SpaceX's Next Big Business Isn't Rockets. It's Computer Chips.

Six months ago, SpaceX (NASDAQ: SPCX) was a private rocket company. Today, it is a public one worth more than $2 trillion, and its most intriguing new project has nothing to do with launching rockets. In March 2026, Elon Musk unveiled Terafab, a sprawling semiconductor venture, run alongside his electric-car company Tesla (NASDAQ: TSLA) and AI start-up xAI, with Intel (NASDAQ: INTC) later signing on to contribute manufacturing technology. The pitch is audacious: build chips not just for cars and robots, but for artificial intelligence (AI) data centers in orbit.

For a company this new to the public market, it's worth asking what a bet like that could mean -- and what it's worth today.

Image source: Getty Images.

What Terafab is

Terafab begins with a prototype fab in Austin and a far larger complex planned elsewhere in Texas. Intel joined the effort in April to contribute its process technology, including its next-generation 14A manufacturing process for the full-scale plant. The scale is staggering: SpaceX has pegged the initial investment at about $55 billion and the total build-out at up to $119 billion.

Interestingly, the space angle is what sets it apart. Musk has said that a large share of Terafab's output is aimed at chips for artificial-intelligence data centers in orbit, where abundant sunlight provides power, and cooling would be easier.

But here's the catch: This is a disclosed plan -- but a plan, not revenue. The project is early, unproven, and hugely capital-intensive.

Why would a rocket company build chip fabs at all?

The logic ties back to what SpaceX already does better than anyone. It is the one company that can launch heavy payloads to orbit cheaply and at scale, so if AI data centers really do move to space, SpaceX controls the road to get them there -- and Terafab would let it design the hardware that flies. Intel's contribution is the manufacturing know-how that SpaceX and Tesla lack, a reminder that even Musk's companies can't stand up leading-edge chip production from scratch overnight.

What it means for SpaceX shareholders

Today, the company is primarily Starlink plus launch. Per its filings around its June initial public offering (IPO), SpaceX's connectivity segment, primarily driven by Starlink, was about 61% of 2025 revenue, at $11.4 billion, with more than 10 million Starlink subscribers as of March 31. Terafab extends the same logic that built Starlink -- put infrastructure in orbit and sell the capacity -- into another possible leg alongside launch and connectivity.

Meanwhile, Starlink is what makes any of this affordable. The satellite-internet business generates high-margin, recurring revenue and has become the cash engine funding SpaceX's more speculative bets, from Starship to xAI.

If space-based compute becomes real, it would slot in as a natural fourth act -- launch lifts the hardware, connectivity moves the data, and Terafab supplies the brains.

It is a coherent story. But it is also years away from generating a dollar of chip revenue.

And it is expensive. SpaceX is newly public with a limited financial history, and a $119 billion chip project is a huge claim on capital that competes with Starship and Starlink's own expansion. At more than $2 trillion, the stock already bakes in a great deal of optimism, so Terafab looks more like upside optionality rather than something to be sure about today.

Ultimately, I'd treat Terafab as valuable optionality, but not a reason to buy the stock. The company has a lot of things it is working on. Some, like rockets and Starlink, are already material. But other parts of the business are simply more speculative. And it's important for investors to keep this in mind. For a company this new, with this much of its sky-high valuation resting on things that haven't happened, keeping any position small is probably the sensible way to play it.

Daniel Sparks and his clients have positions in Tesla. The Motley Fool has positions in and recommends Intel and Tesla. The Motley Fool has a disclosure policy.