Elon Musk Predicts a Wave of Failures Among AI Cloud Companies. Is SpaceX Stock a Sell?
AI now makes up over half the rocket company's revenue. Should shareholders worry?
Elon Musk cautioned on Sunday about a potential collapse of numerous AI cloud firms. In a post on X, the SpaceX CEO noted that debt markets have largely halted lending to companies lacking substantial revenue beyond AI data centers. Musk forecasted that the majority of the over 200 neoclouds (companies offering computing power for AI rental) would either fail or merge with other entities.
SpaceX has secured $40 billion in debt to purchase graphics processing units (GPUs), and he credited the company’s investment-grade credit rating and revenue from its Starlink internet and launch businesses. SpaceX's super intelligence segment contributed $7.56 billion to the company's $14.58 billion third-quarter revenue. The stock, currently around $147, has declined approximately 30% from its June 16 high of $211.39.
Given SpaceX's shift towards AI, the super intelligence revenue surged from $818 million in the first quarter of 2026 to $7.56 billion in the third quarter, accounting for around 52% of its total sales. SpaceX's substantial investments in AI, including $16.4 billion in capital expenditures for the quarter, contrast with its diverse revenue streams.
Starlink's revenue increased by 69% year-over-year to $5.25 billion, and the space segment added $1.77 billion in revenue. SpaceX still maintains investment-grade ratings from all three major credit agencies, with Starlink being their primary cash flow source. SpaceX's AI unit improved from a $2.47 billion operating loss in the first quarter to a $431 million profit in the third quarter, despite $1.2 billion in stock-based compensation related to the Cursor acquisition.
Although SpaceX's capital spending forecast for the fourth quarter is $35 billion to $40 billion, nearly double the third quarter's total, CFO Bret Johnsen stated that new computing deployments pay for themselves within a year at current pricing. While Musk's warning may indicate a wave of neocloud failures, it could also benefit SpaceX by potentially reducing competition for its rented computing capacity, provided high rental prices persist.
Given SpaceX's diversified revenue beyond AI and its investment-grade credit rating, the stock does not appear to be a sell at its current price of around 34 times sales. However, a significant change in SpaceX's short-term rental contract pricing could alter this assessment.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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