The SpaceX IPO, Fable 5, AI Capex Update & Market Check w/ Gavin Baker, Andrew Fox & Clark Tang

Summary

• SpaceX prices Friday at $135/share, $1.77T — and the table’s verdict is unambiguous: Brad calls it “a must buy, a must own, a set it and forget it” for any investor who is “AI pilled.” Gavin’s two levers: how fast SpaceX brings on terrestrial data centers (Elon stands them up in 122 days — “speed is literally cost”) and whether the Cursor acquisition puts xAI on the coding Pareto frontier, where “all frontier model revenue will accrue.”
• SpaceX became the #4 hyperscaler in 30 days — “EWS” wasn’t in many people’s models six months ago. The Anthropic deal monetizes at $22-23B per gigawatt per year, Google at $50B, versus only ~$14B implied in the leaked $160B 2028 revenue number — meaning the Street math clears before any orbital leap of faith, and Altimeter’s Freida pegged a 55% IRR on the Anthropic deal (“if you can borrow at 6, 7, 8% and invest at 55%… that math maths”).
• Clark’s view: orbital compute is a call option, not a requirement: with rapid two-stage Starship reusability ($1,500/kg on Falcon → $250/kg or lower), the math backs into ~$5B per gigawatt of capex in space vs $20-25B terrestrially for the non-silicon half of the bill of materials — a 5x reduction — conditional on satellite reliability, since “GPUs melt and lasers fail.”
• The least-talked-about upside is the model itself: Cursor’s Composer 2.5 (built on Kimi K2.5 plus proprietary coding data exceeding the public internet) was Pareto dominant 12 days ago, and Grok 4.3’s 1.5T-parameter run is now training with Cursor data injected into pre-training. Brad: if there’s an upside surprise in the IPO, “this is the place getting the least amount of attention.”
• Fable 5 and Mythos reset the compute bull case: the unlock is long-running tasks, and per Noam Brown’s “polynomial” post, “we do not know how smart these models are” because nobody has run one continuously for a year — imagine Einstein thinking about physics 24 hours a day. Gavin: “however bullish I was on compute before, I’m just a lot more bullish.”
• Frontier captures ~90% of revenue even as open source may take 80% of tokens — the “cheap tokens catch up” thesis was “decisively wrong” on revenue. Twist: open source is bearish for frontier labs but bullish for compute providers, and Gavin thinks Nvidia could weaponize it against ASICs — “That’s a cute ASIC you’ve built there… How would you like open source to join the frontier?”
• The capex math maths — but both PMs have dialed risk down. ~$1.5T of 2027 capex against ~$300B+ inference revenue at 60-70% gross margins works, especially with per-gigawatt monetization up from ~$20B to $30-40B this year and Anthropic hitting “accidental profitability.” Still, with CPI back at 4.2, semis having “gone straight up a cliff,” Altimeter has cut from large to medium-small exposure — “consolidation on the way to much higher highs.”

Deep dive

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