SpaceX's science fiction dreams come with an astronomical bill

Elon Musk's aerospace company SpaceX has faced skepticism from Wall Street due to its staggering expenditures on artificial intelligence (AI) infrastructure. In the past three months, the company allocated nearly $16 billion towards AI, surpassing Wall Street's expectations of $13 billion. Despite delivering a revenue beat, SpaceX's shares dropped as much as 11% in after-hours trading, reflecting investor concern over the astronomical costs associated with Musk's vision of an AI-powered future in space.

During a conference call following the earnings report, Musk and SpaceX's executives defended the substantial AI spending, emphasizing its necessity for their ambitious goals. Musk suggested that Starlink, the company's lucrative connectivity business, could expand to provide bandwidth for humanoid robots on Earth and beyond, while also enabling the construction of a "mass accelerator" on the moon. He further projected that SpaceX could achieve a $1 trillion revenue milestone as early as 2029.

The company reported a 92% increase in quarterly revenue to $7.8 billion, which surpassed analyst projections. SpaceX also nearly halved its net loss to $541 million. CFO Bret Johnsen highlighted that SpaceX's capital expenditures (capex) for AI infrastructure were proving profitable, with a less than one-year payback period. UBS analysts responded positively to the company's strong performance in the AI sector, upgrading their revenue estimates for 2026 and 2027.

Despite the uncertainty surrounding SpaceX's share price, which has fallen around 16% below its initial public offering (IPO) price, the company's underlying business remains robust, driven by the success of Starlink and its Starship rocket.