SpaceX Posted Its First Profit And The AI Trade Came Back

SpaceX reported its first profitable quarter since going public, and Elon Musk said committees at SpaceX and Tesla are now examining whether the two companies should merge. For a week this briefing has described an artificial-intelligence buildout financed with debt nobody had priced properly, so a profit from one of its largest builders lifted share prices across Asia overnight. The quieter story sat in Washington: three weak housing reports landed in one day, and the interest rate the U.S. government pays to borrow for a decade fell as investors read them.

Fast Facts

• Super Micro Computer said preliminary quarterly revenue will be $18.5 billion to $19.5 billion, against guidance of $14.5 billion to $15.5 billion; Dell and HPE rose with it (Read More)
• General Motors will buy back $20 billion of its own shares, leaving each remaining share a bigger slice of the company, and warned 2027 will be bumpy; the stock fell anyway (Read More)
• Higher subscription prices lifted Netflix revenue 12%, but its forecast for the current quarter came in below analysts' estimates and the stock fell more than 6% before the opening bell (Read More)
• The FAA certified Boeing's 737 MAX 10 after years of delay, clearing airlines to fly the largest member of the MAX family (Read More)
• Anthropic recorded an $80 billion loss for the first half of 2026, up from $13 billion a year earlier, driven by accounting charges rather than cash out the door, according to the Wall Street Journal (Read More)
• Larry Ellison pledged shares in Tesla, SpaceX and Paramount Skydance to borrow more from banks this year, helping bankroll his son's bid for Warner Bros. (Read More)

Global News

• Jio's $3.2 billion share sale, India's largest ever, was fully covered in under two hours, with institutions bidding 4.9 times the shares set aside for them (Read More)
• South Korea's Kospi index rose 3% as chipmakers climbed on strong exports and demand for artificial-intelligence hardware (Read More)
• CATL, the world's largest maker of electric-vehicle batteries, reported an unexpected profit slowdown and its mainland-listed shares fell more than 10% (Read More)
• Carrefour cut its profitability targets for the year, blaming France's protests for keeping shoppers away; shares fell more than 13% (Read More)

SpaceX Turned Its First Profit Since Going Public, And Its AI Arm Passed Starlink On Revenue

SpaceX reported its third-quarter results after Tuesday's close. Revenue came in at about $14.6 billion, up roughly 161% from a year earlier and well ahead of the $12.7 billion to $12.9 billion analysts expected on average. Net profit was $4.4 billion, against a $1.05 billion loss a year earlier. That is its first profitable quarter since it went public about four months ago, and the nine-month picture flips to a $413 million profit from a $2.59 billion loss in 2025. On the call, Elon Musk said SpaceX and Tesla have each formed a special committee, a small group of directors studying one question, to explore a merger. He said the idea has "a lot of merit."

SpaceX shares rose more than 8% in trading after the official close and Tesla gained 1.8%, with the rally reaching other AI-linked companies. The merger talk gives those numbers their scale: a combined SpaceX and Tesla would be worth more than $3 trillion, the largest corporate combination ever attempted and larger than the $1.25 trillion SpaceX and xAI tie-up in February. "They've got to come up with something, and then that's got to be put to the shareholders as a vote," Musk said, calling 50% approval from Tesla's owners a "high hurdle."

In Tuesday's briefing, and Friday's before it, we wrote that the AI buildout was being paid for with borrowed money whose true cost nobody had priced. Tuesday night's report is the first answer to that from inside the buildout. Super Intelligence, SpaceX's AI computing business, booked about $7.56 billion and passed Starlink's connectivity arm on revenue for the first time, while Starlink still produces most of the company's profit. A borrower who earns cash today can pay the interest on its debt out of earnings rather than by borrowing again. That is what lenders watch hardest, and it is why one quarter of profit can change how a whole group of stocks is priced.

Starlink added 1.6 million consumer subscribers to reach 13.6 million, where analysts had looked for roughly 2.29 million additions, so the business that still earns most of the profit grew more slowly than expected. One profitable quarter is not a pattern. And the merger is still a proposal about a proposal, two committees that have agreed on nothing. Musk said as much: "Some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it."

Sources: Al Jazeera · MarketWatch · our 2026-10-20 briefing

Three Weak Housing Reports Landed In One Day, And Long-Term Borrowing Costs Fell With Them

Three readings on the U.S. housing market arrived within hours of each other, and all three pointed the same way. The Census Bureau said housing starts, meaning the number of homes on which construction actually began, fell 5.2% in September to an annual pace of 1.221 million. Economists polled by Reuters had looked for 1.305 million. Permits to build single-family homes fell 4.0% to 845,000, the fewest since March 2023; finished homes fell 2.4% to 840,000, the fewest since May 2020. The National Association of Realtors said its index of signed but not yet closed purchase contracts fell 7.3% in September to 66.0, the lowest since the series began in 2001 and 11.3% below a year earlier. Yesterday this briefing reported builder confidence at its weakest since 2012; these reports are what those builders went on to do.

Investors read the three reports as evidence of an economy cooling where high rates bite first, and bought long-dated government debt in size. Debt like this pays a fixed set of dollars on a fixed schedule, so when buyers bid the price up, whoever pays that higher price collects the same dollars and earns a smaller interest rate on the money put in. Price up, rate down, every time. The Treasury's official close for 2026-10-20 put the 10-year note at 5.12% and the 30-year at 5.42%, both under the prior session, while the 2-year, which tracks where investors think the Fed is heading over the next couple of years, finished higher at 4.79%. The gap between the 2-year and the 10-year narrowed to 33 hundredths of a percentage point.

Freddie Mac's survey put the average 30-year fixed mortgage at 7.40% in the week before the data, the highest in nearly three years, and that is the number written on the paperwork at a closing table. Lawrence Yun, the Realtors' chief economist, tied September's weakness to it: "Market conditions weakened in September due to fast-rising mortgage rates." A record low in signed contracts is that rate counted in households: people toured a house, ran the arithmetic on the monthly payment, and did not sign.

Sources: Reuters via Investing.com on starts and permits · Reuters via Investing.com on pending home sales · U.S. Treasury · our 2026-10-20 briefing

Britain's Inflation Climbed To 3.5% And The Fuel Pump Did Most Of The Work

The Office for National Statistics said U.K. consumer prices rose 3.5% in the year to September, up from 3.1% in August and the highest annual reading since October 2025. On the month, prices rose 0.4% against a 0.3% forecast. Motor fuel did most of the lifting: petrol and diesel cost 29.8% more than a year earlier, their highest since 2022. Core inflation, which strips out food and energy to show the underlying trend, rose to 2.8% from 2.6%, and services inflation to 3.7% from 3.4%.

This is the oil story arriving at a household bill. Crude has held close to $110 a barrel through the attacks on shipping in the Strait of Hormuz, and because oil trades as one global market, a threat to tankers in one waterway lifts what refiners everywhere pay for crude. The number on the sign at a filling station is one of the few prices a family watches week to week, and fuel also moves food to the shop, so the same cost turns up later in prices that have nothing to do with driving. The core reading matters as much as the headline: energy pushed the whole index up, and the measure that leaves energy out still edged higher, which says the pressure is reaching other parts of the basket. U.K. policymakers are heading into a meeting widely expected to deliver a rate rise, though no decision has been made.

Sources: Reuters via Investing.com · WSJ

What To Watch

Every company figure below is analysts' average forecast for earnings per share, not a result. They are expectations, and a reporting day is about finding where they were wrong.

Reporting today:

• Tesla (TSLA), after close: $0.22 expected against $0.37 a year ago. The one to watch, after Musk's merger talk on SpaceX's call.
• Also after the close: Meta Platforms (META) $6.54 against $7.25 a year ago, IBM (IBM) $2.88 against $2.65, Texas Instruments (TXN) $2.40 against $1.48, and Lam Research (LRCX) $2.17 against $1.26.
• AT&T (T), before the open: $0.61 expected against $0.54 a year ago.

Later this week:

• Thursday brings 138 reporting companies, among them Procter & Gamble, Union Pacific, Lockheed Martin and Comcast before the open; Friday is lighter, with American Express and the oilfield-services company SLB.

Next week:

• The Federal Reserve's rate-setting committee meets on October 27 and 28, with a press conference on the afternoon of the 28th. Traders are positioned for no change this month and are watching December; nothing has been decided.
• The Bureau of Economic Analysis publishes Gross Domestic Product and Personal Income and Outlays on Thursday, October 29.
• Jio is expected to start trading on October 28.

The Classroom Takeaway

Two of today's stories meet at one number: the interest rate the U.S. government pays to borrow, which sets the floor under a mortgage and the yardstick for a company's future profits. Students can follow it on live market data and ask which of the day's stories it explains.