SpaceX’s AI spend spooks investors

SpaceX had its first-ever earnings call on Tuesday, and investors aren’t exactly ready for takeoff.

Shares dropped more than 13% following the call and stayed in that territory until close, even though SpaceX beat expectations by bringing in $7.8 billion in Q2 revenue, up 92% year over year, and almost halved its quarterly net loss, to $541 million.

SpaceX went public on June 12 in the largest IPO in US history. Since then, it’s lost more than $1 trillion in market value as its share price has fallen about 50%, from an intraday high of $225.64 to well below its offering price of $135. Its current market cap of $1.4 trillion, CNBC noted, “isn’t supported by any of today’s financial metrics”: It’s losing billions per quarter and has “almost twice as much debt as cash.”

“SpaceX wants to tell the story they’re the market leader…But people still have these questions: How quickly can they grow? How big are the costs going to be before this thing gets to profitability?” analyst and former Tesla board member Steve Westly said Wednesday on CNBC’s Squawk Box Europe.

Sky-high AI. Investors may have been spooked by the company’s eyewatering spending on AI infrastructure: almost $16 billion in Q2, twice as much as in Q1. CFO Bret Johnsen anticipated that the company’s capex spending would keep the same pace throughout the year, Business Insider reported.

SpaceX said it hopes to have $100 billion in annual recurring revenue by the end of the year, most of it coming from data centers. Recently, it made deals to lease data center capacity to Google and Anthropic. Johnsen said the company sees quick returns from its AI spending. “Specifically on the AI compute side, we’re able to deploy capital in such a way that we’re getting less than one-year payback,” he said on the earnings call.

Starlink, SpaceX’s connectivity arm and the only segment of its business to have an operating profit, overperformed in Q2, bringing in $4.3 billion in revenue, up 65% year over year.

Then there were the rockets. SpaceX is betting big on its Starship rockets, which can carry a larger payload at a lower cost than its earlier Falcon 9 generation of rockets, the Wall Street Journal reported. The company is hoping the Starships can help it launch low-Earth-orbit Starlink satellites.

But deployment of the rockets has been, well, rocky. The launches are losing money. Only eight of 13 Starship launches have been successful, and on Wednesday, one of them dented the moon.

Pie in the sky. Elon Musk attended an analyst call after the earnings were released, and made several of his signature predictions (place your Kalshi bids now!): We’ll have data centers in space next year, he claimed, and SpaceX will reach $1 trillion in revenue by 2030.

Musk also posited that robots would be used to “scale up manufacturing on the moon” and to build a “mass accelerator” there, a slingshot-like device that could launch items into space, per Business Insider.

“If you have a mass accelerator on the moon, I know this sounds totally nuts, but you can probably scale to a thousand times the economy of Earth in terms of intelligence launched to space, maybe even a million times,” Musk said, in a sentence where “probably” does a lot of heavy lifting.

SpaceX’s shares may see more volatility on Thursday, when the lock-up period for employees and early investors ends, freeing them to sell $100 billion worth of stock.