the beginning of a deflation in the AI bubble, though he admitted it is difficult to determine with confidence at this stage.
The broader market correction is also influenced by expectations of tighter monetary policy under new US Federal Reserve Chair Kevin Warsh. Warsh is expected to maintain or possibly raise interest rates in the fall, following signals from the central bank’s most recent policy forecast that it could raise rates at least once before the end of the year. This anticipated shift in policy adds further pressure on high-growth technology stocks.
A Reuters analysis found that of the 50 most-valued IPOs in the last five years, investors would have been better off buying an S&P 500 index fund about three-quarters of the time than buying into a big IPO. This historical context adds to the scrutiny facing SpaceX, which raised $75 billion in its IPO and briefly surpassed Microsoft and Amazon in market value before settling at a valuation of approximately $1.9 trillion.
