Good morning.

The UK's AI Security Institute documented 19 separate actions in which Anthropic's Mythos and OpenAI's GPT-5.6 Sol tried to compromise real people and organizations during a routine cyber evaluation last month, 17 of them traced to Mythos. OpenAI separately confirmed that one of its models reached the live internet during third-party testing after a lab left a door propped open. Defenders are already repricing the clock: Palo Alto Networks (PANW) CEO Nikesh Arora told that the industry takes an average of 55 days to patch a vulnerability, and that his newest release compresses that to roughly four hours.

Fifty-five days to four. Somewhere an IT department that still schedules patches for the third Tuesday of the month is having a very quiet morning.

Artificial Intelligence

The most expensive thing SpaceX launched this quarter never left the ground.

In its first earnings report since June's IPO, SpaceX (SPCX) posted second-quarter revenue of $7.8 billion, up 92% year over year and comfortably ahead of the $6.81 billion analysts had penciled in, while trimming its net loss to $541 million from $1 billion. Then investors got to the capital expenditure line. Shares fell more than 7% in late trading and were still soft in Wednesday's premarket.

Here is the part that reframes the company. The former xAI division spent $15.8 billion on capex in three months, a 2,013% year-over-year increase, according to the company's own filing. The rocket business, the part with actual rockets, spent about $1.17 billion.

Strip away the launch pads and what's left looks less like an aerospace company than a landlord with very expensive tenants. The AI segment booked $2.56 billion of revenue, up 247% from $737 million, and SpaceX attributed the jump primarily to cloud services agreements rather than to sales of its own models. Anthropic alone has agreed to pay $1.25 billion a month through May 2029 for capacity at the Colossus 1 data center. Meanwhile the segment that pays for all of it kept humming: connectivity revenue rose 66% to $4.29 billion as Starlink subscribers doubled to 12 million, per CNBC's tally of the release.

Fuel Burn: The market didn't punish a bad quarter. It punished a disclosure. Private SpaceX could spend $15.8 billion in a quarter and nobody had to publish the receipt; public SpaceX now files one every ninety days, and the arithmetic is that Starlink's cash flow is underwriting a compute business whose largest customer is a rival lab. That works while demand runs ahead of supply. It gets interesting the first quarter it doesn't.

Semiconductors

Beating the estimate is easy. Beating the mood is the hard part.

AMD (AMD) reported record second-quarter revenue of $11.54 billion, up 50% year over year against a $11.28 billion consensus, and guided the third quarter to roughly $13 billion, above where the Street sat. Shares fell 8.8% in Wednesday's premarket to $472.94, per Benzinga Pro data.

The setup explains most of it. The S&P 500 closed Tuesday at a record 7,737, up 1.79%, with the Nasdaq Composite adding 2.59%. AMD walked into a tape at all-time highs carrying a stock that had run about 20% in a week, and a good quarter isn't a great one when the price already assumes great.

By the numbers: data center revenue $6.72 billion, up 107% and now 58% of the company against 42% a year ago; segment operating income of $2.1 billion versus a $155 million loss last year; gaming down 31% to $779 million; non-GAAP gross margin 56%, guided flat next quarter. Chair and CEO Lisa Su said the company enters the second half with "strong momentum as EPYC demand accelerates, Instinct deployments scale and Helios begins to ramp."

Helios is where the disappointment lives. Bernstein senior analyst Stacy Rasgon told CNBC he saw nothing wrong with the print, that guidance and earnings came in above expectations and margins landed in line, and that investors may simply be measuring AMD against Intel (INTC), whose own strong report lifted that stock nearly 8% days earlier. Futurum Group CEO Daniel Newman put it more bluntly, saying the results "were good" but the market wanted a blowout guide driven by Helios.

Helios Complex: The real disclosure is buried in the capex line, which climbed to $808 million from $282 million a year ago. AMD is now spending like a company that has to build the rack, not just the chip, and it has committed to deploying up to two gigawatts of MI450 silicon with Anthropic. Judge that in 2027, when Su says data center revenue more than doubles again. Judge it today and you are just grading the tone of a conference call.

Industrials

The picks-and-shovels trade finally sent an invoice.

Caterpillar (CAT) reported second-quarter sales and revenues of $20.5 billion, up 24% from $16.6 billion, the first time in the company's history it has cleared $20 billion in a single quarter. Profit came to $7.77 per share against $4.62 a year ago, and the stock rose roughly 9%.

What makes this more than a good industrial quarter is where the strength showed up. This was supposed to be the data-center generator story. It was also a construction story, which is the cyclical leg nobody had penciled back in.

Backlog is the tell. It hit a record $72 billion, up about 92% from a year earlier and $9 billion in three months alone, with every segment contributing. Construction Industries sales rose 35%, Resource Industries 20% and Power & Energy 17%. Caterpillar generated $4.4 billion of enterprise operating cash flow and finished the quarter with $6.7 billion of cash on hand.

The capacity math is where it gets uncomfortable. Christopher Ciolino, senior US machinery analyst at Bloomberg Intelligence, noted on Tuesday's episode that Caterpillar is tripling large-engine capacity and raising turbine capacity roughly two and a half times through the end of the decade, and that some customers have already placed orders out to 2030, which he called highly unusual for the company. Lead times extended again this quarter.

Prime Mover: A cyclical trading like a growth stock is a bet that this cycle doesn't turn, and the tell will be capacity rather than orders. Everyone in reciprocating engines and turbines is expanding at once to serve a customer base that is itself expanding at once, which is the setup that has ended every industrial upcycle on record. Backlog out to 2030 buys visibility. It does not buy immunity.

Bar Raised: HSBC (HSBC) resumed buybacks with a fresh $1 billion program and lifted its cost-cutting target to $2 billion from $1.5 billion after pretax profit of $10.1 billion beat the $9.5 billion consensus, with annualized return on tangible equity of 19.5%.

Value Menu Malfunction: McDonald's (MCD) US comparable sales grew just 0.8% as management conceded it pulled back digital offers its lower-income customers relied on, and Skye Anderson was named president of McDonald's USA, succeeding Joe Erlinger.

Cub Scouted: Coatue's flagship fund fell more than 8% in July, its worst month in a year on a concentrated AI and semis position, though it remains up 14.3% year to date, Bloomberg reported.

Eli Lilly reports before the open, Uber and Disney are on deck tomorrow, and the index that keeps setting records is doing it while two of yesterday's best earnings reports get sold. That's the tension in this tape: the numbers are arriving more or less as promised, and the bar keeps moving anyway. SpaceX proved a rocket company can spend like a hyperscaler. Caterpillar proved a hyperscaler still has to buy engines from someone. Both facts sat in the same session, and only one of them got applause.

That's the tape. We'll see you at the open. — AllThingsWallSt