SpaceX Bets on AI as Musk Expects AI Revenue to Surpass All Other Business

TradingKey - SpaceX (SPCX) Chief Executive Officer Elon Musk recently stated that the artificial intelligence business is about to replace rocket launches and Starlink as the company's most important source of revenue. In an internal meeting lasting about 30 minutes, Musk projected that SpaceX's AI revenue could exceed all other business revenue as early as September this year and widen the gap further in the fourth quarter, indicating that the company's strategic focus is rapidly shifting toward AI infrastructure.

In addition, Musk further outlined an aggressive long-term goal. Currently, SpaceX possesses about 1.4 gigawatts of AI computing capacity, and the company plans to expand this scale to 10 gigawatts by the end of 2027. According to Musk's forecast, if this target is achieved, annual revenue from the AI business could reach $300 billion to $500 billion, far exceeding the size of the company's current rocket launch and satellite internet businesses.

This forecast is not without a performance foundation. SpaceX's newly announced second-quarter revenue reached $7.8 billion, up 92% year-on-year. Meanwhile, the company is investing heavily in AI, with AI-related capital expenditures reaching $15.83 billion in the second quarter, a sharp increase from $749 million in the same period last year, which also pushed the company's total capital expenditures past $18 billion.

Following SpaceX's previous acquisition of xAI, the synergy between its AI business and its rocket and Starlink satellite networks is becoming a key market focus. Beyond building terrestrial AI data centers, the company also plans to leverage Starship's low-cost launch capabilities to explore space data centers while providing a global communications network via Starlink. If this model ultimately materializes, SpaceX's business model could further transition from a traditional commercial aerospace company into a comprehensive AI platform covering computing power, communications, and space infrastructure.

SPCX daily price chart, source: TradingView

For SpaceX's stock price, the rapid growth of its AI business is expected to serve as a new support for its valuation. Argus Research recently upgraded SpaceX's rating from "Hold" to "Buy" and issued a price target of $160, citing the company's large-scale AI investments as one of the reasons that could bring new growth space.