Fidelity Investments, the big brokerage and mutual fund firm, long has had a rule protecting its small retail clients from plunging into initial public stock offerings while the shares were still subject to IPO-related hype.

In most cases, Fidelity would allow IPO investments only for clients with at least $500,000 in their brokerage accounts.

No longer. For the SpaceX IPO expected to launch on June 12, Fidelity has cut the threshold to only $2,000.

It’s a curious decision, considering that the SpaceX IPO will be not only the largest such IPO in history — with a possible $75 billion in shares coming on the market, valuing the entire company at about $1.8 trillion — but potentially the most over-hyped. SpaceX, you may know, is the biggest company controlled by Elon Musk, so if you buy its shares, you’re buying into his vision.

A Fidelity representative told me that it made the change because SpaceX has reserved about 30% of its offered shares for retail investors, much more than the traditional 10%, “which means there are more shares being offered to retail clients.”

Fidelity’s liberalized policy is an example of how Wall Street has been moving the investment goalposts in order to stuff more of SpaceX’s shares into the portfolios of ordinary investors.

Fidelity’s clients, of course, can make their own decision about whether to buy in, but that’s not the case for owners of some stock index funds, who may find SpaceX among their holdings whether they like it or not.

That’s because managers of stock index funds are duty-bound to add a stock to their holdings once it’s added to the index they track.

The risk inherent in the SpaceX IPO may fall significantly on unwitting retirement account holders, who tend to be heavily invested in index funds. Vanguard, which pioneered index mutual funds, says that about 30% of retirement account holders choose equity funds if they’re offered by plan sponsors, and most are indexed.

There’s no mystery why Wall Street is anxious to sell SpaceX to the small investor. It’s because almost all of the major investment banks, led by Goldman Sachs, are underwriters of this massive stock issue, so they have an incentive to get the shares out the door promptly. Accordingly, there has been a big push on the Street to stuff them into the leading stock indices, leaving index fund managers no choice but to buy.

Before getting into some of the weirder features of the SpaceX IPO, here’s a brief primer into how index funds work and how index fund managers have responded to the prospect of a huge and widely followed stock issue dropping onto the market. Nor is SpaceX the only mega-IPO lurking on the horizon. It’s likely to be followed this year by the AI firms for Anthropic and OpenAI.

The overseers of stock indices, of which the largest are Standard & Poor’s (which owns the S&P 500, the standard benchmark for the overall stock market) and Nasdaq (owner of the Nasdaq 100 index of the largest Nasdaq-listed companies), generally have been cautious about when to add a stock to their indices.

Standard & Poor’s, for example, waits until a stock has been publicly traded for at least a year and has turned a profit in four quarters, including the quarter prior to its addition. At Nasdaq, the rule has been that companies have to wait for at least three months and have at least a 10% float, meaning that at least 10% of its shares are available for trading.

With the SpaceX IPO in the offing, however, Nasdaq reduced its “seasoning” period to only 15 days and removed the 10% threshold. I asked Nasdaq if it made the change to entice SpaceX to list on its exchange rather than on the New York Stock Exchange, but didn’t get an answer. Anyway, Nasdaq did get the listing.

Another index operator, FTSE Russell, which manages the broad-based Russell 2000 index, reduced its entry threshold for big companies to as few as five trading days after an IPO, rather than waiting for the next quarterly or annual report.

Investors may have dodged the most significant bullet on June 5, when Standard & Poor’s opted not to change its index-listing rules for any of its market indices. But if you’re holding index funds that track the big-cap Nasdaq 100 or the Russell 2000, you’ll be tethered to SpaceX , depending on its weight in the index — if it keeps flying, good for you. If it crashes, you’ll take a loss.

That brings us back to SpaceX itself. As its name indicates, the company is best known as a rocketship firm, with billions of dollars in U.S. government contracts aimed at transporting humans to the moon.

But what is it, really? In its prospectus, the company describes its mission as building “the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars.”

This is not the language of Benjamin Graham and David Dodd, the gurus of value investing. It’s more like the language of Robert A. Heinlein, who wrote science fiction. (As it happens, Heinlein coined the term “grok,” which Musk took as the name for the AI bot of his social media platform X.)

Even if you believe in the goals, none of them is rationally achievable within the traditional investor’s horizon of a few years or even a few decades, much less within your lifetime. The same goes for the company’s claim of a “total addressable market,” or TAM, of $28.5 trillion for its products and services; for perspective, consider that the gross domestic product of the United States in 2025 was about $32 trillion.

Almost all of SpaceX’s claimed TAM comes from its prospective AI business — the only one of its three business segments that has virtually no concrete achievements to claim. It’s not clear that even Heinlein would have written such a stretch into his books.

In real life, Aswath Damodaran, the stock valuation expert at NYU, says the figure “borders on fantasy” and places it in the same category as other “bloated and patently unreachable numbers floated for companies” by Silicon Valley promoters.

Currently, the jewel in SpaceX’s revenue crown is Starlink, Musk’s network of orbiting internet-providing satellites. Starlink provided the largest share of SpaceX’s revenue in 2025 — $11.32 billion of its $18.8 billion — and was its only profitable segment, with $4.42 billion in net income. Space operations lost $657 million on $4.08 billion in revenue, and AI lost $6.36 billion on $3.2 billion in revenue.

The IPO, therefore, looks like a massive bet on AI, propped up by profits from Starlink. There’s reason to be concerned about Starlink’s future, however. SpaceX’s IPO prospectus discloses that although the number of Starlink subscribers has more than doubled over the last year, to 10.3 million as of March 31 from 5 million a year ago, its average revenue per subscriber has been shrinking, to $66 as of March 31 from $99 at the end of 2023.

Moreover, Starlink satellites have a useful life of only five years, meaning that the fleet has to be refreshed more often than the average American household replaces the family car, at untold expense in research and development and launches. About 10,000 satellites are currently in orbit.

It’s also possible that Starlink may run into increased political backlash. Its satellites have been blamed for interfering with astronomical observations and posing an ever-increasing risk of space collisions.

In 2021, Musk dismissed the collision concerns: “Space is just extremely enormous,” he said, “and satellites are very tiny.”

Then there are the governance features of SpaceX. Put simply, only one person is in a position to make any decisions, Elon Musk. He will own a mere 12.3% of the Class A shares due to be issued in the IPO, which each receive one shareholder vote, but 93.6% of the Class B shares, which have 10 votes each. That gives him 85.1% of all shareholder votes. As a result, the prospectus says, “Mr. Musk will be able to control the outcome of matters requiring shareholder approval,” including the selection of the board of directors.

Will he exercise his control mostly for the benefit of shreholders, or for himself? His record isn’t encouraging. As I’ve reported, he has a habit of using his various companies to prop up each other, most recently by sticking SpaceX and other companies with the excess inventory of Cybertrucks, the ridiculed pickups marketed by Tesla, which he also controls. When his SolarCity solar energy company ran into financial trouble in 2016, he merged it into Tesla with the assent of a compliant Tesla board.

None of this necessarily means that SpaceX will be a drag on the market. It could soar on IPO days and remain aloft, despite what the numbers suggest will be a majestic overvaluation from the inception. Or not. Either way, small investors could end up holding the bag.

Musicians have been left out of settlements between major record labels and AI companies, a new lawsuit alleges.

The American Federation of Musicians of the United States and Canada (AFM), which has 70,000 members, said Universal Music Group and Warner Music Group “received significant compensation” from the AI companies for past copyright violations and licensed “substantial” portions of their music catalogs to them, but haven’t shared that with the musicians.

UMG and WMG sued AI companies Udio and Suno in 2024, accusing them of copyright infringement. Both companies settled with Udio last year. In November, WMG announced a partnership with Suno, but Universal Music Group’s lawsuit against Suno is pending.

“While the Defendants protected their own interests and created a significant source of new revenue with the retrospective settlements and prospective licenses, they have refused to compensate the musicians whose work — created with their own instruments and through their talent, creativity, and hard work — is fed into AI machines for profit,” AFM said in its lawsuit, filed in U.S. District Court in New York on Friday.

AFM said it believes the AI settlements fall under the “new use” provision of its collective bargaining agreements, which requires music companies to notify the union of new licenses for purposes not covered by the contract and to compensate musicians, whose work was used to train AI models.

UMG and WMG said in statements that they are in negotiations on a collective bargaining agreement with AFM.

“Warner Music Group is growing the value of music by establishing guardrails and architecting a healthy AI ecosystem on behalf of artists everywhere,” the company said in a statement.

Universal Music Group said it will continue to work to resolve issues during the negotiations.

“Universal Music Group has been at the forefront of protecting the rights and advancing the interests of artists and songwriters in the age of AI — striking responsible AI licensing agreements to ensure they are compensated, leading the charge for legislation to further protect them and taking legal action against bad actors,” the company said in a statement.
“We expect to continue our strong working relationship with the AFM built on mutual respect for the talented musicians in our industry.”

AI has become more popular among consumers, dramatically changing the landscape in the entertainment industry. Many startups have popped up allowing users to type text prompts into AI systems to generate original songs, video clips and stories.

Some creatives say the AI tools help them brainstorm or illustrate bold ideas on a budget. But critics have raised concerns about whether AI systems are trained on copyrighted works without permission or payment to artists. Others are worried AI could eliminate their livelihoods.

Udio said it would create a new platform that would train on licensed and authorized music with artists having the ability to opt-in. Suno agreed to change its platform, launching new licensed models, and place download restrictions.

Bradford Auerbach, a partner at law firm OGC, said he expects to see more of these types of lawsuits filed by unions.

“You’ve got the unions always protecting the status quo, so you’ve got this invariable conflict of new technology coming in, and moving the cheese for a lot of people that were accustomed to having their business set up the way it was,” Auerbach said.

WASHINGTON — President Trump signed an executive order Tuesday directing the federal government to establish a voluntary early review process for the country’s most advanced artificial intelligence models, following a months-long internal battle over how aggressively Washington should move to regulate the fast-growing technology.

Under the order, companies are asked to allow government agencies, including the National Security Agency and representatives of the Defense Department, to evaluate cutting-edge models up to 30 days before they are released to the public. The order stops short of mandating participation and explicitly bars the creation of any new licensing or permitting for AI models.

“The main question is whether this is the start of a continued government clamp down and response to continued AI capabilities, or whether this is a one-off, limited, and truly voluntary act,” said James Sanders, research associate at the Center for a New American Security, a Washington, D.C., think tank.

“It’s unclear how voluntary this will stay and how voluntary it will be in practice as the AI labs try to maintain good relationships with the U.S. government,” he said.

The order represents a reversal for Trump, less than two weeks after he scuttled a version of the policy that gave the government a 90-day review period — and, more broadly, for an administration that came to power promising to strip away AI guardrails, a posture that slowly created fractures within the GOP.

In the executive order, Trump appeared to frame a need to foster AI technologies while taking into account national security. “As these capabilities evolve, my Administration will continue to work closely with industry to ensure that the best and most secure technology is deployed rapidly to confront any and all threats to our country,” he said in the order.

The step set off immediate debate about whether Trump’s plan would be an effective approach. It formalizes an existing practice in which top AI companies share models with external evaluators and government players before deploying them publicly, but raises questions about how voluntary it will be and how the government will choose which labs to target.

David Sacks, who previously served as Trump’s AI advisor, called the 30-day window a “game changer,” arguing that the shorter timeline would allow companies to engage with the government without slowing down new model releases.

“In the AI race, every day counts,” Sacks wrote in a post on X.

Dean W. Ball, Trump’s former AI advisor, characterized the order as a victory for the AI “safety contingent” and a loss for Sacks and others who promote a more accelerated approach. He called the order a mistake, saying it could be a first step toward a federal licensing requirement for AI models.

“All for a benefit that is barely articulable; what, exactly, is the intelligence community going to do in 30 days to make the models safer?” Ball wrote on X.

The signing of the executive order occurred amid growing tensions among Republicans over AI, job loss and data center construction, including fear among a significant portion of Trump’s supporters that artificial intelligence could eliminate jobs or become a security threat. Polling in May had shown strong support among Republicans for a framework like the one outlined in Trump’s executive order.

The growing split among Republicans over AI was clearly visible in Florida on Monday, where James Uthmeier, the state’s Republican attorney general, sued OpenAI over the alleged risks of ChatGPT, citing the use of the bot by a gunman in a shooting at Florida State University last year.

Meanwhile, Rep. Byron Donalds — the Trump-endorsed candidate to succeed Gov. Ron DeSantis — said Monday that he did not agree with Trump on AI policy, indicating he supported state-led regulation, a shift for a candidate who had been backed by the AI industry earlier in the year.

A poll released by Americans for Responsible Innovation, a nonprofit advocating for a federal framework for AI policy, found that the majority of Republican voters polled supported the type of plan laid out in Trump’s executive order. Seventy-one percent also said independent security testing should be required by law for advanced AI systems.

When Trump took office, his administration pivoted away from Biden-era policies requiring AI companies to test their AI models and share safety results with the government before public release, reversing the U.S. posture on regulation.

That changed after Anthropic — acting on its own initiative — brought its Claude Mythos Preview model to senior White House officials, a move that exposed vulnerabilities in its software and raised concerns about the potential need for safety-testing of AI models before broad public release.

The White House attempted to downplay the executive order as a regulatory move, emphasizing in a post Tuesday that the federal government would not conduct sweeping oversight and the process outlined in the executive order would be voluntary.

“We are NOT conducting oversight of all new models, as that level of government overreach would have chilling effects on free speech and innovation,” the White House Office of Science and Technology Policy posted on X.

Trump’s signing of the order prompted calls from those who support stricter AI regulation for Congress to take steps beyond Trump’s plan. Thus far, Congress has not passed any major legislation to regulate artificial intelligence.

“Congress should take the structure this order creates, make participation mandatory, and extend it beyond cyber threats to the full range of risks the most capable models present,” Riki Parikh, policy director of the Alliance for Secure AI, a nonprofit that promotes safeguards for AI, said on X, saying the order’s voluntary framework “isn’t enough.”

Progressives, including Gov. Gavin Newsom and Vermont Sen. Bernie Sanders, said the executive order was too weak and slammed Trump for flip-flopping on regulation.

Some experts suggested the distinction between voluntary and mandatory sharing of their cutting-edge technology may be crucial.

“No company is formally required to participate, but if a developer wants to sell frontier AI systems to the federal government, participation may soon become the price of entry,” Jessica Tillipman, a professor who studies contracting law at George Washington University, wrote in a post on X.

The administration’s approach was welcomed by industry leaders, including Microsoft President Brad Smith, who said the order was “an important step toward advancing innovation while protecting the security of the American public.”

Anthropic endorsed the order and called it “an important step in strengthening America’s leadership in AI.” The company said it was looking forward to supporting the implementation of the program.

Ceballos and McDaniel reported from Washington, Christopher from Los Angeles. Times staff writer Michael Wilner contributed to this report.