SpaceX Just Became an AI Company. The Numbers Prove It.
Key Points
SpaceX's AI segment generated more revenue than launches and connectivity combined in Q3.
That segment also became profitable, with net income of $431 million, compared to a $1.26 billion loss a quarter ago.
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Space Exploration Technologies (NASDAQ: SPCX) just delivered an excellent financial report for the third quarter. Most of the attention has been on its revenue, which rose 161% year over year to $14.6 billion, and the fact that the space company has become profitable, with net income of $4.4 billion.
Both points were good news for SpaceX shareholders, but the real highlight of the report is the growth of its AI business.
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The AI segment, which it now calls the "super intelligence (SI)" segment, generated revenue of $7.6 billion, up 830% year over year and 195% sequentially. The company's other segments are also growing, but not nearly as quickly, which made SI its largest revenue source, accounting for just over half of sales.
Connectivity remains the most profitable segment, with operating income of $2.4 billion, compared to SI's operating income of $431 million. SI was still in the red as recently as last quarter, when it lost $1.26 billion. SI also remains extremely expensive, accounting for $16.4 billion of SpaceX's $19.6 billion in Q3 capital expenditures.
But the quarter's results should ease concerns that SI is a money pit for SpaceX. The investments that it has made in SI, including compute infrastructure, its acquisition of Cursor, and AI model training, are starting to pay off. It has signed cloud services agreements with other AI companies, most notably Alphabet and Anthropic. And in the six-and-a-half-week period from Aug. 14 (when the Cursor acquisition closed) to the end of the quarter, Cursor contributed $608 million of revenue.
While SpaceX has been in the launch and connectivity businesses for much longer, the numbers show that it's clearly an AI company now, too. SpaceX stock is still richly valued, but the rapid growth of its SI segment is a promising sign.
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Lyle Daly has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
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