SpaceX tumbles amid AI spending concerns; Musk outlines $1 trillion revenue target
Investing.com - SpaceX (NASDAQ: SPCX) shares fell more than 10% in premarket trading on Wednesday, as the company’s massive artificial intelligence infrastructure spending overshadowned strong quarterly sales growth.
Following SpaceX’s first earnings release since a blockbuster public debut in June, CEO Elon Musk also outlined a host of ambitious plans for the rocket company, targeting $1 trillion in revenue by 2030, earlier than prior expectations of 2031. Musk said the rocket maker planned to begin launching data centers into space next year.
Yet analysts focused in on SpaceX’s free cash flow, which fell deeply into the red for the first two quarters of the year. In the second quarter alone, the company shelled out $18.36 billion in capital expenditures, up by $2.8 billion from a year earlier.
Of that spending, $15.8 billion came from SpaceX’s AI unit. SpaceX, whose operations span from rocket launches to satellite internet, highlighted its plans to become a major AI name in its pitch to investors prior to the IPO.
The AI business delivered the fastest growth for SpaceX, with revenue soaring 247% to $2.6 billion. The company said new cloud service agreements added $1.6 billion in AI infrastructure revenue during the quarter, while compute capacity expanded to 1.4 gigawatts.
Yet it was the division offering thousands of satellites in low-Earth-orbit that remained SpaceX’s cash cow. Revenue at the segment surged by 66% to $4.3 billion, powered by a doubling of subscribers to its Starlink satellite-based communications service.
Overall, SpaceX reported second-quarter revenue of $7.81 billion, topping analysts’ estimates of $6.81 billion, while adjusted loss per share narrowed to $0.09 from $0.34 cents a year ago.
"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," analysts at Vital Knowledge said in a note.
Founded by Elon Musk in 2002, SpaceX has grown into the world’s leading launch provider and a dominant player in satellite internet through its Starlink network. As part of its historic IPO, the company sought to broaden its investment appeal by positioning itself as a rapidly expanding artificial intelligence infrastructure company alongside its space and connectivity businesses.
SpaceX priced its IPO at $135 per share, with the stock climbing above $200 in the days following its market debut before retreating in recent weeks, erasing more than $1 trillion in market value from its peak.
The company operates across three business segments: Space, Connectivity and AI. Its largest business is Connectivity, led by the Starlink satellite broadband network, which serves residential users as well as enterprise and government customers, including airlines, cruise operators and other commercial clients.