When most people hear Space Exploration Technologies (SPCX +3.73%), they probably picture a rocket blasting into space.
That’s understandable. Rockets are how SpaceX became famous. But investors who think SpaceX is simply a rocket company are missing the bigger picture, since the company is increasingly becoming a collection of businesses that reinforce one another.
And I think investors should think about it in three layers.
Image source: Getty Images.
Starlink is the economic foundation
The first layer is Starlink.
Starlink provides internet connectivity through a growing constellation of satellites orbiting Earth. Unlike Starship or some of SpaceX’s more ambitious projects, it’s no longer a promise about the future.
It’s a real business with millions of paying customers. Starlink ended the second quarter with approximately 12 million subscribers, double the number from a year earlier. Connectivity revenue rose 66% to $4.3 billion, while operating income reached roughly $1.7 billion.
That’s significant. Starlink is increasingly becoming the financial engine that allows SpaceX to pursue much larger opportunities.
And the market opportunity extends well beyond households. Starlink is expanding into aviation, maritime, enterprise, government, and mobile connectivity. Enterprise and government revenue grew 108% year over year in the latest quarter, accounting for 42% of total revenue.
If Starlink can continue to scale profitably, it will generate even more profits to fund SpaceX’s other ambitious projects.
Space Exploration Technologies
Today’s Change
(3.73%) $5.52
Current Price
$153.47
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$145.14 – $155.00
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Artificial intelligence (AI) could become the next massive growth engine
The second layer is much newer: artificial intelligence (AI).
SpaceX’s AI-related revenue jumped 247% year over year to $2.6 billion in the second quarter. The company is rapidly building computing infrastructure to serve demand for AI workloads.
That growth is remarkable. But here’s where investors need to look beyond the headline. SpaceX spent approximately $15.8 billion on AI infrastructure during the quarter. That’s roughly 6 times the segment’s quarterly revenue.
So the important question isn’t simply whether AI revenue is growing quickly. It’s whether SpaceX can earn attractive returns on the enormous amount of capital it is investing. If it can, the opportunity could be huge.
SpaceX has already demonstrated that it can build infrastructure at a scale few companies can match. Its ability to combine that infrastructure with access to capital, engineering talent, and its own launch capabilities could give it an unusual competitive position.
Still, AI is the exciting new part of the SpaceX story, so it’s not quite as proven a business as Starlink. Investors should closely monitor the development of this business and how it complements Starlink’s existing offerings.
Rockets are the infrastructure
This is the part of SpaceX that investors could easily misunderstand. The rocket business isn’t necessarily the destination. It’s the transportation infrastructure that allows the rest of the ecosystem to exist.
Think of it this way. Falcon 9 already gives SpaceX a highly successful launch platform. But the newer Starship is designed to change the economics of space much more dramatically.
Starship is SpaceX’s next-generation reusable rocket system. The company intends for both the spacecraft and its booster to be rapidly reusable, while carrying substantially more payload than Falcon 9.
SpaceX believes Starship could eventually increase payload capacity dramatically and reduce launch costs by roughly an order of magnitude. If that happens, the implications go far beyond launching rockets.
SpaceX could deploy more Starlink satellites. It could build larger satellite networks. It could support more commercial and government missions. And it could potentially put large amounts of computing infrastructure into orbit.
That last possibility is particularly interesting.
SpaceX is already pursuing orbital AI infrastructure and has announced plans for a $100 billion Starbase Louisiana complex intended to support Starship and future AI satellite operations. That’s a remarkable investment in infrastructure for something that doesn’t yet exist at a meaningful commercial scale.
But it reveals how SpaceX thinks about the future. Starship isn’t merely a bigger rocket. It could be the platform that makes SpaceX’s next generation of businesses economically possible.
Putting the SpaceX flywheel together
Put the pieces together, and the investment thesis for SpaceX becomes much more interesting.
Starlink generates recurring revenue and profits. Those profits can help fund new infrastructure like Starship. Starship could eventually make launches dramatically cheaper. Cheaper launches could allow SpaceX to deploy more satellites, more quickly. More satellites increase Starlink’s capacity.
At the same time, growing demand for AI creates another enormous market for computing infrastructure. And if SpaceX can eventually deploy some of that infrastructure in space, it could open an entirely new market.
Each business potentially makes the others more valuable. And that’s the SpaceX story.
In short, investors aren’t simply buying rockets. They’re buying a company attempting to control multiple layers of the infrastructure connecting Earth, satellites, communications, and computing.
Few companies on the planet are positioned to do that.
