The latest
SpaceX shares fell nearly 10% in pre-market trading on Wednesday after the company said capital expenditure on artificial intelligence had reached almost $16bn, double the previous quarter. It also said spending would remain at current levels for at least two more quarters. The decline followed SpaceX’s first earnings report since its June initial public offering, despite revenue and losses both coming in ahead of analyst expectations.
Details
- Results exceed forecasts: SpaceX reported quarterly revenue of $7.8bn, above the $6.82bn consensus and 92% higher than a year earlier. Its net loss was about $541mn, compared with an estimated $2.12bn. AI revenue more than tripled from the prior quarter to $2.56bn, mostly through capacity leases to Anthropic and Google.
- Computing target: Musk said capacity would rise from 2 gigawatts at year-end to a level “closer to 10GW than 5GW” by the end of 2027. Each additional gigawatt costs tens of billions of dollars to develop, mainly for chips. He said future infrastructure would use Nvidia hardware exclusively.
- Cloud revenue bet: Chief financial officer Bret Johnsen forecast more than $100bn in annual recurring revenue by year-end, with cloud services providing most growth. Leasing boosts near-term sales but leaves less capacity for SpaceX’s own AI models. SLC Management’s Dec Mullarkey said a primarily cloud business could cap margins.
- Valuation at stake: SpaceX raised $86bn in its June IPO, but its shares have lost almost half their value since peaking at $225 in the following week. Its $1.65tn market capitalisation also reflects goals including reusable Mars rockets and orbital data centres. Musk said Starmind AI-1 launches were expected next year and revenue could reach $1tn by 2030. Goldman Sachs, a bookrunner on the offering, expects AI revenue to increase 100-fold by 2030.
- Trading pressure: Short interest has risen to the equivalent of 220mn shares, about 34% of the freely traded stock, according to S3 Partners. Deutsche Bank said Thursday’s expiry of the employee lock-up and weaker-than-expected passive fund buying after SpaceX joined the Nasdaq 100 were also weighing on the price. Investors are additionally assessing a possible Tesla merger.
Between the lines
The market reaction indicates investors are prioritising the cost and returns of SpaceX’s computing build-out over a better-than-expected quarter. Melissa Otto, global head of Visible Alpha research at S&P Global, called the AI spending ambitious; leasing provides immediate revenue while constraining the company’s own model capacity.
What’s next
Investors will watch Thursday’s employee lock-up expiry for added selling pressure, then capital expenditure over the next two quarters against the company’s stated $16bn pace. The next operational milestone is the planned start of Starmind AI-1 orbital data-centre launches next year.
