Could SpaceX Eventually Become the Ultimate AI Infrastructure Play?

Space Exploration Technologies (NASDAQ: SPCX) -- commonly called SpaceX -- is probably best known for its Starlink satellite internet and mobile services and its revolutionary reusable rocket technologies that have dramatically lowered the costs for getting satellites and other payloads into orbit. On the other hand, the company is actually positioning artificial intelligence (AI) technologies as the most important part of its growth strategies.

In the S-1 prospectus the company published prior its initial public offering (IPO) in June, it said that roughly $26.5 trillion of its $28.5 trillion total addressable market comes from AI technologies and services. On the other hand, the company's AI segment accounted for only roughly 17% of the $18.7 billion in revenue that it recorded in 2025. With that in mind, could SpaceX really be the ultimate AI infrastructure play for long-term investors?

Image source: Getty Images.

What is SpaceX cooking up in the AI space?

Shortly before SpaceX went public, the company announced that it had landed a major AI processing contract with Alphabet's Google division. The deal will see SpaceX providing $920 million a month in AI processing services to Alphabet starting this October, and the contract lasts for three years.

Starting from SpaceX's base of roughly $3.2 billion in AI segment revenue in 2025, the company already looks poised for dramatic growth over the next year just from the Alphabet contract alone. SpaceX's wealth of AI processing technologies built around GPUs from Nvidia allowed it to win a large long-term contract with Alphabet -- and that's a great sign that the company is in good position to win other big deals with leading tech customers.

SpaceX is also aiming to revolutionize the AI infrastructure market with its construction of orbital data centers. By putting data centers in space, the company could be able to leverage more direct and reliable access to solar energy and dramatically cut down on the high electricity expenses needed to run data centers.

On the other hand, there are heat diffusion engineering problems associated with orbital data center technologies -- and other challenges as well. For starters, the data center hardware will need to be shipped into space. As the leader in low-cost rocket launches, SpaceX is uniquely positioned to handle the costs associated with the task.

There are also other big challenges involved. While orbital data centers may offer some substantial efficiency improvements when it comes to power sources, they may also be far more complicated and difficult when it comes to maintenance. Hardware components including GPUs, hard drives, and motherboards can wear out and need to be replaced, and it's currently far easier to do that on Earth than in space.

While it's possible that SpaceX will be able to leverage robotics technologies to make completing those kinds of tasks far more feasible, there are still a lot of operational obstacles involved in building and maintaining a thriving orbital data center at scale. They are a promising concept and could turn SpaceX into a huge winner in the AI infrastructure space, but investors should understand that the category is still speculative and could take a long time to come to fruition.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.