SpaceX's AI spending unnerves Wall Street despite promises of quick payoff
In addressing Wall Street for the first time since SpaceX's IPO, executives tried to make the case that hefty AI investments are paying off within a year.
SpaceX disclosed a substantial increase in artificial intelligence (AI) capital expenditures during its inaugural earnings report following its IPO in June. While revenue witnessed a remarkable 92% growth year-over-year, capital expenditures surged over sixfold to $18.4 billion, surpassing total sales for the quarter. Over 80% of SpaceX's capex was directed towards AI, where the company lags behind competitors like OpenAI, Anthropic, and Google.
SpaceX's CEO, Elon Musk, emphasized that the company would achieve an annual recurring revenue (ARR) of $100 billion by December 2026 if no significant changes were made. However, investors reacted negatively to the news, causing SpaceX shares to plummet following the earnings report. CFO Bret Johnsen sought to reassure investors by stating that SpaceX is deploying capital efficiently and expects to recoup investments within a year.
SpaceX has secured deals with Google, Anthropic, and Reflection AI, bringing in potential monthly revenue amountsing to up to $920 million, $1.25 billion, and $150 million, respectively. The company's AI data centers in Memphis, Tennessee, have been sued for using natural gas-burning turbines without proper permits. Despite the challenges, SpaceX remains optimistic and aims to build 20 gigawatts of capacity by the end of next year.
Written by urgent.news from CNBC's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
