SpaceX Q3 revenue surges 161% driven by AI data centre deals

SpaceX reported that its third-quarter revenue more than doubled, beating analyst estimates as its artificial intelligence and Starlink businesses grew. The company said on Tuesday that revenue stood at US$14.58-billion, compared with analysts’ estimate of US$12.72-billion, according to data compiled by LSEG. Shares rose about 3 per cent in extended trading following the announcement.

AI Revenue Driven by Compute Rentals

The surge in revenue was largely driven by the company's artificial intelligence operations, which saw revenue rise more than ninefold to US$7.6-billion. According to The Globe and Mail, this growth came mostly from renting out computing capacity rather than from SpaceX’s own AI models. The company’s AI business spans Grok, the social-media platform X, and a fast-growing data centre operation.

SpaceX is generating this revenue through compute contracts with developers such as Anthropic, Alphabet’s Google and Reflection AI. The Globe and Mail describes this business model as "closer to a cloud provider’s than an AI lab’s." Despite the revenue growth, operating losses at the AI unit have been large. SpaceX has cautioned that it will need sustained investment before it can consistently generate profits.

Capital Spending and Infrastructure

Capital spending nearly tripled as SpaceX invested heavily in compute infrastructure. AI accounted for US$16.4-billion of the company’s US$19.6-billion in capital spending for the quarter. SpaceX expects capital spending to stay near that level in the near future.

The company’s broader connectivity operations, including Starlink, remain the main financial engine. Starlink reached 13.6 million subscribers in the third quarter, exceeding the 12.19 million analysts expected. However, average monthly revenue per subscriber has fallen from US$99 in 2023 to US$69 in the third quarter as the company expands abroad with cheaper plans. SpaceX has stated that geographic expansion beyond the wealthiest countries could push average revenue per user lower over time.

Starship and Future Outlook

SpaceX reported a net profit of US$4.4-billion for the three months ended Sept. 30, compared with analysts’ expectation for a profit of US$1.57-billion. The space segment, which includes commercial launches, government missions and Starship development, remains a significant source of costs and uncertainty.

Starship, SpaceX’s next-generation reusable rocket system, has yet to enter commercial service. It is expected to enable the deployment of higher-bandwidth Starlink satellites and orbital AI-computing infrastructure. Last month, SpaceX successfully deployed several Starlink satellites in Starship’s first orbital test flight, which ended hours earlier than expected after an engine issue. The company’s ability to turn Starship into a reliably reusable vehicle is central to its longer-term strategy.

Why it matters

The shift in SpaceX’s revenue composition highlights a strategic pivot toward becoming a major infrastructure provider for the AI industry. By renting out data centre capacity to competitors and partners like Google and Anthropic, SpaceX is diversifying its income streams beyond satellite internet and launch services. However, the heavy capital expenditure required for AI infrastructure and the declining average revenue per Starlink user present ongoing challenges for profitability.

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Sources

• ft.com: Subscribe to read
• theglobeandmail.com: SpaceX’s quarterly revenue beats estimates as AI business surges - The Globe and Mail

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.