Investors flee for the skies amid rattled AI trade down here on land

Much of the stock market has been concerned with down-to-earth matters, problems of copper and of silicon — specifically how to turn those base elements into the GPUs that serve as the linchpin of Corporate America’s quest to completely reinvent their industries with the power of AI. But all that focus on cloud computing has kept attention away from a vibrant industry about computing… amongst the clouds.

For instance, just last week AST SpaceMobile rose after announcing launch plans for the first of its next-generation satellites next month, as it tries to execute its plan to offer satellite-based broadband service directly to consumers.

The services-from-space trade has been a popular market theme this year, with companies like AST SpaceMobile, EchoStar, Rocket Lab, and Planet Labs all periodically soaring on updates related to their partnerships and launch plans that might allow them to offer broadband and cellular coverage from space.

It’s not only satellites that are shaking up the skies, either. Joby Aviation and Archer Aviation have been dueling for supremacy in the nascent but potentially huge air taxi industry.

That rivalry between the much-hyped companies is heating up, as Joby has sued Archer, alleging the latter stole its trade secrets and used them to undercut a partnership deal in an act of “corporate espionage, planned and premeditated.”

Boeing’s air taxi subsidiary, Wisk, sued Archer in 2021 as well, accusing the latter of “brazen theft” of confidential information and intellectual property.

Even the more established atmosphere-based businesses had been having a vibrant week with oil prices falling. Shares of major US carriers are up on oil’s price action, with Southwest up more than 5% and the rest of the big four airlines — American, Delta, and United — up between 2% and 6%.

The Takeaway

While the market debates whether it’s early innings, middle innings, or a late game on the AI trade, speculative and unprofitable businesses with sky-high potential do have at least some appeal. AST SpaceMobile says that its satellites will soon enable ubiquitous coverage directly to everyday smartphones from space, which sounds nifty even if (like competitors Rocket Lab and Planet Lab) the business remains unprofitable and is expected to post quarterly losses for the next two years, at least. And while Archer and Joby are both racing to develop electric air taxis for use in commercial flight, each has also struck deals with major defense contractors.