SpaceX quarterly revenue jumps, beats estimates as AI business surges

Elon Musk's SpaceX reported a significant third-quarter profit on Tuesday, exceeding market estimates, as its AI business surged and revenue more than doubled, sending its shares up 2.5% in extended trading. Capital expenses nearly tripled as the company invested in compute infrastructure. CEO Musk stated that SpaceX is at an inflection point across launch, connectivity, and superintelligence.

Starlink and SpaceX's broader connectivity operations have been the main financial engine for the company, supporting Musk's AI ambitions. However, SpaceX's own AI software, including xAI's Grok, has been overshadowed by rivals such as OpenAI, Anthropic, and Alphabet's Google. Revenue in the third quarter surged 161% to $14.58 billion, compared to analysts' estimate of $12.72 billion.

Net income was $4.4 billion, up from a net loss of $1.1 billion a year earlier, and the company surpassed investor expectations for a profit of $1.57 billion.

AI revenue rose more than ninefold to $7.6 billion, primarily from renting out computing capacity. However, AI accounted for $16.4 billion of SpaceX's $19.6 billion in capital spending, which the company expects to stay near that level in the near future. SpaceX is generating its AI money mainly by renting data-center capacity to developers such as Anthropic, Google, and Reflection AI, rather than from its own models. This business model is closer to a cloud provider than an AI lab.

With AI revenue now the company's biggest business line, SpaceX's hyperscale business is providing operating strength and leverage that will carry into advancements in its satellite and launch business. The diversification and strength of SpaceX make a merger with Tesla seem imminent, according to tech research group Futurum Group CEO Daniel Newman.

Barclays suggested a deal could be announced before Tesla's annual meeting, with SpaceX as the likelier acquirer, although neither company nor Musk has officially committed to favoring a deal.