BWG Global's News of Note, Week of July 27 – July 31

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SpaceX management tried to convince investors its $18.4B in 2Q26 capex was a sound investment. During its first quarterly earnings report as a public company, SpaceX said capex swelled more than 6x from the year-ago quarter due to heavy investments in AI infrastructure. The stock suffered the same fate that befell Google a couple of weeks ago, with investors temporarily bailing out amid fears the payoff will not justify the expense anytime soon. But SpaceX shares rebounded later in the week, as the lockup period for insider selling expired without a deluge of shares hitting the market. Insiders and employees are holding on, and as the week ended, investors were jumping back into SpaceX, pushing the shares back up to just below its $135 IPO price.

During its earnings call, SpaceX said its one profitable segment, Starlink, has big plans to attack the consumer wireless market and should be able to take customers from existing carriers. (Combined 2025 revenue for Verizon, T-Mobile and AT&T was $352B, so SpaceX would need to grab 20% of that to cover its annual capex if its spending trend continues apace.) The SpaceX plan is to use a network of rooftop sites to complement its satellites with terrestrial coverage. SpaceX has 65 MHz of nationwide midband spectrum that it bought from EchoStar.

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Anthropic and OpenAI models hacked more companies, according to the British government. The UK’s AI Security Institute said Anthropic’s Mythos 5 and OpenAI’s GPT-5.6-Sol attacked real people and organizations during evaluations. The testers gave the models internet access, and detected 19 unsanctioned, autonomous attacks - 17 of which were performed by Mythos 5. Last month, Anthropic said its models hacked three companies when they were inadvertently given internet access during security testing, and OpenAI said one of its models broke out of a sandbox and hacked Hugging Face, also during a security test.

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Quantum computers will be able to break through the public-key encryption that secures current network communications, so companies like Quantum Corridor are working to prevent that. This week Quantum Corridor, Ciena and Toshiba said they completed a trial using high-speed optical encryption, post-quantum cryptography and quantum key distribution. High-speed optical encryption uses cryptographic chips within optical network transponders to scramble data. Post-quantum cryptography replaces security algorithms in existing software protocols without requiring new hardware. Quantum key distribution transmits keys as photons over fiber-optic lines. Measuring a quantum system alters its state, so any attempt to intercept these keys will corrupt the signal. Quantum Corridor, which is attempting to build a quantum superhighway in the Midwest, said the trial was conducted across its live production network between data centers in Chicago, IL and Hammond, IN.

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A tale of two CDNs played out late this week as Akamai and Cloudflare both reported earnings. Shares of Akamai sold off after management trimmed revenue projections for Q3 and said its legacy content delivery business contracted during Q2. Akamai’s smaller cloud infrastructure services business grew 39% year-on-year, but expenses associated with the AI buildout contributed to declining margins. Meanwhile Cloudflare delighted Wall Street with a beat and raise, and said it now has more than 4,500 customers that spend more than $100,000 per year. (Annual revenue in 2025 was $2.1B). Cloudflare also said more than half the traffic passing through its network is now machine-to-machine/AI traffic.

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The semiconductor industry is enjoying strong demand from both AI and traditional use cases, according to BWG Global research. BWG Global’s Jay Deahna hosted a panel of semiconductor executives to discuss demand drivers and supply constraints. A semiconductor marketing executive said prices are not rising for power supplies, but lead times are. He sees power supply vendors favoring their higher margin customers as demand exceeds supply. He also foresees another increase in memory prices, as buyers who thought they had locked in their supplies learn their orders may not be fulfilled, forcing them to return to the market. Fiber optics and packaging capacity for wafers are also likely to experience supply constraints, he said. 

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From our community: A finance chief who reads a rising token bill and cuts tokens is shrinking the numerator of a fraction whose denominator s/he never wrote down. Accenture’s Buddy Ryland writes that cost per verified outcome, not cost per token, is the metric CFOs need to understand. Ryland names drone surveillance, digital twins and telemetry as three AI use cases with measurable outcomes. Read the full post here.