Elon Musk’s SpaceX posted a third-quarter profit overnight that blew past estimates as revenue more than doubled thanks to its surging AI business, sending its shares up 2.5% in extended trading.
Capital expenses nearly tripled as it invested in compute infrastructure.
“We are in an inflection moment for SpaceX across launch, connectivity and superintelligence,” Musk said on a call with investors.
Starlink and SpaceX’s broader connectivity operations have been the company’s main financial engine, underpinning Musk’s AI ambitions.
But SpaceX’s own AI software, including xAI’s Grok, has so far been overshadowed by rivals OpenAI, Anthropic and Alphabet’s Google.
Revenue in the third quarter surged 161% to $US14.58 billion for the three months ended September 30, compared with analysts’ estimate of $US12.72 billion, according to data compiled by LSEG.
AI revenue rose more than ninefold to $US7.6 billion, mostly from renting out computing capacity, but AI took $US16.4 billion of the company’s $US19.6 billion in capital spending, which SpaceX expects to stay near that level in the near future.
SpaceX is making its AI money mainly by renting out data centre capacity to developers such as Anthropic, Google and Reflection AI rather than from its own models, a business closer to a cloud provider’s than an AI lab’s.
“With AI revenue now the company’s biggest business line, the company’s hyperscale business is quickly providing operating strength and leverage which will carry into the advancements of its satellite and launch business. Increasingly the strength and diversification of SpaceX makes a merger with Tesla feel imminent,” said Daniel Newman, CEO of tech research group The Futurum Group.
Barclays suggested last week that a deal could be announced before Tesla’s annual meeting, with SpaceX the likelier acquirer, though neither company nor Musk has officially committed to favouring a deal.
The company’s AI business spans Grok, social media platform X and a fast-growing data centre operation. It is also the company’s biggest area of investment.
Operating losses at the AI unit have been large and SpaceX has cautioned it will need sustained investment before it can consistently generate profits.
The satellite-internet unit has continued to expand its subscriber base, aided by additional satellite launches and a growing range of consumer, enterprise, aviation, maritime and government services.
Reuters