SpaceX (NASDAQ:SPCX) shares dropped more than 12% in early trading on Wednesday after investors focused on the company’s soaring artificial intelligence spending, despite quarterly revenue exceeding expectations and management unveiling ambitious long-term growth plans.
The decline followed the company’s first earnings report since its high-profile public listing in June, with investors expressing concern over the scale of capital investment needed to support its AI expansion.
Musk targets $1 trillion in annual revenue
During the earnings presentation, Chief Executive Elon Musk outlined an aggressive roadmap for the company, saying SpaceX aims to generate $1 trillion in annual revenue by 2030, one year earlier than its previous target.
Musk also revealed plans to begin deploying data centers into space next year as part of the company’s broader AI infrastructure strategy.
The announcement reinforced SpaceX’s intention to become a major player in artificial intelligence alongside its established space launch and satellite communications businesses.
Capital spending becomes the market’s main concern
Although revenue growth remained robust, investor attention shifted to the company’s cash generation.
SpaceX spent $18.36 billion on capital expenditures during the second quarter, compared with $2.8 billion in the same period last year.
Approximately $15.8 billion of that investment was directed toward the company’s AI division, reflecting the enormous financial commitment required to expand computing capacity.
The spending pushed free cash flow deeply into negative territory during the first half of the year, overshadowing otherwise solid operating performance.
AI and Starlink continue to drive growth
SpaceX’s AI business delivered its fastest-growing results, with revenue surging 247% year over year to $2.6 billion.
The company said new cloud infrastructure agreements generated an additional $1.6 billion in AI revenue during the quarter, while computing capacity expanded to 1.4 gigawatts.
However, the Connectivity division, led by the Starlink satellite broadband network, remained the group’s largest source of revenue.
Starlink revenue climbed 66% to $4.3 billion as subscriber numbers doubled, reinforcing its position as the company’s primary earnings engine.
Overall, SpaceX generated second-quarter revenue of $7.81 billion, comfortably ahead of analysts’ expectations of $6.81 billion, while adjusted loss per share narrowed to $0.09 from $0.34 a year earlier.
Analysts remain focused on cash flow
Despite the strong revenue performance, analysts questioned whether the pace of investment could continue without weighing on shareholder returns.
Analysts at Vital Knowledge wrote: “Bottom line: the revenue and EBITDA results are great, but the cash flow numbers are pretty ugly […] as the company spends heavily in the AI business.”
Investors weigh long-term opportunity against near-term costs
Founded by Elon Musk in 2002, SpaceX has evolved into the world’s largest commercial launch provider while building a leading satellite internet business through Starlink.
Ahead of its IPO, the company highlighted artificial intelligence as a key pillar of its future growth strategy, alongside its Space and Connectivity operations.
SpaceX shares were priced at $135 in June and quickly climbed above $200 before retreating sharply in recent weeks, erasing more than $1 trillion in market value from their peak as investors reassessed the balance between rapid expansion and profitability.
SpaceX stock price
