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SpaceX's orbital Data Centers could face the same challenges as Microsoft's abandoned underwater project
SpaceX filed an IPO on Wednesday that Elon Musk claims will fund an effort to transform the rocket manufacturer into an 'AI powerhouse. Launching up to 1,000,000 data-center satellites in orbit to bypass Earth's power and water limitations. Microsoft had a similar ambition to escape land-based computing constraints in 2015, when it lowered ?a shipping-container-sized data center onto the seabed off Scotland, aiming to cut energy ?use through natural seawater cooling and tapping offshore wind and tidal power. Microsoft's Project Natick, once hailed as a?potential breakthrough? for the data-center sector, has met all of its technical goals, but the underwater data centers have been abandoned over two years due to lack of demand from clients and unviable economics. A Microsoft spokesperson responded to a question by saying: "While there are no datacenters currently in the water, Project Natick will be used as a platform for research to explore, test and validate new concepts about datacenter reliability. Five data center experts told us that what happened to Microsoft should serve as a warning for SpaceX. Although the two projects are geographically far apart, they have many similarities. They both rely upon modular units, which are costly to deploy, and can't be repaired, upgraded, or expanded. These features are considered crucial by the AI industry. Roy Chua of AvidThink said that "these problems will likely be more severe in space than in the ocean". He cited unresolved issues such as how to cool the data centers in orbit and high launch costs, along with the adverse effects of harsh space conditions on AI chips. SpaceX?did not respond to a comment request. SpaceX, the company that acquired Musk's AI start-up xAI in Feburary, could raise $75 billion if it goes public. This would make it possibly the largest IPO ever. xAI's holdings include the social media company X (formerly Twitter) and AI chatbot Grok. MUSK'S SPACES? AMBITIONS FACE HURDS The two people who were familiar with the project, but asked not to be identified due to the sensitive nature of the issue, said that although Microsoft had proven that undersea facilities could work, their customers did not want to scale them up. Instead, they wanted to expand conventional land-based installations that would allow cheaper and faster upgrades as AI technology accelerated. The "locked-for life" sealed design, which?SpaceX will replicate in orbit, has limited flexibility because AI chips are improving rapidly every year. A satellite or an undersea information center, on the other hand, may only be replaced every five to seven (7) years. Two people also said that the economics was a major obstacle. The cost of building data centers underwater was higher than on land. While the costs may have decreased at scale, it would still have taken tens or hundreds of millions of dollars to do so. The cost of space will increase dramatically. In a research note published in February, analysts at MoffettNathanson (an independent U.S. equity-research firm) said that Musk's plan of putting a million AI satellites into space would cost trillions. Analysts say that in order to make data centers commercially viable, the launch costs will need to drop from their current low of thousands of dollars to a few hundred dollars per kilogram. Tim Farrar is an independent satellite analyst with TMF Associates. "The issue is not whether or not something works, but if it makes economic sense compared to simply building more capacity at the ground level," he said. Musk claims he can overcome technical and financial obstacles, such as radiation exposure, heat control in a vacuum, and the need to replace hardware frequently, by lowering launch costs and developing more resilient AI chip. Musk claims that demand will not be a problem, as Earth's resources will be quickly depleted by AI, which is required to support a future where robots will outnumber people, and all cars will drive themselves, and space travel will become routine. Farrar stated that the idea that Earth's problems, such as power shortages and environment issues, can not be solved, is unrealistic. It makes Earth seem worse in order to make "everything" appear better from space. Musk's argument hinges on Starship - SpaceX next-generation rocket. Starship is designed to be fully recyclable and can carry much larger payloads than SpaceX Falcon rockets. Starship has been years behind schedule and has experienced explosive failures on some of its 11 suborbital tests flights since 2023. MoffettNathanson calculates that Musk's target would require 3,000 Starship launches per year, or 8 a day. Blue Origin, Jeff Bezos’ space company, is also a supporter of orbital data centres. In March, the rocket company announced that its Project Sunrise concept will add AI computing capability in orbit by utilizing clean solar power and preserving data-center infrastructure on Earth. Blue Origin has not responded to any further comments. SPACE AI COULD be a niche business Claude Rousseau is a Research Director at Analysys Mason, who monitors satellite markets. He believes that space data centers have a bright future. Rousseau stated that "I am convinced that in the near future, space-based data centres will not be able to replace ground-based datacenters." He added that this would be more of a niche industry that serves infrastructure in orbit such as military satellite constellations or?space station. The International Space Station, for example, already has experimental systems that?process data on orbit and reduce the reliance upon downlink bandwidth. Nvidia's Chief Executive,?Jensen Huang, said on the All-In Podcast in February that the economics for space-based AI-data centers are still unattractive. "We should work on the ground because we are already here," Huang said. He described orbital AI infrastructure more as a long-term engineering challenge than a short-term solution. Chua said that plans to move data centres under the ocean or into space could create new challenges and make it harder to solve problems on Earth. Chua stated that "there are many problems we can solve before going into space" pointing out improvements in AI chip performance, improved water recycling and the expanded use of solar energy and modular nuclear generation.
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Automakers unveil new EVs for US market despite sales downturn
The New York Auto Show saw major automakers unveil new 'electric vehicles' on Wednesday, despite weak consumer demand and sales that have plummeted since Washington removed the $7,500 tax credit for EVs. Kia announced that it will'start selling its lower-priced EV3 to the United States in later this year. Subaru also offered a three-row EV called the "Getaway", which can seat seven. The Japanese automaker will launch its family EV SUV in the U.S. later this year or early next year. It is their fourth EV. The U.S. electric vehicle market is becoming more competitive, but the recent rise in gasoline prices has sparked renewed interest. Russell Wager is the vice president of'marketing' at Kia America. He said, "The EV market will come back - perhaps not as fast as we would have liked." "We're dedicated to it." Kia stated that the U.S. electric vehicle market could return to its previous level in three or four years. GM has recently begun selling its Chevrolet Bolt EV, which starts at $27.600. The previous generation was discontinued in 2023. After the expiration of the $7,500 EV Tax Credit on September 30, the Alliance for Automotive Innovation trade group, which represents GM,?Ford, Toyota Motor, Volkswagen?, Hyundai?, Stellantis? and other major automakers said EV Sales were 9.6% in 2025, but dropped to 6.5%?in the last three months?the lowest since early-2022. Christian Meunier of Nissan Americas said that the U.S. Market has declined substantially. Meunier told an interviewer at the New York Auto Show that there is no demand for EVs. "The demand is gone." "The demand has disappeared." Hyundai Motor CEO Jose Munoz stated that the company had seen an increase in EV sales as fuel prices rose, especially in California. This trend was "not driven by regulations, but by market conditions." The automaker revised its plans in order to include more hybrids. Munoz said: "I believe we're going see an 'evolution' where, step-by-step, 'EVs' will increase a bit. Let's say, maybe 10-15% of market share, but not 50 or 60%." David Christ, the general manager of Toyota Motor North America's?Toyota Division, stated that Toyota Motor North America is introducing 3 EVs to the U.S. in this year and higher fuel costs would give the EVs a boost. Christ said, "I don’t think they’re going to be able to return to the levels of government-funded incentives. But?it will be higher than what it would have been without the gas price shock." In 2024, EV sales will account for 10.2% total vehicle sales. Donald Trump has taken a number of steps that will discourage EV production and purchases, and encourage the production of gas-powered vehicles. (Reporting and editing by Kirby Donovan; Kalea hall and David Shepardson)
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Gold gains due to softer dollar and focus on Iran war
The U.S. Dollar fell on Wednesday, and other risk assets rose on the?tentative? hope that the conflict in Middle East would de-escalate. By 1730 GMT, spot gold had risen 2.5% to $4,784.22 an ounce, the highest level since March19. U.S. Gold Futures closed 2.9% higher at $ 4,813.10. Dollars of other currencies are more attracted to greenback priced bullion after the U.S. currency dropped for a 2nd consecutive day. Bob Haberkorn is a senior market analyst at RJO Futures. He said that gold?prices may move above $5,000 per ounce, if we are on a path to de-escalation. Rate-cut expectations could creep in again. He added: "The focus of the discussion is Iran and the Strait of Hormuz - the way this conflict develops and the future path." U.S. president Donald Trump claimed in a Truth Social posting that Iran's President asked for a truce, but the spokesperson of Iran's Foreign Ministry called this assertion false and baseless. Trump will address the nation on Thursday at 1100 GMT. Axios reported earlier that talks about a truce are underway. "An end of the conflict (for gold) could prove to be a double-edged blade." A lasting peace agreement will remove the geopolitical safe haven bid which supported?prices prior to the conflict", said Tony Sycamore, IG's market analyst. Sycamore said that lower oil prices and inflation could revive expectations of Fed cuts in 2026, which would help prices. In March, spot gold prices fell by more than 11% as the Iran War stoked inflation fears and caused markets to reduce their expectations of rate cuts. Bullion is often seen as a safe haven during geopolitical turmoil or inflation. However, high interest rates can reduce its appeal. The ADP's National Employment Report?showed that private payrolls in the U.S. increased steadily?in March. Retail sales in the United States rose strongly in February, but rising gasoline prices may have an impact on spending in months to come. Silver spot rose by 1.2% at $76.03, while platinum climbed 1.6% to 1,979.30, and palladium jumped 1.3% to 1495.95. Ashitha Shivprasad, Bengaluru (reporting; Paul Simao, Diti Pjara and Diti Simao)
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Perpetua Resources wants $2.7 billion EXIM Loan for Idaho gold-antimony Project (March 31).
Antimony -and- gold miner Perpetua Resources announced on Tuesday that U.S. Export-Import Bank's board unanimously agreed to inform Congress about a proposed $2.7billion loan to finance the Stibnite Project -in Idaho. The proposed financing includes $2.2 billion in direct loans for?construction and exploration costs as well as corporate costs. The remainder will cover interest?and fees. The loan, along with the $714 million cash available on hand would cover the estimated cost of $2.576 billion to build the Stibnite Gold Project. The Canadian shares of the company closed at C$39.20 C$ on Tuesday. Perpetua Resources' CEO Jon Cherry stated that today's decision marked the final stage in EXIM approval process, and put the company on the right track to a Final Investment Decision this year. The proposed loan is part of the Export-Import Bank’s Make More in America Program, which aims to boost domestic production and industrial development in the United States. The project has gained in importance because the United States is seeking a domestic supply of antimony after China last year restricted exports. Perpetua began early construction work in October 2025, after obtaining all federal and state permits. Agnico-Eagle Mines and JPMorgan Chase are among the company's investors. Varun Sahay, Bengaluru Reporting; Tasim Zahid, Editing
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Sources say that Rodriguez is preparing to take over Citgo's board.
Four sources familiar with the preparations say that Delcy Rodriguez, the interim president of Venezuela, is preparing to take control of the U.S. subsidiaries of the state oil firm PDVSA, including Citgo Petroleum. The?move?could escalate a tug-of-war for control of the U.S. refiner that is the seventh largest. Washington recognized Rodriguez in March as Venezuela's president following the capture and detention of Nicolas Maduro. This opened the door for her to reopen U.S. embassies, consulates and to regain control over Venezuelan-owned businesses abroad that Maduro lost to the opposition. Citgo, Venezuela's crown jewel in foreign assets, is now run by supervising board members appointed by a no-longer-active opposition-led congress. Two sources claim that Rodriguez is still working on her list of board members to be approved by the Treasury. Some?names' suggested in Washington were not well-received, they said. The sources stated that if the executives were approved, Treasury's Office of Foreign Assets Control would have to issue specific licenses. One source said that Treasury officials had already spoken to members of Citgo’s board and informed them of their 'expectation to authorize the new board members appointed by Rodriguez, if they have been cleared by Washington. Another source stated that the U.S. State Department must also?follow up on the appointments? and provide OFAC with?policy direction? Sources claim that Rodriguez's envoys told some law firms who represented Venezuela, PDVSA, and its subsidiaries before U.S. federal courts in the past that their contracts were being reviewed and that they could be terminated. Requests for comments from the Venezuelan ministries of oil, communications and PDVSA as well as the U.S. Treasury Department and State department did not receive a response. Citgo's supervisory boards declined to comment. Changes in Slow Motion Asdrubal Chavez, a cousin to the late Venezuelan President Hugo Chavez, was ratified by PDVSA in March as head of its U.S. subsidiary. Chavez hasn't effectively led the companies for more than seven year, despite being denied a U.S. Visa to lead Citgo out of Houston. PDVSA added Ricardo Gomez and Nelson Ferrer to its board as part of the March appointments. These executives were close to Rodriguez, who had previously worked at Citgo for Chavez. It wasn't immediately clear whether these executives would be approved by the Treasury. As the Houston refiner continues its fight in U.S. courts to overturn the sale of PDV Holding, it's parent company, to an affiliate of hedge fund?Elliott Investment Management. The refiner is fighting in the?U.S. courts to reverse the sale of PDV Holding to an affiliate hedge fund Elliott Investment Management. Citgo said that in court, the auction ordered to pay creditors billions of dollars for debt defaults in Venezuela and expropriations was unfair. It was plagued with conflicts of interest. The complex auction was concluded last year, after a Delaware court?approved of a bid of $5.9 billion by Elliott's subsidiary Amber Energy. But the final transfer of ownership is now pending a green light from the U.S. Treasury, which has protected Citgo from creditors since it severed ties with Caracas-headquartered PDVSA in 2019 amid U.S. sanctions. Elliott declined to make a comment. Reporting by Marianna Pararaga in Houston, and Deisy buitrago in Caracas. Editing by David Gregorio.
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SpaceX's IPO: The Road to Success
SpaceX, Elon Musk's company, has filed a confidential application for its highly anticipated U.S. Initial Public Offering, according to a source familiar with the matter. This will make space exploration a mainstream investment topic, rather than a speculative one. Here's a timeline for SpaceX’s path to a blockbuster IPO. Elon Musk launched SpaceX in March 2002 using the money he earned from selling PayPal. SpaceX failed to launch its first rocket, the Falcon 1 in March 2006. SpaceX Falcon 1 successfully launched for the first launch in September 2008. It was the first liquid-fuel rocket developed by a private company to reach Earth orbit. SpaceX signed its first major contract in December 2008 with NASA for the transportation of cargo and supplies to International Space Station. May 2012 - SpaceX Falcon 9 rockets launched a Dragon capsule into space, becoming the first private spacecraft docked at the ISS. June 2015 - Falcon 9 rocket exploded in mid-air. December 2015 – First successful vertical touchdown of Falcon 9 rocket. This was the first large rocket to achieve a controlled recovery after it had delivered a payload in orbit. In February 2018, the first Falcon Heavy launch sent Musk's Tesla Roadster into space, along with its mannequin, Starman. April 2019 - The capsule of the crew?Dragon vehicle exploded on the ground during a test. May 2019 - SpaceX launched Starlink satellites. This constellation is capable of beaming high-speed internet signals from space to customers all over the world. October 2020 - SpaceX has completed its 100th successful Falcon rocket flight since Falcon 1 flew into orbit for the first time in 2008 SpaceX Crew-1 mission, November 2020. This is the first operational mission under NASA's Commercial Crew Program. NASA awards SpaceX the contract to build the first commercial human landing vehicle as part of the Artemis program in April 2021. SpaceX launches the first ever all-civilian crew to orbit the Earth in space on September 20, 2021. NASA's Double Asteroid Redirection Test mission (DART), launched by SpaceX into an interplanetary transfer space, marks the first ever test of a planet defense system to prevent a possible asteroid impact with Earth. April 2023: First Starship Rocket explodes after losing control. November 2023: Starship launch fails minutes after reaching the space. November 2023: A U.S. Judge blocked the U.S. Department of Justice's pursuit of an administrative case accusing Elon Musk’s SpaceX of refusing to illegally hire refugees and asylum seekers. September 2024: The SpaceX Polaris Dawn spacewalk was the first privately-managed spacewalk. SpaceX's Starship broke apart in space minutes after it launched from Texas, forcing airlines to change course over the Gulf of Mexico so as to avoid falling debris. Starship explodes during a test on the ground in June 2025. February 2026 - SpaceX acquired Musk's artificial-intelligence startup xAI ?in a record-setting deal worth $250 billion, unifying the world's richest man's AI and space ambitions by combining the ?rocket-and-satellite company with the maker of the Grok chatbot. Musk stated that SpaceX will shift its focus in February 2026 to the construction of a "self growing city" on moon. NASA official stated that the Starship has accumulated at least 2 years of development delays since NASA selected the rocket as an astronaut lander on the moon in 2021. It is expected to take more time before clearing remaining hurdles to land on the moon. SpaceX files its U.S. initial IPO in secret on April 20, 2026, setting the stage for the largest stock market flotation to date. (Reporting and editing by Leroy Leo, Anil D'Silva and Arasu Kanagi Basil in Bengaluru)
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SpaceX is seen as a test that will determine whether mega-IPOs succeed or fail
Elon Musk's spaceX could be the break-through that global IPO market needs. Saudi Aramco was the last company to debut on the market with a valuation of over one trillion dollars in 2019. SpaceX has all the ingredients the IPO market?has been looking for to end a long-term drought of mega-deals. It is a company with a valuation over "trillion dollars", a CEO who enjoys cult like retail support, and exposure to a?high-growth?industry. Investors' appetite for an IPO of this magnitude is still uncertain. Analysts and experts say that the company's success is unique, so it could only have a limited impact on broader market sentiment. Brian Jacobsen is the chief economist at Annex Wealth Management. Here are some charts that show the market's current status and SpaceX IPO's potential: WORLD'S BIGGEST IPO ON THE HORIZON The rocket startup has confidentially filed for a blockbuster listing,?looking to raise $50 billion or more, which could value it at $1.75 trillion, potentially dethroning oil giant Saudi Aramco as the world’s largest IPO. Here are charts showing the current market status and SpaceX's IPO potential: Samuel Kerr is the global head of equity markets at Mergermarket. He said that SpaceX would be the largest ever IPO. It will be a test of public market capability in a period of real market turmoil. SpaceX is probably the only business that can list on this market given its tremendous hype. SpaceX registered confidentially for an IPO - on Wednesday, according to a report citing a reliable source. PIVOTAL TESTING SpaceX's listing - could serve as a bellwether of the IPO market. A positive reception could indicate the long-awaited return of big-ticket deals. Issuers waited for years as markets were volatile, driven by inflation fears, rising interest rates and geopolitical tensions. Industry hopes that 2026 will see a resurgence of market debuts. Kat Liu is vice president of IPOX, a research firm that specializes in IPOs. It would show that the public markets are able to accept large, high-value offerings and validate late-stage pricing on the private market. TRILLION DOLLAR CLUB Several high profile startups, such as SpaceX, ChatGPT maker OpenAI, and TikTok owner ByteDance have blurred lines between public and private companies with valuations that are comparable to those of the top-tier S&P500 firms. SpaceX's listing will put it on par with mega-cap giants like Microsoft and Apple, which attract the majority of retail and institutional investor flows. Elon Musk announced in February that SpaceX acquired his artificial-intelligence startup xAI, in a deal of unprecedented proportions. SpaceX was valued at $1 trillion, and xAI, at $250 billion. This is what a report citing a reliable source said. The recent xAI integration allows Musk to bundle Starlink, launch and AI into a scarce, mega-story that can support a higher valuation than what the businesses could achieve separately, said Minmo Gahng. Assistant professor of finance, Cornell University. SpaceX reported that it generated an $8 billion profit last year on revenues between $15 billion and $16 billion, according to a January report citing sources familiar with the issue. Current State of Play An index that tracks major listings underperformed the equities benchmark in the last 12 months. Analysts believe that a successful SpaceX debut could help to reopen the door for large, delayed listings, especially in capital-intensive industries which have struggled with attracting public market investors. Some have a more conservative view of the market's future. Kerr, from Mergermarket, said that "(SpaceX could) take up so many capacity that other mega issues might decide to wait and not test the same window."
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Gold continues to rise on the back of a weaker dollar, but Iran remains in focus
The U.S. Dollar?slipped? and traders watched developments in the Middle East. Gold spot was up 2.2% to $4,774.25 an ounce at 1510 GMT. This is the highest price since March 19. U.S. Gold Futures rose 2.6% to $4800.40. Dollars of other currencies are more attracted to greenback priced bullion after the U.S. currency fell for a second day. Bob Haberkorn is a senior market strategist with RJO Futures. He said that gold prices could rise above $5,000 an ounce, if we are on a path of?de-escalation', and rate-cutting expectations may creep back into the market. He added: "The focus is on Iran and the Strait of Hormuz - the way this conflict develops and what the future looks like." Trump stated in a Truth Social posting that Iran requested a ceasefire and that the United States would consider it when the Strait of Hormuz is open. "A conflict-free world could be a double edged sword for gold." A lasting peace agreement will remove the geopolitical safe haven bid which supported gold prices prior to the conflict, said Tony Sycamore, IG's market analyst. Sycamore said that lower oil prices, a easing of inflation, and expectations for 2026 Fed reductions could all help to boost prices. Spot gold fell more than 11% during March, as the higher energy prices resulting from the war in Iran fueled inflation fears and caused markets to reduce expectations for rate cuts. Bullion is often seen as a safe haven during times of geopolitical unrest and inflation. However, high interest rates can reduce its appeal. ADP's National Employment Report showed that private payrolls in the United States increased steadily during March. Retail sales in the U.S. rose strongly in February. However, rising gasoline prices as a result of 'the war' could have a negative impact on spending in months to come. Silver spot rose 0.6% per ounce to $75.56, platinum gained 1.5% at $1,977.96, and palladium increased 1.3% to $1495.50. (Reporting and editing by Paul Simao, Diti Pujara, and Ashitha Shivaprasad from Bengaluru)
McGeever: Higher oil prices cloud Wall Street's optimistic earnings outlook
Even if the Iran War ends soon, U.S. oil prices will be structurally higher this year. Investors may have to reconsider their optimistic 2026 earnings estimates.
The consensus oil outlook for 2026 was quite bearish while Wall Street's earnings forecasts were very optimistic.
This has not changed. According to LSEG 'data, the full-year earnings growth estimate for 2026 was nearly 16% as of?Friday. This is up from 14% a year ago and 12% a year before.
These 'rosy forecasts' assume that oil prices will average $60 per barrel this year, but those expectations have disappeared with the U.S. and Israeli strikes against Iran on February 28, as well as the subsequent disruption of supply.
The oil market has seen wild volatility. Crude oil recorded its largest weekly increase on record last weekend, and continued to rise to almost $100 a barrel in this week's trading before falling on hopes of a quick end to the war.
The damage has been done. The global energy system, which was finely tuned, has been thrown off balance. Infrastructure has also been damaged and the anticipated supply glut has disappeared.
The average oil price this year is likely to be much higher than what businesses budgeted for at the beginning of the year. The companies will absorb a portion of the increase and consumers will feel it. In either case, corporate profits will be squeezed.
RUPTURE THE FORECASTS
In a December poll, the average consensus forecast for Brent crude in 2026 was $61.27 a barrel, with the oversupply expected offset any possible disruption of supply from the brewing U.S.Iran tensions. This would have been a 7% drop from the average price of $68.20 in 2025.
Since then, these forecasts have been thrown out.
Analysts at HSBC raised their forecasts for Brent crude to $80 per barrel in 2026 from $65 per barrel and U.S. West Texas intermediate crude to $76 per barrel from $61 per barrel on Tuesday. This represents an increase of 23% for Brent and 25% for U.S. West Texas Intermediate crude.
The U.S. Energy Information Administration also raised its forecast for 2026 Brent crude to $79, up from $58 a month ago. This is a 36% rise.
Energy price increases will have a significant impact on the economy. Fuel, fertilizer and petrochemicals will be more costly. This impact will also be felt by industries such as manufacturing, metals and retail.
Joe Brusuelas is the chief economist of RSM US LLP. He says that as prices increase, consumers are affected and corporate earnings are eroded.
It's a GAS!
Goldman Sachs equity strategists believe that the impact of "modestly higher" oil prices on S&P500 earnings will be relatively muted. However, an extended period of disruption in supply or uncertainty is much more dangerous to economic activity. They say that for every percentage point of decline in the real U.S. growth rate, S&P 500 earnings could drop by 3-4%.
According to other estimates, a 30% increase in oil prices can knock 4% off the earnings of S&P 500, with the most severe impact felt in transportation, consumer discretionary, and industrial sectors.
Around 70% of the U.S. Economic activity in the United States is dominated by consumer spending. Energy costs will rise sharply, causing household budgets to be squeezed and other spending to suffer.
Alarm bells have already started to ring. According to data from the American Automobile Association, average gasoline prices in the United States are now above $3.50 per gallon. This is up 17% since the start of the war.
Of course, there's also a negative side. Energy sector profits are expected to grow by double digits if oil prices continue to rise. Energy only makes up 4-5% of the total S&P500 earnings, so it is unlikely that it will offset any margin losses elsewhere.
AI?ARMS RACES ARE EVEN EXPENSIVER NOW
There is an incredibly large dispersion between the 11 sectors in current earnings growth forecasts for 2026.
The energy sector EPS was minus 1,2% as of Friday. This is the bleakest forecast, and the only one that indicates a decline in profits.
On the other end of scale, the tech sector's 2026 estimated EPS growth was 35.9%. This is the highest estimate among all sectors, and it was up from 30.8% in January 1. Tech has contributed to the S&P 500 earnings growth for the past few years.
Higher energy prices will hurt the mega-cap companies leading the race for artificial intelligence. UBS analysts predict that capex expenditures by "hyperscalers", this year, will reach $770 billion. Construction and operation of data centers may now become more costly.
Investors are already worried about future returns. The prospect of a significantly more expensive energy source will only increase their concerns at a time where risks in many other sectors have also increased.
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(source: Reuters)