SpaceX beat revenue expectations and reduced its losses in its first quarter as a publicly traded company, delivering sharp increases in all three of its divisions: space, connectivity and AI.

• Why it matters: The company has been under the microscope — with shares falling below their IPO price of $135 — as investors look for Elon Musk to deliver AI advancements.

By the numbers: SpaceX's revenue soared 92%, to $7.81 billion, in the period ended June 30, compared with a year earlier, topping S&P Visible Alpha expectations of $6.9 billion. That included:

• $4.29 billion in its connectivity division, which includes the Starlink satellite internet service, up 66% from a year earlier.
• $2.56 billion in AI revenue, which includes xAI and Grok subscriptions, up 247%.
• $962 million in space revenue, up 29%.

💸 Follow the money: SpaceX spent $15.8 billion building AI infrastructure in the quarter, helping expand its AI compute capacity to 1.4 gigawatts — more than triple where it was last year.

• And that spending spree isn't just benefiting chipmakers — it's also flowing to the literal picks and shovels building the physical backbone of AI.

🚜 One beneficiary is Caterpillar, which reported 72% growth in its power generation business this morning, driven by "very strong demand" for generators and turbines used in data centers.

• Its construction segment benefited too from data center construction.
• It all helped Caterpillar top $20 billion in quarterly revenue for the first time in its history.

📈 The impact: SpaceX shares were down over 6% in extended trading after closing the day up 9.4% in anticipation of earnings. Caterpillar ended the day up 5.6%.

The bottom line: Today's AI economy is split between builders and beneficiaries. The next test is whether the companies footing the bill can eventually reap the rewards.

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McDonald's believes value is the biggest driver of customer traffic these days — its problem is convincing some franchisees to believe that too, Axios' Pete Gannon writes.

👣 Zoom in: Fewer customers visited McDonald's U.S. restaurants in the second quarter compared with those same locations a year ago.

• McDonald's blamed several factors, including a popular Minecraft campaign last year that set a high bar for comparisons and a World Cup campaign this year that failed to deliver.
• But it also blamed "inconsistent restaurant level execution" of one of its key value menus.

💸 Between the lines: McDonald's CEO Chris Kempczinski told analysts on the company's earnings call this morning that about a third of its franchisee system didn't follow the recommended pricing guidance for the chain's "$3 everyday affordable price" menu launched in April.

• He said the program gives franchisees wide latitude to set prices on individual items, and some restaurants saw that as an opportunity to charge more — choosing immediate margins over the long-term traffic benefits that lower prices may have delivered.

Zoom out: Comparable U.S. sales rose 0.8% thanks to higher average checks, yet that was still a sharp slowdown from the pace in recent quarters.

What we're watching: Kempczinski said McDonald's plans to "educate" those franchisees on the big picture, and intends to make pricing — and pricing execution — part of its business review process.

🛌 Wayfair reported its strongest U.S. growth since the pandemic in Q2, as the online furniture company continues to take market share from legacy brick-and-mortar retailers. (CNBC)

💰 Polymarket is in early talks with prospective investors to raise about $1 billion, with the prediction markets platform seeking a valuation north of $20 billion. (Bloomberg)

Spotify today joined the exclusive 300 million paid subscribers club.

• The music streaming app joins Netflix as the only major global streaming platforms known to have reached that milestone, Axios' Sara Fischer writes.

🎧 Between the lines: The tech giant grew paid subscribers 9% year over year last quarter, with gains across every region.

• New premium offerings, including tiered subscription products and personalized experiences, are what's helping drive subscriptions.
• Earlier this year, the company rolled out AI-powered personal podcasts, announced expanded Audiobooks+ tiers, and introduced more conversational AI tools like Talk to Spotify and Studio by Spotify Labs.

💸 Follow the money: Spotify's steady premium user growth has helped the company expand its profitability after years of losing money.

• Gross margin hit a record 33.4% last quarter, moving the company closer to its long-term 35%–40% margin target.

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