Last week’s AI supply chain developments came down to one question: who benefits from the industry’s enormous infrastructure spending? SpaceX is bringing certain turbine components in-house [1], NVIDIA is opening hardware designs that could increase competition among suppliers [5], [6], and SpaceX and Tesla are exploring a potential merger [1]. Meanwhile, speculation about Anthropic’s IPO valuation showed the gap between a company’s estimated worth and the cash it can actually raise [14]. For investors, the issue is who captures that growth and on what terms.
SpaceX Is Bringing Critical Infrastructure Production In-House
On SpaceX’s earnings call, Elon Musk said the company is casting its own blades and vanes for gas turbines, components that operate in extremely hot gases to help generate power [1]. According to Musk, turbine suppliers told SpaceX these components were running 12 to 18 months behind the rest of the equipment [1]. Manufacturing them internally could shorten the time needed to bring additional power online, although SpaceX still relies on outside suppliers for complete turbines and other equipment [2]. On October 6, Doosan Enerbility held a shipment ceremony for a 380-megawatt gas turbine destined for SpaceX’s AI operations [3]. Supply constraints can create openings for alternative manufacturers even as major customers try to produce some components themselves [2].
Demand for gas-power equipment remains strong. In July, GE Vernova reported that its combined backlog and reserved production slots for gas-power equipment had increased from 100 to 116 gigawatts [4]. The investment question is whether customers bringing constrained components in-house eventually weaken suppliers’ pricing power or enable those suppliers to deliver more finished equipment. Removing a manufacturing bottleneck could benefit the broader supply chain while reducing the premiums certain manufacturers have been able to charge for scarce components.
A similar strategy is emerging around semiconductors, although the timeline is considerably longer. SpaceX is bringing roughly 200,000 NVIDIA GB300 chips online each month, according to Musk [1]. At the same time, the company is pursuing its own chip-manufacturing initiative, Terafab. Musk described an internal goal of producing a functional test chip around May or June 2027, with potential volume production in the third quarter of 2028, while emphasizing the uncertainty surrounding those dates [1]. SpaceX also remains dependent on semiconductor manufacturing equipment and other suppliers, including ASML, as it explores that ambition [1].
SpaceX is manufacturing some turbine components today, while its chip plans remain future goals. For investors, the implications differ across suppliers: some provide components SpaceX needs immediately, others make products it may eventually manufacture internally, and still others supply the equipment necessary for that transition. What matters next is whether internally manufactured components can meet reliability, cost, and production requirements, and whether existing suppliers can preserve their margins as customers develop alternative sources.
NVIDIA’s Open Hardware Designs Could Reshape Supplier Economics
At the Open Compute Project summit on October 12, NVIDIA contributed additional designs for the infrastructure surrounding its next-generation Vera Rubin AI chips [5]. The updated MGX 1.2 architecture includes fanless liquid-cooled compute trays, standardized power and cooling connections, and support for high-density racks requiring up to 250 kilowatts [5]. Rather than requiring every supplier to develop entirely customized components, the shared specifications give manufacturers a common foundation for designing compatible equipment. NVIDIA’s goal is to help the industry build AI infrastructure faster [5].
Other manufacturers are positioning themselves around those requirements. At the summit, Visionbay unveiled plans for its K-1 AI factory platform, combining NVIDIA’s 800-volt direct-current reference architecture with power and thermal technologies from Vertiv [5]. Eaton also expanded its liquid-cooling capabilities earlier this year through its acquisition of Boyd Thermal [7]. Both companies operate in areas that become increasingly important as AI computing systems require more electricity and sophisticated cooling.
Standardization creates an opportunity and a risk for suppliers. Common designs can reduce development costs, accelerate manufacturing, and help companies serve more customers. At the same time, products built to comparable specifications may become easier for buyers to evaluate against one another, potentially placing pressure on pricing. Manufacturers still need to qualify their components, demonstrate reliability, and produce at scale, so an open design does not eliminate the value of engineering expertise or established supplier relationships.
NVIDIA and Cisco also announced plans for USFP, a new optical module format intended to move far more data between computing systems [8], [9]. The proposed design offers approximately four times the bandwidth density of existing 200-gigabit-per-lane modules, with improved energy efficiency [8]. Optical modules convert electrical signals into light and back, allowing enormous amounts of information to move across data-center networks. TE Connectivity and Amphenol are among the companies developing the components needed for the new format [8]. These remain design targets, and the open specification is still being developed [9].
The announcement raised questions about existing optical suppliers. More capable modules do not necessarily mean customers will purchase fewer components overall, because demand also depends on how networks expand and how much additional capacity gets used. Lumentum has described strong demand extending into early 2029 [10], while NVIDIA announced a $2 billion investment and multibillion-dollar purchase commitment involving Coherent earlier this year [11]. Neither development guarantees that a particular supplier will benefit from USFP, however. For investors, more orders matter only if suppliers keep profitable economics on those orders. The next evidence to watch is confirmed production contracts, supplier qualification, and whether margins remain stable as shipments increase.
SpaceX and Tesla Explore a Merger as Tesla’s Profit Declines
Musk confirmed that SpaceX and Tesla have established independent board committees to explore a possible merger. He said he would not participate in their discussions, no transaction terms have been agreed upon, and shareholder approval would be required [1]. The strategic argument centers on combining SpaceX’s computing and infrastructure capabilities with Tesla’s vehicles, robotics, and related technologies. Whether that combination would create value for shareholders depends on how a transaction is structured and what each company would contribute.
Tesla’s October 21 financial report adds context to those discussions. The company reported approximately $28 billion in quarterly revenue, roughly unchanged from a year earlier, while net income declined 43% [12], [13]. Tesla also reported $1.53 billion in free cash flow and $45.4 billion in cash, cash equivalents, and short-term investments [12]. Those resources are meaningful, but they do not establish what Tesla would be worth in a combination with SpaceX.
Some investors have interpreted the possible merger as providing a potential price floor for Tesla shares [2]. That conclusion is premature. A transaction favorable to one company’s shareholders may impose costs on the other’s, particularly if the exchange ratio or valuation does not reflect the economic value each side contributes. Independent committees can help address conflicts when two companies share a prominent leader, but their involvement does not guarantee favorable terms. Until a definitive agreement is announced, the central investment questions remain unresolved.
Anthropic’s IPO Valuation Isn’t the Same as Cash Raised
During the week of October 19–23, Reuters reported that some investors were discussing a potential valuation of approximately $1.5 trillion for Anthropic’s planned initial public offering, below earlier expectations exceeding $2 trillion [14], [15]. Those figures attracted attention, but a proposed valuation is not the same as cash available to fund a business. A company’s estimated market value reflects what investors may be willing to pay for its shares, while the money it actually raises depends on the size, pricing, and structure of the offering.
Update, October 26, 2026: Anthropic has now publicly filed a Form S-1 registration statement with the Securities and Exchange Commission for its proposed IPO. The company intends to list its Class A shares on Nasdaq under the symbol ANT, but the number of shares offered and the price range have not yet been determined [17]. The filing shows that both the company and existing shareholders will sell shares, and that Anthropic will not receive the proceeds from shares sold by existing shareholders [21]. The filing advances the offering beyond speculation, but the headline valuation still says nothing about how much cash Anthropic will actually raise.
For a company making large infrastructure commitments, what matters is how much new capital it ultimately receives, what obligations that capital must support, and how much additional financing could be needed.
Frequently Asked Questions
Why would a company start making its own parts instead of buying them?
A company may bring production in-house when outside suppliers cannot deliver critical components quickly enough, when costs become excessive, or when greater control over production offers a competitive advantage. Manufacturing internally can reduce dependence on a supplier’s schedule and potentially improve cost control, but it also requires specialized expertise, equipment, and reliable production processes. SpaceX’s decision to cast certain gas-turbine components shows the trade-off [1]. Making those components internally could help reduce delays, but they must still meet performance and reliability requirements. For investors, the question is whether internal production reduces a supplier’s pricing advantage, enables additional equipment sales, or proves more expensive than continuing to purchase externally.
How can a supplier’s sales grow while its profits shrink?
Revenue and profitability do not always move together. A manufacturer may sell more units while earning less on each sale if competitive pricing, production costs, or changes in product mix reduce its profit margins. Industry standards can contribute to this dynamic by making components more interchangeable and allowing customers to compare competing suppliers more easily. NVIDIA’s open hardware architecture shows how this could play out [5], [6]. Shared specifications could help suppliers manufacture more efficiently and reach additional customers, but the same standards could also increase competition. Investors therefore need to consider both revenue growth and margins, along with the supplier’s ability to qualify products, maintain reliability, and deliver at scale.
What is the difference between a company’s valuation and the cash it raises in an IPO?
A company’s valuation is an estimate of what the entire business is worth based on the price investors are willing to pay for its shares. IPO proceeds refer to the money generated by selling shares in the offering. When a company issues new shares, the proceeds generally go to the company; when existing shareholders sell their shares, those proceeds go to the selling shareholders. Anthropic’s proposed IPO offers a timely example. Although valuations around $1.5 trillion have been discussed, the company’s October 26 filing did not establish the final offering price or number of shares [14], [17]. Investors will need those details to assess how much funding the transaction actually provides.
How do investors evaluate a merger between two companies with the same leader?
When companies share a prominent leader, investors pay particular attention to conflicts of interest, the independence of the negotiation process, and whether the proposed terms treat shareholders fairly. Independent board committees can help evaluate a transaction, obtain professional advice, and negotiate without the shared leader directly representing both sides. The potential SpaceX–Tesla combination presents these considerations. The companies have established independent committees, but no merger terms have been announced [1]. Investors would need to assess the exchange ratio, each company’s valuation, the financial obligations involved, and the strategic benefits before determining whether a transaction creates value.
What makes a market development “news” rather than “noise” for investors?
News changes the cash flows, costs, or risks behind an investment, while noise changes the story around it without changing those fundamentals. A simple test is to ask what was actually signed, paid, built, or reported, and what is still a projection, rumor, or valuation. Last week offered both. SpaceX casting its own turbine parts is a real change in how it builds [1]. A trillion-dollar IPO valuation discussed before any shares are priced is a headline about expectations [14], [17]. We find it helps to name the evidence that would turn a headline into a durable signal, such as signed contracts, delivered capacity, or completed financing, and then wait for it.
The Throughline
Taken together, last week’s developments show how growth in AI infrastructure is changing the balance of power between buyers and suppliers. SpaceX is bringing certain manufacturing capabilities in-house, while NVIDIA is encouraging more standardized hardware designs. Both approaches could help infrastructure expand faster, but they also raise questions about which suppliers can preserve their pricing power as production scales.
For investors, the key question is whether growing sales translate into durable profitability. More orders do not automatically mean stronger margins, just as a higher company valuation does not guarantee greater financial resources. The potential SpaceX–Tesla merger introduces another consideration: even a strategically attractive combination depends on the terms shareholders ultimately receive.
What matters next is whether these announcements translate into measurable results: qualified components, sustained supplier margins, signed agreements, and financing that supports growth without placing an unreasonable burden on shareholders.
Demand for AI infrastructure is real, but who captures its value is still being decided. The next thing we’re watching is the share count and price range in Anthropic’s offering, because those numbers will show how much new capital the company actually raises.
If you’d like to discuss how these developments may relate to your own financial plans, we’re glad to help: https://tuttlewealth.com/contact/
Sources & References
- [1] Investing.com, “Earnings call transcript: SpaceX tops Q3 2026 estimates, shares jump after hours,” October 20, 2026. View source
- [2] Daily H.E.A.T., “Musk Is Eating the Bottlenecks,” October 23, 2026. View source
- [3] E. Ko, “Doosan Enerbility exports 380 MW gas turbine to US AI firm SpaceXAI,” The Korea Herald, October 6, 2026. View source
- [4] GE Vernova, “GE Vernova reports second quarter 2026 financial results and raises 2026 financial guidance,” July 22, 2026. View source
- [5] NVIDIA, “OCP Global Summit: Amid Ecosystem Adoption, NVIDIA Opens Vera Rubin Architecture to Help Scale AI Factories Worldwide,” October 12, 2026. View source
- [6] Daily H.E.A.T., “NVIDIA Just Published the Floor Plan,” October 20, 2026. View source
- [7] Eaton, “Eaton completes acquisition of leading liquid-cooling solutions provider Boyd Thermal,” March 12, 2026. View source
- [8] Techzine, “Nvidia and Cisco develop USFP form factor: up to 12.8 Tb/s capacity,” October 2026. View source
- [9] Futurum Group, “Cisco’s USFP Brings 400G-per-Lane Design to NVIDIA’s Optical Roadmap,” October 2026. View source
- [10] Benzinga, “Lumentum Stock Rises After CEO Says AI Demand Has the Company Sold Out Through Early 2029,” October 9, 2026. View source
- [11] NVIDIA, “NVIDIA and Coherent Announce Strategic Partnership to Develop Optics Technology to Scale Next-Generation Data Center Architecture,” March 2, 2026. View source
- [12] Tesla, Inc., “Third Quarter 2026 Update,” October 21, 2026. View source
- [13] Electrek, “Tesla (TSLA) releases Q3 2026 financial results: margins rebound, profit still falls,” October 21, 2026. View source
- [14] Reuters via The Manila Times, “Anthropic first-half loss markedly higher at $80B,” October 22, 2026. View source
- [15] Reuters via Investing.com, “At Anthropic pre-IPO meet: ‘Thinking’ caps, surging revenue, no human extinction,” October 14, 2026. View source
- [16] Board of Governors of the Federal Reserve System, “October 2026 Calendar.” View source
- [17] Anthropic, “Anthropic files S-1 with the SEC for proposed initial public offering,” October 26, 2026. View source
- [18] Board of Governors of the Federal Reserve System, “Federal Reserve issues FOMC statement,” September 16, 2026. View source
- [19] Axios, “Warsh signals steady Fed outlook despite inflation jump,” October 16, 2026. View source
- [20] S. Moore, “What To Look For From The Fed’s October Meeting,” Forbes, October 19, 2026. View source
- [21] Anthropic, PBC, “Form S-1 Registration Statement,” U.S. Securities and Exchange Commission, October 26, 2026. View source
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