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Elon Musk’s SpaceX suffered one of the biggest single-day valuation losses in corporate history on Monday, shedding about $400 billion in market value as rising US interest-rate expectations triggered a broad sell-off in technology stocks and cooled investor enthusiasm for artificial intelligence-linked companies.
Shares of the rocket and AI company plunged 16.4 per cent to close at $154.60, extending losses for a third consecutive session. The stock has now fallen 31.5 per cent from the record high reached days after its blockbuster $86 billion initial public offering on June 11.
The sharp decline reduced SpaceX’s market capitalisation to about $2.03 trillion from an intraday peak of nearly $3 trillion reached on June 16. According to Financial Times analysis of Bloomberg data, the $400 billion wipeout ranks as the second-largest one-day loss in market value ever recorded by a company.
The sell-off marks a dramatic reversal for a stock that had become the latest poster child of Wall Street’s AI boom. Investors who rushed into SpaceX after its market debut are now confronting a harsher reality of higher borrowing costs, elevated valuations and mounting questions about whether massive AI investments will generate sufficient returns.
Higher rates hit high-growth stocks
The immediate trigger for Monday’s rout was a sharp rise in US Treasury yields as markets increasingly bet that the Federal Reserve will need to raise interest rates to combat persistent inflation.
Fed Chair Kevin Warsh last week pledged to tackle inflation pressures linked to the economic fallout from President Donald Trump’s military campaign against Iran, while policymakers delivered a more hawkish set of projections than investors had anticipated.
Nine of the 18 Fed officials who submitted forecasts now expect interest rates to be higher by the end of 2026. Just three months ago, no policymakers were projecting additional rate hikes.
Markets are now pricing in the possibility of a rate increase as early as September.
The yield on the two-year Treasury note, which is particularly sensitive to expectations for monetary policy, climbed to 4.23 per cent on Monday, its highest level in more than a year.
Higher bond yields tend to hurt richly valued technology companies because they reduce the present value of expected future earnings. SpaceX has become one of the most expensive companies in the market, trading at more than 100 times last year’s revenue.
AI spending concerns spread across Big Tech
The pressure was not limited to SpaceX.
The Nasdaq Composite fell 1.3 per cent, while several of Wall Street’s largest technology companies suffered steep declines.
Alphabet dropped 6 per cent, putting it on course for its biggest one-day fall since May 2025 and erasing more than $256 billion in market value. The decline came after Nobel Prize-winning scientist John Jumper announced his departure from Google DeepMind to join AI start-up Anthropic.
Amazon fell 4.8 per cent, while Meta Platforms and Microsoft each lost around 3 per cent. Together, the three companies were poised to lose more than $248 billion in market value.
Debt sale adds scrutiny
SpaceX’s decline was exacerbated by news that the company is launching a debt offering expected to raise as much as $20 billion.
The proceeds will be used to refinance a bridge loan taken out in March when Musk merged AI start-up xAI and social media platform X into SpaceX.
The timing of the bond sale has intensified scrutiny of the company’s financial outlook. Higher interest rates increase borrowing costs and could complicate fundraising efforts for companies reliant on external capital.
A large portion of SpaceX’s valuation is tied to expectations surrounding its AI business. The division reportedly posted losses of $6.4 billion in 2025, yet investors have assigned enormous value to its long-term growth potential, based on estimates that the global AI market could eventually reach $26.5 trillion.
On Monday, SpaceX announced a new agreement to provide computing resources from its Colossus 2 data centre to AI start-up Reflection AI. The deal follows similar partnerships with Anthropic and Alphabet and mirrors the business model of AI infrastructure provider CoreWeave, which leases computing capacity to companies developing AI models.
However, analysts note that xAI’s chatbot Grok remains a distant challenger to OpenAI’s ChatGPT, Google’s Gemini and Anthropic’s Claude, raising questions about whether SpaceX can justify its premium valuation.
Winners and losers of the AI boom
While software and internet giants came under pressure, several semiconductor and memory-chip companies benefited from continued optimism around AI demand.
Micron Technology surged 5.8 per cent to a record high after announcing a strategic agreement with Anthropic to support next-generation AI infrastructure.
Data storage firms SanDisk and Western Digital also extended their strong gains for the year, underscoring a shift in investor preferences toward companies supplying the hardware underpinning the AI boom.
Monday’s sell-off suggests investors are becoming more selective about where they place their AI bets. While enthusiasm for artificial intelligence remains intact, the era of assigning ever-higher valuations to companies based solely on future AI potential may be facing its first major test.
For SpaceX, the loss of $400 billion in a single session is a stark reminder that even the market’s most celebrated AI stories remain vulnerable to the twin forces of higher interest rates and heightened investor scrutiny.
