SpaceX (NASDAQ:SPCX) almost doubled its revenue in its first quarterly earnings report since becoming a publicly traded company, as rapid expansion across its Starlink satellite network and artificial intelligence businesses fuelled growth. However, management also made clear that the company’s aggressive investment programme is set to continue.
The Elon Musk-led group said it expects to reach a revenue run rate of $100 billion by December, while projecting that investments in AI computing infrastructure will achieve payback in less than one year. It also plans to deploy at least 1,000 next-generation V3 Starlink satellites over the next 12 months and expand into the mobile telecommunications market.
Investors assess long-term growth strategy
The results for the quarter ended 30 June offered investors an early indication of whether SpaceX’s $1.75 trillion valuation can be supported by its strategy of using profits from Starlink to finance expansion into artificial intelligence, data centres and next-generation space technologies.
While management highlighted growing commercial momentum in its AI operations, it acknowledged that building the business will continue to require substantial capital investment.
“We’re building AI compute capacity at scale faster than anyone else, we believe, and we’re significantly improving our AI models,” Musk said during the earnings call.
Quarterly revenue climbed to $7.8 billion from $4.1 billion a year earlier, exceeding analyst expectations, according to LSEG data. Revenue from Starlink, which accounted for more than half of total sales, increased 66%, while the company’s AI business recorded revenue growth of approximately 250%.
Heavy investment continues despite improving profitability
Although revenue expanded rapidly, SpaceX’s capital expenditure rose sharply to more than $18 billion during the quarter, compared with $2.83 billion in the same period last year.
Chief Financial Officer Bret Johnsen said investment spending is expected to remain at similar levels over the coming quarters. Spending on AI infrastructure alone reached $15.83 billion in the second quarter, up from $749 million a year earlier.
“The central question for SpaceX’s first quarter as a public company was whether the machine underneath the story actually works, and on that question Elon Musk and his team delivered a few positives,” said Thomas Monteiro, an analyst at Investing.com.
Despite the stronger-than-expected results, SpaceX shares fell 7.5% in after-hours trading after gaining 9.4% during the regular session ahead of the earnings release.
The stock has now declined about 8% since its record-breaking initial public offering in June. Investors are also watching the expiry of the post-IPO lock-up period, which begins on Thursday and could increase the supply of shares entering the market.
Starlink remains the financial backbone
Starlink and SpaceX’s wider connectivity business continue to generate the majority of the company’s earnings, providing financial support for its AI and Starship development programmes.
Some analysts have questioned whether relying on Starlink profits to finance these capital-intensive projects can remain sustainable over the long term.
During the second quarter, operating losses narrowed to $143 million from $970 million a year earlier. Losses within the AI division also improved, while Starlink’s operating income increased 79%.
“That’s a tremendous upside surprise today alone, the fact that AI is already monetizing itself. They’re not relying on Starlink to fund operations there. I think that’s a huge part of the story,” said Brian Mulberry, chief market strategist at Zacks Investment Management.
SpaceX President Gwynne Shotwell said the company expects to win “quite a few” customers from T-Mobile, AT&T and Verizon as it develops a mobile communications service combining satellite connectivity with terrestrial infrastructure. Shares of the telecommunications companies declined in after-hours trading following the announcement.
Starlink ended the quarter with 12 million subscribers, double the level recorded a year earlier. However, average revenue per user fell 22% as the company expanded internationally and introduced lower-priced subscription plans.
AI expansion and space business continue to evolve
SpaceX’s AI division, which includes xAI, Grok, social media platform X and its expanding data centre operations, has become the company’s largest investment area.
The business is already generating revenue through computing contracts with Anthropic, Alphabet’s Google and Reflection AI, although part of its recurring revenue has yet to be recognised.
“SpaceX expects to have built more than two gigawatts of computing capacity this year and by the end of next year will have close to 10 gigawatts of computing,” Musk said.
The company also confirmed that it intends to build its AI data centres exclusively using Nvidia hardware. Nvidia Chief Executive Jensen Huang has previously estimated that every gigawatt of computing capacity can generate between $40 billion and $50 billion in revenue.
Meanwhile, revenue from SpaceX’s space operations increased 29% year-on-year. The division includes commercial launches, government contracts and development of the Starship rocket, which continues to require significant investment as the company prioritises expanding its own satellite network.
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