SpaceX is falling hard and now looking to the Pentagon for money, which is bad news for taxpayers, the company, and anyone holding AI-linked debt.

• SpaceX has lost about $1 trillion from its peak value and the stock is down 35%.
• To raise cash, SpaceX is in talks to sell the Pentagon billions in data center capacity for running AI models.
• The whole AI buildout runs on borrowed money — SpaceX, Oracle, and others are seeing their bonds treated as risky junk.
• A cheap new Chinese AI model, Kimmy K3, is rated as good as top US models, sparking a chip-stock selloff and raising fears US firms are overpriced.
• If customers don't show up to fill these debt-funded data centers, it could drag everything down — and some of that debt sits inside ordinary life insurance policies.

Outlook: Expect more pressure on AI-linked stocks and bonds as cheap Chinese competition grows and SpaceX leans on government money to stay afloat.