SpaceX shares dropped on Wednesday after Elon Musk\u2019s plans for blockbuster spending to position his AI and rocket company as a data center developer spooked investors.<\/p>\n
SpaceX surpassed analysts\u2019 expectations in Tuesday\u2019s debut earnings report, posting quarterly revenues of $7.8 billion, well above analysts\u2019 estimates of $6.82 billion and up 92 percent from a year earlier. It posted a net loss of about $541 million, better than estimates of $2.12 billion.<\/p>\n
But shares in SpaceX fell 10 percent in early trading after it reported capital expenditure of almost $16 billion on AI, double the previous quarter and well above Wall Street\u2019s expectations. It said spending would persist at current levels for at least two more quarters.<\/p>\n
The earnings report comes after SpaceX raised $86 billion in a historic initial public offering in June that was underpinned by expectations that it will generate meteoric revenue growth in coming years.<\/p>\n
SpaceX\u2019s shares initially surged but they have shed around half their value, from a peak of $225 in the week after going public to $112 on Wednesday.<\/p>\n
Musk told investors on an earnings call that the group planned to increase its computing capacity from 2 gigawatts at the end of this year to \u201ccloser to 10GW [than 5GW]\u201d by the end of 2027.<\/p>\n
Each gigawatt of new capacity costs tens of billions of dollars to develop, with the bulk of that spent on chips. Musk announced that he would rely exclusively on Nvidia hardware in future infrastructure development.<\/p>\n
At the highest end of Musk\u2019s estimate, the company\u2019s data centers would be consuming as much power as New York City at the peak of summer by the end of 2027.<\/p>\n
Musk, whose commercial success at Tesla and SpaceX has come from developing hardware, is betting that his company can capitalize on insatiable demand for computing power.<\/p>\n
Bret Johnsen, SpaceX\u2019s chief financial officer, told investors that the group would generate more than $100 billion in annual recurring revenue by the end of the year, with cloud services accounting for the bulk of its growth.<\/p>\n
\u201cI think what the investment community wasn\u2019t overly excited about was the capex number in the AI segment,\u201d said Melissa Otto, global head of Visible Alpha research at S&P Global. \u201cIt\u2019s ambitious.\u201d<\/p>\n
,<\/p>\n
SpaceX\u2019s AI revenue more than trebled from the previous quarter to $2.56 billion, with the majority of that coming from deals to lease data center capacity to rival AI groups including Anthropic and Google.<\/p>\n
That approach has boosted SpaceX\u2019s short-term revenues while limiting its capacity to train and run its own competitive AI models.<\/p>\n
Dec Mullarkey, managing director of SLC Management, said SpaceX\u2019s data center leasing could hamper it. \u201cTheir margins are going to be capped if they are primarily a cloud company,\u201d he said.<\/p>\n
SpaceX\u2019s $1.65 trillion market capitalization also hinges on Musk achieving ambitious goals such as reaching Mars with reusable rockets, putting data centers into orbit, and playing a critical role in developing AI.<\/p>\n
Goldman Sachs, a bookrunner on SpaceX\u2019s offering, expects the company\u2019s AI revenue to increase 100-fold by 2030. Musk said on Tuesday that SpaceX could hit $1 trillion in revenue by the end of the decade.<\/p>\n
On the earnings call, Musk said SpaceX had made progress on its first generation of orbital data centers, dubbed Starmind AI-1. \u201cThis is not some sort of far-future, distant thing. We expect to start launching these next year.\u201d<\/p>\n
The latest series of Grok AI models are being trained on SpaceX data, which Musk said would give his company\u2019s tools an edge in engineering.<\/p>\n
Musk also argued that the potential of the group\u2019s Starlink unit\u2014which provides satellite Internet\u2014was \u201cunder-appreciated.\u201d<\/p>\n
Some traders have been putting on bets against SpaceX shares in recent weeks. Short interest in the company has risen to the equivalent of 220 million shares, or roughly 34 percent of the shares that are freely trading, according to data provider S3 Partners.<\/p>\n
Analysts at Deutsche Bank said the end of the stock\u2019s initial lock-up period for employees on Thursday was weighing on SpaceX\u2019s equity price. The German bank also said \u201clower than expected\u201d buying by passive funds that track indices was affecting SpaceX\u2019s shares after it was added to the Nasdaq 100 index last month.<\/p>\n
Investors are also weighing the probability of Musk merging SpaceX with Tesla after previously consolidating parts of his business empire.<\/p>\n
Musk said the electric-car maker was increasingly collaborating with SpaceX, including through Terafab, a semiconductor manufacturing initiative, during Tesla\u2019s earnings call last month.<\/p>\n
He added that any merger would have to take place under the \u201cappropriate process.\u201d<\/p>\n
\u00a9 2026 The Financial Times Ltd. All rights reserved. Not to be redistributed, copied, or modified in any way.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" SpaceX shares dropped on Wednesday after Elon Musk\u2019s plans for blockbuster spending to position his AI and rocket company as a data center developer spooked investors. SpaceX surpassed analysts\u2019 expectations in Tuesday\u2019s debut earnings report, posting quarterly revenues of $7.8 billion, well above analysts\u2019 estimates of $6.82 billion and up 92 percent from a year […]<\/p>\n","protected":false},"author":1,"featured_media":61602,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[9995,316,440,9605,3086,6207,5951],"class_list":["post-61601","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-quarterly-earnings","tag-spacex","tag-starlink","tag-syndication","tag-tesla","tag-x","tag-xai"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/61601"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=61601"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/61601\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media\/61602"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=61601"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=61601"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=61601"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}