WSJ What’s News - SpaceX Starts Spending Like a Hyperscaler

Episode Date: August 5, 2026

A.M. Edition for Aug. 5. Michigan awaits the results of a Democratic Senate primary seen as a referendum on the party’s identity. We’ll get the latest as the vote count continues. Plus, SpaceX shares slide after the company discloses huge AI investments. And struggling private colleges are increasingly tapping restricted donor endowments to cover day-to-day operating expenses, something WSJ’s Douglas Belkin reports is in many cases being done without donor knowledge or consent. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Michigan awaits the results of a Democratic Senate primary seen as a referendum on the party's identity. Plus, powerful AI models once again break out of their testing environments to wreak havoc online. And more U.S. colleges dip into their endowments to cover day-to-day expenses. What we're beginning to see in the United States among schools that are really hurting is that trustees are borrowing from these restricted funds without permission. And that's risky. It's Wednesday, August 5th. I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. The votes have been cast, but a winner has yet to be declared in a closely watched Democratic Senate primary in Michigan that's emerged as a test of the party's direction.

According to the Associated Press, progressive Abdul al-Sayed is leading four-term representative Haley Stevens with 95% of voters. votes counted. Speaking to his supporters, El-Sayed appealed for party unity, but also seemed to rebuff those who thought that his progressive stance was out of step with the politics of the electoral battleground. We are not a purple state. We are a state in need of a movement. With El-Syad and Stevens separated by just over a percentage point, the journal's Ellie Davis said that primary voters failed to coalesce over their priorities. The vote, Voters I spoke to today as they were leaving the polls said that they voted for El Sayed because of his stance against big money and politics. The moderate Democrats in Michigan, who I spoke to after they cast their ballots for Stevens, are worried that El Sayed won't appeal to the independent voters he needs to win the general election.

Contests next week in Wisconsin and Minnesota will offer similar tests, though journal editor Aaron Zidner said that the outcome in Michigan is likely to be parsed most intensely after a DNC panel last month, chose it to vote fifth in the party's 2028 presidential primaries. It's up at the beginning of the calendar and is going to play a major role in picking the party's next nominee for president. Candidates who are looking to run for president in 2028 and who wanted to find clues in Michigan to where the heart of the party was in its center or on its left wing are probably going to have to look pretty closely at these results. Because right now, the course that the party's primary voters in the state's,

in a swing state want to pursue is not very clear. In a few other closely watched races last night, former Missouri representative Cory Bush, a one-time member of the progressive legislative squad, failed to overcome millions of dollars in spending from pro-Israel groups in a bid to reclaim her seat. And Missourians overwhelmingly rejected a proposal to phase out the state's income tax

and expand sales taxes to make up for lost revenue. That comes as Republican-led states have been racing to cut or eliminate individual income. tax, while some blue states are attempting to raise income tax on their wealthiest residents. The Missouri measure marks the first time since the modern income tax began over a hundred years ago that a state legislature had asked voters whether to eliminate it. Well, as you mentioned on the PM show last night, SpaceX shares are falling in off-hours trading after the company released its first quarterly earnings report since going public.

Revenue was up more than 90 percent compared to a year ago, but equity markets reporter Joe Stoner says that wasn't what most investors were paying attention to. Like other hypers, SpaceX is spending huge amounts of money on building out its AI data center capacity and its AI operations more broadly. Like other companies, it's still not clear how they're going to make money off of that. Elon Musk has spoken about leasing data centers. That's something that analysts respond to warmly. But still, the figures are huge. It's spending over $18 billion in the last quarter. That's more than $5 billion ahead of market expectations. after the latest share drop, SpaceX is now trading more than 15% below its IPO price,

and shows that shares could be coming under pressure again soon. Tomorrow, a whole load of SpaceX insiders are going to be allowed to sell their shares for the first time. They've been in what's called a look-up period after the IPO earlier this year. We've already seen the share price depressed somewhat by fears that this wave of new supply will lead to lower prices and analysts want to look up volatility. Well, in a sign of SpaceX's increasing sway as a hyperscaler, shares of chipmaker AMD are falling after Elon Musk slipped in this announcement while speaking to investors. Going forward, we've decided to build exclusively on Nvidia. That comes as Musk had said as recently as May, but SpaceX and Tesla would likely continue to buy both Nvidia and AMD chips.

Otherwise, it was a strong report for AMD yesterday as the company posted a fifth consecutive quarter of record processor sales, driven by the rise of data-hungry AI agents that help users with tasks like coding. And Paramount could be on the hook for hundreds of millions of dollars in payments to shareholders of Warner Brothers Discovery. That is after a federal judge in California set a March 27 date for Paramount to face off in court against dozens of states opposing its $80-plus billion Warner takeover. Paramount had been seeking a November start date. The company's agreement with Warner includes a ticking fee that will see at Pay Warner shareholders roughly $650 million a quarter beginning in October until the transaction closes. Speaking to investors yesterday, Paramount CEO

David Ellison projected confidence about the upcoming trial and the company's ability to close the transaction. We're absolutely open to finding a solution out of court, but we also really believe that we'll win at trial. We believe that the facts in the law are on our side. A coalition, including California and 11 other states, as well as the Writers Guild of America, contend that the merger is anti-competitive and would hurt consumers in the industry, while Paramount argues that it needs to increase its size in order to better compete with rivals, including Netflix, Amazon's Prime Video, and Disney. Coming up, struggling colleges are dipping into their endowments in order to keep the lights on,

and we'll look at AI models going rogue once again after the break. Powerful AI models have once again gone rogue, breaking out of their sandboxes and finding targets to attack on the internet. An AI Research Institute backed by the UK government says that models built by OpenAI and Anthropic took autonomous, unsanctioned action during routine tests last month. In one, Anthropics Mythos 5 tried to trick two unidentified developers into adding malicious software to their open source coding project, and another disclosed yesterday, an open AI model being tested on systems that used the cybersecurity testing company irregular, hacked an unnamed website.

Last week, Anthropics said that its models had also attacked companies in tests involving irregular. Meanwhile, at a cybersecurity conference in Las Vegas later today, OpenAI is expected to describe technical details of an attack by its models on the AI company Hugging Face. Anthropic and Open AI said the incidents point to a need for stronger standards around the evaluation systems used to test AI models. And as colleges prepare to welcome students back to campus, many institutions are finding themselves in real financial trouble. To cope, college leaders are cutting programs, laying off faculty, and as journal reporter Doug Belkin explains, even digging into their endowments to pay the bills.

Some of these schools have burned through the parts of their endowment that they're legally allowed to access, and they're taking money from accounts that were earmarked when they were given for specific purposes. And this is beginning to generate some donor complaints and some legal scrutiny from attorneys general in the United States. So the rule of thumb for trustees at universities is that their endowment should not be drawn down by more than about 5% a year. Anything larger than that can eat into the principal and shrink the endowment for future, generations. According to estimates from higher-ed financial consultant, prospective data science, nearly 200 private colleges last year borrowed from restricted endowments up from around 130 the year prior. Doug says more than 440 colleges are at risk of closing or merging in the next decade as people

question the value of a degree. There's been a lot of anger, the director toward colleges. For generations, the price of a university degree outstripped in four. It used to be a sure thing that a college degree meant you were very likely to get a very good job out of school. That's not the case. So now, for every 100 kids who enroll in university, 40 don't finish within six years, and of the remaining 60, only half, about 30 end up finding jobs that actually leverage their degree. To read Doug's full report on endowment reading, check out the link we've left in our show notes. And that's it for what's news for this Wednesday morning. Today's show was produced by Hattie Moyer. Our supervising producer was Daniel Bach, and I'm Luke Vargas for The Wall Street Journal.

We will be back tonight with a new show, but before that, we've got a special bonus episode coming later today. It's the latest What's News and Earnings, where we'll be looking at how restaurant companies right now are all about value. That'll be right here in your What's News feed at Midday. See you then, and as always, thanks for listening.