Is SpaceX a Top Artificial Intelligence (AI) Stock Pick in September?

Space Exploration Technologies (NASDAQ: SPCX) may have "Space" in its name, but it's also a major competitor in the artificial intelligence (AI) boom. It's investing billions of dollars in its AI capabilities, putting it on a level playing field with many other noteworthy AI names.

But is SpaceX a great AI stock to buy now? Let's take a look.

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xAI and its Grok model are growing quickly

A few months before SpaceX went public, it acquired xAI, which operates the Grok AI model. This gave SpaceX direct exposure to AI, but that also means it has to spend a lot of money. Right now, compute constraints are holding many AI products back from becoming quicker and smarter, so investing in AI computing capacity is a smart move.

Fortunately, SpaceX raised about $100 billion in cash and equivalents through its IPO and the debt sale it conducted shortly thereafter. That does that give SpaceX enough capital to build out its AI solutions?

During Q2, SpaceX spent about $15.8 billion on AI compute infrastructure. While that sounds like a lot, and it is, it is likely far less than competitors like OpenAI and Anthropic spent. Earlier this year, OpenAI stated it would spend $750 billion on AI infrastructure through 2030. Spread evenly over a five-year period, that would amount to about $38 billion per quarter.

So, xAI may be competitive, but it may not be spending enough to really fit in among the major AI hyperscalers. However, xAI's lower spending may be far more responsible and reasonable than that of its competitors, as SpaceX isn't focused solely on becoming a dominant force in the AI world.

SpaceX sees its AI business as a way to fund some of its space economy and exploration aspirations, so it's investing heavily in it, though it isn't going all in. It's good to see this level of restraint. Still, if something goes wrong and xAI's models prove clearly inferior to those of the competition, SpaceX may not deliver the return on investment investors demand.

Investors will receive more information about the OpenAI and Anthropic IPOs in the near future, which should provide some additional clues as to how xAI stacks up against its direct competition. As a result, I think investors would be best served by exercising patience right now. There will be more AI investment options in the near future, and once investors have more information about the competition, they should be able to make a better-informed decision about which one to add to their portfolio.

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.