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The earnings season has kicked off with a bang, though not the kind that investors have been hoping for. Two Magnificent 7 members turned in their disappointing earnings on the same day.Alphabet (GOOGL) and Tesla (TSLA) both reported earnings on July 22, and both stocks dropped the following day. Microsoft (MSFT) and Meta (META) are next in line to report earnings on July 29.The theme for the year has already been set, when all the hyperscalers increased their capital expenditures (capex) plans as if spending more guarantees winning the AI race.The trade-off is that this serious cash burn will negatively affect free cash flow. The only Magnificent 7 members that won’t have this problem are Apple (AAPL) and Nvidia (NVDA).Despite this elephant in the room, Morgan Stanley is still bullish on Microsoft. In a research note shared with me, Morgan Stanley analysts Adam Wood and Josh Baer updated their opinion on Microsoft stock ahead of the fourth quarter (Q4) earnings.

Morgan Stanley believes the Q4 report will be a positive catalyst for MSFT stock.Shutterstock

Morgan Stanley believes the Q4 report will be a positive catalyst for MSFT stockAnalysts said that Azure and Copilot are key drivers for the stock, and they believe that the sentiment about them is about to improve.They see approaching Q4 results as the first catalyst that will support their thesis.They noted that Q3 was strong and that Microsoft exceeded consensus estimates across all three segments, delivering approximately 1% total revenue upside, driven by 39% constant-currency Azure growth.Analysts believe that Azure growth will continue into fiscal year 2027, as Microsoft continues with its plan to approximately double its total datacenter footprint over the next two years.Wood wrote: “We believe this expanding infrastructure footprint should continue easing capacity constraints, allowing Azure to capture robust AI and cloud demand while providing further evidence that Microsoft’s significant AI infrastructure investments are translating into durable revenue growth.”Analysts expect Azure AI to achieve approximately 100% year-over-year growth in Q4 fiscal year 2026, or 18% quarter-over-quarter growth.They noted that Microsoft’s management has said that a significant portion of capex is for longer duration assets like land and buildings, which could generate revenue for more than 15 years.Wood reiterated an overweight rating for Microsoft stock, and a price target of $600, based on a 25x multiple and EPS estimates for fiscal year 2028.He noted that this multiple represents a premium to large-cap software peers, but he believes it is justified by strong positioning and execution.Analysts noted downside risks:Weak macro impacting IT spendingOn-premises cannibalization by CloudIncreased investments hurt margin expansionAI adoption proves limitedUpside potential:Cloud adoption accelerates, with Azure as convincing winnerAI leadership results in substantial revenue contribution over-timeOperational efficiencies leading to greater than anticipated economies of scale and margin expansionWhile Morgan Stanley believes that high capex will work in Microsoft’s favor, investors need to watch carefully what happens to OpenAI, as it is a major driver of that capex.Microsoft’s $100 billion friendship with OpenAI is showing cracksMicrosoft revised its partnership with OpenAI in April, stating that it no longer has an exclusive license for its models.It was also absent from the last OpenAI funding round.This news sounds a bit different when taken along with the amount of money Microsoft spent on OpenAI. We can thank Elon Musk’s lawsuit against OpenAI for this important information.Michael Wetter, who runs the company’s corporate development, testified in court that the company has spent more than $100 billion on its OpenAI investments and its costs of building data centers and hosting, according to Reuters.After spending so much money on OpenAI, it is hard to break out, and Microsoft keeps making one step forward and one step back, as we can see from what is going on with the Copilot front.Microsoft made major leadership changes to improve its AI strategy, with the most important being the naming of Jacob Andreou as EVP for Copilot.The company launched Copilot Cowork in March for Frontier (early access program), and it became generally available in June.The most recent effort was the launch of MAI-Image-2.5-Pro and MAI-Voice-2-Flash AI models, which reduce GPU usage significantly.Despite these serious efforts, OpenAI’s GPT‑5.6 is the preferred model in Microsoft 365 Copilot.Not only is Microsoft competing with its partner on the model front, but it has already built and is building additional data center capacity, driven by OpenAI’s insatiable demand.The problem is that OpenAI’s leaked financials show it is not profitable.Tech writer and prominent AI skeptic Ed Zitron published leaked OpenAI’s audited financial statements, which were verified by the Financial Times. This revealed an increase in OpenAI’s net loss, from $5.09 billion in 2024 to $38.53 billion in 2025.OpenAI’s way to get more investor money was to pursue an IPO, but this IPO is now in question.On July 10, Apple filed a lawsuit in a federal court in Northern California, alleging trade secret theft by former employees and OpenAI.Related: AI agents can now open bank accounts and move your moneyThe lawsuit could be trouble for the IPO, but OpenAI was already considering postponing it until 2027, even before the lawsuit, The New York Times reported.As if the era of tokenmaxxing ending, and OpenAI having problems, wasn’t enough, Kimi K3’s release only made things worse for frontier model developers.The issue here is the one that Alex Karp, Palantir (PLTR) CEO, raised, that companies are starting to realize they need more control over the models and to have security of their data. This is how these open-weight models might lead them to invest in their own infrastructure.If we add to the picture Meta entering the cloud business, which will also sell AI capacity, Microsoft could end up with excess capacity.In conclusion, Microsoft’s capex might look good for Morgan Stanley analysts, but one domino falling could unravel it all.Related: Microsoft CEO’s Anthropic criticism reveals bigger AI power struggle

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Wall Street spent most of July arguing about how much SpaceX stock is worth. On Friday, July 24, HSBC became the first major bank to tag it as worth slightly less than the market is already paying.The bank initiated coverage of Space Exploration Technologies (SPCX) with a hold rating and a $115 price target.That target sits below July 23’s close of $118.24 and $20 under the $135 IPO price from June.Shares fell about 4% on July 24 to trade near $113, extending a decline that has taken the stock down roughly 27% in a month.What makes the note worth reading isn’t the rating; it’s what HSBC had to do to arrive at it.Why HSBC’s $115 SpaceX price target is lower than it looksHSBC reached a $115 price target after being unusually generous.The bank valued SpaceX by pricing each business separately and adding them together. Then it applied a 2x “innovation premium” on top.That premium exists to account for Elon Musk’s record of building companies that reshape industries, CNBC reported. HSBC used Tesla’s first decade as a public company as its benchmark, so the math already assumes Musk pulls off something extraordinary. Yet, it still lands under the current price.That is the troubling part for shareholders. Double the company’s worth for the founder alone, and the stock is still fully valued.HSBC did model a best-case scenario. It put a sky-high valuation at $293 per share, assuming Starship commercializes, Starlink adoption accelerates, and AI revenue arrives faster than expected.The bank simply doesn’t treat that outcome as the base case, and the $115 target is where its base case lands.

Starship Flight 13 launched on Friday evening, July 24, one of two dates that will settle the argument over SPCX stock.Walter Cicchetti / Getty Images

The $106 billion number SpaceX investors should focus onMost analyst notes fight over revenue growth. HSBC’s forecast doesn’t dispute the growth at all.The bank expects revenue to more than double to $38.2 billionin 2026 from $18.7 billion in 2025, driven by the AI segment and Starlink.The problem sits further down the page. HSBC expects SpaceX to keep posting GAAP losses through 2027 and doesn’t see free cash flow turning positive until 2030.Reaching positive free cash flow costs roughly $106 billion in cumulative cash.For a reader deciding whether to buy, that figure matters more than the price target. Free cash flow is the money left after a company pays its bills and funds its equipment, and it’s what eventually pays shareholders.HSBC is saying SpaceX will burn through more than $100 billion before it produces any.What HSBC’s forecast implies for the next 4 yearsRevenue roughly doubles in 2026, then keeps climbingLosses continue on a GAAP basis into 2027Cash usage runs to about $106 billion before it reversesPositive free cash flow arrives around 2030Why the AI business is where HSBC pushes back hardestHSBC called SpaceX the clear leader in commercial launch and credited Starlink’s lead in satellite internet.The skepticism starts where SpaceX stops being a space company.The company absorbed xAI in February 2026, bringing in the Grok model, the Colossus data centers, and the X platform (formerly Twitter).HSBC believes xAI trails the leading AI developers in both enterprise adoption and computing scale. To close that distance means spending against Amazon (AMZN), Microsoft (MSFT), and Google.Related: Morgan Stanley sends strong signal on SpaceX stock price targetThe bank also questioned whether orbital data centers can become economically viable within the next decade, and said Starlink’s addressable market is likely smaller than SpaceX’s own estimate.SpaceX told the SEC its total addressable market runs to $28.5 trillion, with $26.5 trillion of thatin AI.HSBC is essentially arguing the market has priced a slice of that $26.5 trillion into the stock before anyone has proven it can be reached.What SpaceX’s own numbers say about the burnThe filings back up the caution. SpaceX generated $4.69 billion in revenue in the first quarter of 2026 and lost $1.94 billion from operations, according to Reuters.Starlink is carrying the company. The connectivity segment brought in $3.26 billion of that quarterly revenue with $1.19 billion in operating income.More Space Stocks:SpaceX stock defies latest Wall Street forecastsCathie Wood buys more SpaceX stock after selloffSpaceX investors may be ignoring troubling trendThe AI segment produced $818 million in revenue and a $2.47 billion operating loss in the same three months.Capital spending in Q1 hit $10.1 billion, and $7.7 billion of it went to AI, CNBC reported.There’s a signal in there that’s worth noticing: SpaceX is spending the majority of its capital on the one segment HSBC says it’s least likely to win.The one metric bulls tend to skipStarlink added subscribers fast, reaching 10.3 million by the end of the first quarter from 5.0 million a year earlier, SpaceNews reported.Average revenue per user, or ARPU, fell to $66 a month from $86 over the same stretch, as SpaceX pushed into lower-priced markets in Africa, Southeast Asia, and Latin America.That trade works only if subscriber growth keeps outrunning the price decline.How SPCX stock compares to the market since its IPOThe gap between SpaceX and the broader market since June is clear.SPCX from its $135 IPO price: down about 16%SPCX from its $225.64 June 16 peak: down about 50%SPCX over the past month: down about 27%Nasdaq 100 over the past 12 months: up about 23%, Stocktwits reportedShort sellers have collected roughly $15.5 billion in paper gains since the IPO, with short interestnear 31% of the tradable float, Investing.com noted.The two August dates that matter more than any price targetSpaceX reports its first quarterly results as a public company after the close on Aug. 4. Two trading days later, on Aug. 6, the first lock-up tranche expires. Up to 911.5 million shares become eligible to sell, lifting the public float from about 4.9% to roughly 12%, CNBC reported.Musk’s stake stays locked until mid-2027.For an investor, the sequence is what counts. The earnings report gives the first clean look at cash burn, and 48 hours later, the supply of tradable shares more than doubles.If the report disappoints, the selling arrives into a market that just got a lot more sellers.The Falcon 9 decision that raised the stakes on StarshipThere’s one more development alongside HSBC’s caution.SpaceX has begun turning away satellite operators seeking dedicated Falcon 9 launches beyond 2028 and stopped taking new Falcon 9 rideshare reservations, Bloomberg reported.It has also halted production of some expendable Falcon hardware, including upper-stage components.Falcon 9 is expected to keep flying NASA and Defense Department missions, and the plans could change if Starship slips further.Starship’s Flight 13 launched on Friday, July 24, from Starbase after a July 16 abort and a weather delay, carrying 20 Starlink V3 satellites.What SpaceX investors should actually do with this noteHSBC’s hold is not a sell call, and it does not say the business is broken. It says the price already reflects the good outcome.For most investors, that means waiting until after Aug. 6 to buy, since both the first earnings report and the float expansion land inside 48 hours.Anyone already holding SPCX should size the position for a stock that has moved 50% in six weeks and carries 31% short interest. A strong quarter could push it up just as fast.The bull case needs three specific things: Starship flying often enough to cut launch costs, Starlink adding subscribers faster than ARPU falls, and xAI converting computing contracts into repeat revenue.HSBC’s $115 target is a bet that at least one of those slips. The Aug. 4 report is the first chance to find out which, if any.Related: Jeff Bezos doubles down on Blue Origin with $2B

In much of the country, the most affordable homes for sale are also the oldest. Buyers reaching for a lower price increasingly find themselves looking at houses built well before the wiring standards, materials, and layouts that exist in newer construction.As home prices continue to climb, that calculation has become even more challenging. The median existing-home price hit $440,600 in June, an all-time high and the 36th consecutive month of year-over-year increases, according to the National Association of Realtors. Total inventory slipped to 1.56 million units, a 4.6-month supply, leaving fewer cheap, newer listings for buyers to work with.On Wednesday’s episode of the BiggerPockets Real Estate Podcast, host Dave Meyer and co-host Henry Washington took a question from an investor in Columbus, Ohio, who had spent years refusing anything built before 1964 and watched that rule wall off more and more affordable deals. The two spent much of the episode on whether a cutoff like that has quietly become its own kind of mistake.”I really like this question because I don’t think there’s a right answer,” Meyer said.What NAR’s record median home price means for buyersThe new median home price record did not arrive alongside a collapse in demand. Existing-home sales ran at a seasonally adjusted annual rate of 4.09 million in June, down 2.4% from May but up 2.8% from a year earlier, and properties went under contract in a median of 28 days. Supply is what has not kept pace, and NAR’s chief economist framed that as the variable dictating where prices go next.”The median home price has reached an all-time high,” said NAR Chief Economist Lawrence Yun. He added that progress on long-term affordability could stall if inventory growth does, and that prices can accelerate without consistent gains in supply.This dynamic drew national attention again Saturday, when CBS News aired a segment on buying a home during the affordability crisis.More on housing market and real estate investing:Homeowners face selling decision after housing market shiftAmericans face major decision after housing market newsAmericans are leaving their jobs for unexpected income streamThin supply at a record price does most of its damage at the bottom of the market, where the move-in-ready listings that once anchored a search have priced out of reach. What is left is older, and Meyer’s warning is that screening that stock out on the calendar alone removes a large share of what is actually available.”If your buy box starts in the 1960s, you’re filtering out a huge chunk of inventory, including some potential home runs,” Meyer said.The Columbus investor had set a personal floor at 1964, a line drawn to avoid the knob-and-tube wiring common in older builds. The rule did its job on wiring, but it had also begun closing off affordable properties, and that is the tradeoff Meyer is asking buyers to reopen. Widening the search reaches inventory a stricter cutoff would bury, but it also hands the buyer a set of risks a 2015 build does not carry, and those risks are where the decision gets uncomfortable.

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The tradeoff BiggerPockets hosts see in older homesWashington’s answer was not to avoid older houses but to price them correctly before signing anything. He works the same five systems on every older property he looks at.”I’m always looking at the big five,” said Washington. “I’m looking at plumbing, electrical, roofs, HVAC, and foundation.”Cost is what separates a bargain from a mistake, and by Washington’s estimates the range is wide. New electrical runs roughly $5,000 to $10,000. A roof lands around $10,000 to $15,000 depending on the size of the property. A routine HVAC swap runs $5,000 to $8,000, but a house that has never been ducted pushes that to $16,000 to $20,000 or more. Foundation work is the line item that worries him most, at $20,000 to $50,000 with no guarantee the house sits level afterward.”But plumbing and foundation, you can get up there into almost six figures and having to fix some of those problems,” Washington said.Meyer’s caution runs alongside it. The cheap-fixer version of the pitch, he said, tends to come apart once the renovation actually starts.”A lot of people look at these older homes and say, ‘Oh, that’s a great value-add opportunity.’ And there is if you can execute it,” Meyer said.Meyer said his own whole-house re-plumb is costing about $80,000 and has been running for roughly nine months.That leaves buyers two workable paths rather than one. The first is an older home someone else has already upgraded, where the foundation and plumbing have been handled, the electrical ideally with them, and the layout works as it stands. The second is a narrower window. Washington named 1970 to 1975 as his sweet spot, and Meyer agreed on the reasoning, pointing to construction quality in that stretch, minimal knob-and-tube risk, and less asbestos exposure than 1960s stock.”A lot of the quality of the construction was really good back in the ’70s,” Meyer added.Neither path changes the condition underneath. Yun’s caution was that prices can keep climbing Before closing on anything older, both hosts advised paying for a foundation specialist’s assessment and a re-plumb quote, the two line items most likely to reshape the math after the sale.Key takeaways for 2026 homebuyersRecord prices are pushing buyers toward older inventory: NAR put the June median existing-home price at $440,600, an all-time high and the 36th straight month of year-over-year gains, with total inventory down to 1.56 million units and a 4.6-month supply.A calendar cutoff carries a cost: Meyer said a buy box that starts in the 1960s screens out a large share of what is listed, including some of the best deals. The Columbus, Ohio investor who raised the question had held a 1964 floor and watched it shrink her options.Inspect the big five before the cosmetics: Washington, who says he has done hundreds of deals, checks plumbing, electrical, roofs, HVAC, and foundation on every older property. New electrical runs roughly $5,000 to $10,000 by his estimate, and ducting a house that never had it can reach $16,000 to $20,000 or more.Foundation and plumbing hold the six-figure risk: Washington said foundation work runs $20,000 to $50,000 and can still leave a house sitting uneven, and that plumbing and foundation together can approach six figures. Meyer said his own re-plumb is costing about $80,000 over roughly nine months.The hosts point to the early 1970s: Washington named 1970 to 1975 as his sweet spot, and Meyer cited stronger construction quality in that era, minimal knob-and-tube risk, and less asbestos exposure than 1960s builds. Before closing on anything older, both advised paying for a foundation specialist’s assessment and a re-plumb quote.Related: Homeowners face selling decision after housing market shift

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