Analysts push back on Musk's space computing timeline

SpaceX’s AI returns over the next few years will not come from space. According to Wall Street analysts, the money is coming from Earth data centers rather than the orbital compute that Elon Musk has promised.

This reframes SpaceX (NASDAQ: SPCX) as primarily an infrastructure company. Space computing is a bet for the future, not now, for anyone considering SpaceX as an AI play.

SpaceX already charges for computing. Reuters reported that the company signed enterprise deals for its Colossus supercomputer clusters with Anthropic, Alphabet’s Google, and Reflection AI. Those contracts alone are expected to generate more than $28 billion annually.

SpaceX’s AI revenue in 2025 is ~$3.2 billion, which is significantly higher than the new deals. The compute contracts also outperformed SpaceX’s earnings from rocket launches and Starlink, when counted separately. The contracts, however, include termination clauses, so analysts caution against reading them as recurring revenue.

What SpaceX spent to get here

SpaceX invested ~$18 billion in AI infrastructure and research in 2025. According to company filings, ~$12.7 billion was spent on capital expenditures and $5.1 billion on research and development. That expenditure outpaced spending on space and connectivity lines.

Colossus and a second cluster, Colossus II, together provide ~1 gigawatt of AI compute. That makes SpaceX one of the world’s largest compute operators. J.P. Morgan predicts that terrestrial capacity will reach ~9 gigawatts by 2029, which is equivalent to four times the output of the Hoover Dam.

Brokerages cited by Reuters pointed to its $60 billion purchase of AI coding startup Cursor as a sign the company wants to sell AI applications, not just the machines that run them. The deal ties into Musk’s model plans on the software side. A separate Cryptopolitan report said Musk’s lab, now renamed SpaceXAI, built its Grok 4.5 model jointly with Cursor, and Musk has said SpaceX is buying the startup for that same $60 billion figure.

Why orbit is still a distant bet

Musk has proposed a future in which computers run in space. Analysts Reuters spoke with view this as a later chapter. “The narrative that (orbital) will fundamentally disrupt terrestrial data centers is a little bit overblown,” said Anthony Milovantsev, a partner at consultancy Altman Solon, who estimated that any real displacement of ground-based data centers would take “ten years plus.”

The case is based on hardware that does not currently exist at scale. Orbital computing relies on SpaceX’s Starship flying frequently and cheaply, lower launch costs, and better satellites, according to analysts. Ground clusters continue to run regardless of direction. BofA analysts were more blunt, calling the long term viability of orbital data centers “unproven and heavily reliant on key technological milestones that have yet to be realized.”

If the engineering is delivered, the appeal will be valid. Starships could eventually launch solar computing satellites into orbit, avoiding ground based costs such as energy, cooling, and land use. Analysts aren’t asking if SpaceX can build and sell AI infrastructure. J.P. Morgan’s estimate of ~9 gigawatts in 2029 remains the benchmark for establishing a business beyond Earth.

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