Wall Street Brunch: SpaceX IPO, WWDC And CPI (undefined:SPCX)

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SpaceX begins trading on the Nasdaq on Friday. Is valuation too much? (0:17) May CPI expected to show renewed pressures as rate hike odds rise. (1:30) Oracle earnings spotlight AI cloud growth. (2:13)

SpaceX (SPCX) is set to begin trading on the Nasdaq Friday after pricing what could be the largest IPO in history by valuation.

Reuters reported that the company has already received about $150B in orders, more than double the roughly $75B it is seeking to raise.

SpaceX is offering about 555.6M shares at $135 each, valuing the company at roughly $1.8T.

While demand has been strong, not everyone agrees with the valuation.

Aswath Damodaran, the NYU professor known as the “dean of valuation,” estimates SpaceX’s equity value at closer to $1.3T.

Damodaran told The Wall Street Journal’s Take On the Week podcast that a key point of disagreement is the company’s assumptions about the size of its AI business, including xAI and Grok.

He argued that SpaceX’s projections for the AI market stretch the bounds of plausibility.

Meanwhile, Apple (AAPL) kicks off its Worldwide Developers Conference on Monday, where investors will be looking for updates on Apple Intelligence, Siri and the company’s broader AI strategy.

Wedbush analyst Dan Ives said the eventual monetization of Siri and AI could add another $75 to $100 to Apple’s share price and is “not being factored into the current multiple.”

Wedbush has an Outperform rating and a $400 price target on the stock.

Looking to the economy, attention turns back to inflation after Friday’s stronger-than-expected jobs report raised concerns about wage pressures.

The May CPI report arrives Wednesday.

Economists expect headline CPI to rise 0.3% in May, with the annual rate at 4.2%.

Core CPI is expected to increase 0.5%, lifting the annual rate to 2.9%, still 90 basis points above the Fed’s target.

Wells Fargo said one area likely to reflect the impact of the Iran conflict is airline fares, citing higher jet fuel costs and the bankruptcy of Spirit Airlines. However, the firm does not expect to see a broad reacceleration in services inflation.

Following the payrolls report, traders are now pricing in a quarter-point rate hike before year-end.

On the earnings front, Oracle (ORCL) will be the highlight when it reports on Wednesday.

Stone Fox Capital, which has a Strong Buy rating on the stock, expects strong results and another guidance increase.

“The AI cloud stock appears to have plenty of upside based on just hitting already aggressive growth rates while the potential exists for more upside,” the firm said.

Not everyone is convinced. Louis Gerard recently upgraded Oracle to Hold from Sell, but said the company still faces questions around converting its backlog into revenue and a balance sheet that continues to deteriorate.

Also on the earnings calendar:

Chewy (CHWY) joins Oracle on Wednesday.

Adobe (ADBE) and Lennar (LEN) report Thursday.

In the news this weekend, Marvell Technology (MRVL) and Flex (FLEX) are expected to join the S&P 500 (SP500) later this month, replacing Pool Corporation (POOL) and The Campbell’s Company (CPB).

Marvell surged earlier this week after Nvidia (NVDA) CEO Jensen Huang said it could become the next semiconductor company to reach a $1T market value.

Flex, which provides electronic manufacturing services, has more than doubled this year.

Meanwhile, Pool and Campbell’s are both down about 20% year to date.

And for income investors:

Alphabet (GOOG) (GOOGL) goes ex-dividend on Monday and pays out on June 15.

Occidental Petroleum (OXY) and Travelers go ex-dividend on Wednesday. Occidental pays out on July 15, while Travelers pays out on June 30.

Taiwan Semiconductor (TSM) goes ex-dividend on Thursday with a July 9 payout date.