The latest space race kicked off with a bang—literally.

Yesterday, a New Glenn rocket being tested by Blue Origin, Jeff Bezos’s space startup, exploded into a fiery red ball during a pre-launch engine test in Cape Canaveral, Florida. Nobody was injured, but the incident was a huge blow to Blue Origin in its race against Elon Musk’s SpaceX.

The blast reverberated through the entire space exploration industry:

• AST SpaceMobile, which is using Blue Origin to put satellites in space, had its worst day in over two years, sinking 14.79%
• Amazon, which also relies on Blue Origin to deploy satellites, fell 1.23% today
• Rocket Lab, a launch and satellite systems company, plunged 3.07%
• Lunar exploration company Intuitive Machines sank 4.09%
• Satellite firm Planet Labs fell 0.51%

For AST and Amazon, their businesses could be materially affected by today’s misfire due to the damage to infrastructure or prolonged delays to the launch schedule. Both companies are rushing to get satellites into orbit: Amazon is trying to provide broadband internet service anywhere on Earth, while AST SpaceMobile has a similarly lofty goal for cell service.

The bearish news hit particularly hard across the nascent industry because of the massive rally space stocks have been enjoying in the leadup to the SpaceX IPO. Whether today’s selloff is an overreaction depends on how quickly Blue Origin can get launches back up and running.

“It’s too early to know the root cause but we’re already working to find it,” explained Jeff Bezos in a post on X. “Very rough day, but we’ll rebuild whatever needs rebuilding and get back to flying.”

SpaceX is lowering its price tag

While Blue Origin’s setback should theoretically be a boost for SpaceX, Elon Musk’s darling also had a hiccup today.

Bloomberg reported this morning that SpaceX is now targeting a valuation of $1.8 trillion, down from the previous $2 trillion it set its sights on back in April. Despite the reduction, SpaceX is still expected to go public at the highest valuation in history.

The news added more pessimism about the broader space industry as a whole. After all, it doesn’t bode well for smaller players that have seen their stocks rally if SpaceX, the clear leader of the new space race, isn’t worth as much as investors expected.

To make matters worse, Musk took to X to add details about SpaceX’s multibillion-dollar deal with Anthropic—details that weren’t in the company’s IPO prospectus—further confusing investors trying to gauge whether the company’s monster valuation will hold up.

Only time will tell if valuations end up coming back down to Earth.—LB

🟢 What’s up

• Energy provider Nextpower jumped 14.02% after acquiring battery storage company Prevalon Energy and raising its full-year revenue outlook.
• Okta gained 30.14% as both quarterly and full-year revenue guidance came in ahead of Wall Street expectations.
• NetApp climbed 22.39% on a fiscal fourth-quarter earnings and revenue beat.
• Cloud computing company PagerDuty rose 33.60% after topping earnings, revenue, and operating income estimates while raising its full-year profit outlook.
• Palantir Technologies surged 9.21% as strong results from Snowflake reinforced optimism around its business.

What’s down

• SentinelOne tumbled 8.16% after the cybersecurity firm announced plans to cut 8% of its workforce, while revenue and earnings guidance came in below Wall Street expectations.
• Semiconductor design company Ambarella fell 21.41% as a modest earnings beat failed to impress investors.
• Autodesk dropped 4.00% as concerns over its $3.6 billion acquisition of MaintainX overshadowed strong quarterly results.
• Communications company Viasat slipped 7% after issuing a flat EBITDA outlook for 2027, despite meeting quarterly expectations.
• Infleqtion declined 8.72% as investors worried about rising competition in the quantum computing sector.

Two major retailers just posted ugly earnings that sent their shares into the bargain bin. The twist: They didn’t blame the shaky economy. They blamed their own clothes.

Gap dropped 15.40% after missing expectations for revenue and comparable store sales growth. Adjusted EPS of $0.38 squeaked past forecasts, but a soft Q2 sales outlook and lower full-year revenue guidance did the real damage.

So which apparel was the problem? Although Gap’s sports line Athleta saw same-store sales stumble 11%, the biggest clunker in the bunch was Old Navy—specifically its dresses. “We just got off to a weak start in dresses,” Gap CEO Richard Dickson admitted on the earnings call. “We just did not have the right fashion and value equation.”

Over on the other side of the mall, American Eagle plummeted 11.82% despite beating forecasts on quarterly revenue and EPS, and maintaining its forward outlook. Sales of Aerie intimates even popped 25%. The problem was that comparable sales for the company’s namesake brand slid 2% even after ramping up its ad campaign with Sydney Sweeney.

Most clothing companies right now have an easy out when earnings disappoint: The consumer is scared, so what can you do? But props go to these two for saying, “Hey, maybe it’s us.”

“From what we can see today, the consumer remains resilient, and while we continue to monitor their behavior, at this time, our outlook does not assume any meaningful shift over the balance of the year,” Gap CFO Katrina O’Connell told analysts. American Eagle CEO Jay Schottenstein echoed that sentiment: “We think the economy, the US economy, is very strong and we think it’s only going to get better.”

That’s pretty sunny coming from two companies whose stock just got folded and put on the clearance rack.—JD

Dell used to be the company that sold your dad a desktop. Now it’s becoming one of Wall Street’s favorite AI trades.

The old-school tech company delivered one of the strongest quarters in its history, with EPS surging 282% year over year and revenue jumping 88%, far above expectations. Dell also generated a record $4.1 billion in operating cash flow.

All of that is thanks to—you guessed it—AI. Revenue from AI servers, which now account for more than a third of Dell’s sales, soared 757% from a year ago, and Dell doesn’t see the boom slowing anytime soon: The company raised its full-year guidance, and now expects AI server revenue to hit $60 billion for fiscal 2027, up 144% year over year.

As if all of that wasn’t enough, Dell also landed a major government win. Yesterday, the Pentagon awarded the company a nearly $10 billion contract to provide software and IT services across the military, a move expected to save the government roughly $422 million annually.

The ripple effect

Unsurprisingly, shares skyrocketed 32.76% on all the good news, capping off a 104% gain in the month of May for Dell—but it wasn’t the only beneficiary.

Other hardware stocks like Super Micro Computer and Hewlett Packard Enterprise popped 11.60% and 8.12%, respectively, as Dell’s blowout quarter boosted confidence in demand across the broader AI infrastructure market.

Then there’s President Donald Trump, who bought between $1 million and $5 million worth of the stock on February 10. Nine days later he told a crowd at a Georgia rally to “go out and buy a Dell computer.” The President has enjoyed a 234% gain on his Dell investment over the last three months.

Wall Street buys in

Following Dell’s results, analysts rushed to raise their price targets on the surging stock.

Melius more than doubled its target to $565 from $280, citing strength across both traditional and AI servers, as well as improving profitability in Dell’s PC business. Mizuho also lifted its target, arguing Dell could account for more than 12% of the server market by the end of this year.

Perhaps the biggest vote of confidence came from Susquehanna, which raised its price target from $138 to $700 and upgraded the stock from Neutral to Positive. Barclays also boosted its target to $550, while JPMorgan increased its forecast to $500.

The ongoing AI supercycle has seen demand continue to exceed supply—and if Dell’s latest results are any indication, the company is quickly becoming one of Wall Street’s favorite ways to play it.—SY

• The gap between corporate profits and worker pay has never been this wide.
• Memory chips are now more valuable than oil.
• Citadel Securities just brought in a record $4.3 billion in trading revenue for Q1—a 28% annual jump.
• Universal Music Group rejected Bill Ackman’s $65 billion buyout offer.
• The percentage of credit card balances that are at least 90 days delinquent just rose to a 15-year high.
• Nvidia is pouring billions into this under-the-radar emerging technology.

Monday: Earnings season seriously slows over the next few days, with no major announcements of note to kick the new week off. The only economic reports worth watching are the May ISM index and the April reading on construction spending.

Tuesday: Next week’s all about the labor market, and it begins with the JOLTS reading for April. As for earnings, we’ve got Palo Alto Networks, Dollar General, Ulta Beauty, Signet Jewelers, and Victoria’s Secret.

Wednesday: Earnings worth watching include Medtronic, CrowdStrike, Broadcom, Macy’s, Five Below, and Ollie’s Bargain Outlet. The labor market bonanza continues with the ADP private payrolls report, plus we’ve got ISM services for May, April factory orders, and a look at the Fed’s Beige Book.

Thursday: The usual weekly jobless claims report and the Q1 look at US productivity should catch some attention, while earnings include Ciena, Lululemon Athletica, Docusign, and Brown-Forman.

Friday: The week ends on a high note with the US May jobs report.