SpaceX Beats Revenue Estimates in First Public Earnings, but AI Spending Concerns Send Stock Down Seven Percent

SpaceX delivered a blockbuster first earnings report as a public company on Tuesday, posting 92 percent revenue growth that easily surpassed Wall Street expectations. But the good news was overshadowed by investor alarm over the company's rapidly escalating artificial intelligence spending, sending shares down 7 percent in after-hours trading.

The aerospace giant reported second-quarter revenue of 7.8 billion dollars, nearly double the 4.1 billion dollars it recorded in the same period last year. The results were driven by explosive growth across SpaceX's three core businesses: Starlink satellite internet, space launch services, and a nascent AI infrastructure division that CEO Elon Musk has positioned as critical to the company's long-term vision.

Yet that AI ambition is precisely what spooked investors during Tuesday's earnings call. SpaceX disclosed that capital expenditures on AI infrastructure reached 1.9 billion dollars in the second quarter alone—far above the 1.2 billion dollars analysts had modeled—with plans to invest another 3.5 billion dollars in the second half of 2026. The spending spree is aimed at building out massive data centers to support Musk's xAI large language model project, which SpaceX has tightly integrated into its operations.

Starlink Remains the Cash Engine

While AI spending grabbed headlines, Starlink remained the undisputed star of SpaceX's earnings report. The satellite internet business added 1.3 million subscribers during the quarter, bringing its global customer base to over 12 million—a milestone that cements Starlink as the world's largest satellite internet provider by a wide margin.

Starlink generated an estimated 3.82 billion dollars in revenue during the April-June period, with operating profit reaching approximately 1.42 billion dollars. Adjusted EBITDA for the connectivity business came in at 2.60 billion dollars, slightly ahead of the 2.41 billion-dollar consensus estimate and underscoring Starlink's status as a mature, highly profitable unit within the broader SpaceX portfolio.

"Starlink is the business that gives us the recurring revenue and cash flow to fund everything else," CFO Vaibhav Taneja said on the earnings call. "We're seeing strong demand from households, airlines, maritime customers, and governments. The unit economics continue to improve as we scale."

The Starlink results were particularly notable given growing competition in the satellite internet space. Amazon's Project Kuiper has begun launching its own constellation, and OneWeb continues to expand service in select markets. Yet SpaceX's first-mover advantage and aggressive pricing have allowed it to maintain dominant market share, with Starlink terminals now deployed in more than 80 countries.

Launch Business Still Dominant, But Margins Tighten

SpaceX's space launch operations posted solid if unspectacular results. The company completed 28 missions during the second quarter, including 19 Starlink deployments, five commercial satellite launches, three crewed missions to the International Space Station, and one national security payload for the U.S. Space Force.

Launch revenue totaled approximately 2.1 billion dollars, up 34 percent year-over-year but below some analysts' more optimistic forecasts. Operating margins in the launch business compressed slightly to 41 percent from 44 percent a year ago, reflecting higher fuel costs and investments in Starship development. Musk reiterated on the call that Starship—the company's fully reusable heavy-lift vehicle—remains on track for its first commercial payload delivery in early 2027.

AI Gamble Raises Questions About Capital Allocation

The biggest point of contention during Tuesday's earnings call was SpaceX's aggressive push into AI infrastructure. Musk defended the spending as essential to maintaining competitiveness in what he called "the most important technology race of our lifetime," but several analysts expressed skepticism about whether a rocket company should be allocating such enormous resources to data centers and language models.

"We understand the strategic rationale, but the sheer scale of the AI capex is staggering," said Morgan Stanley analyst Adam Jonas, who asked Musk directly whether the board had considered spinning off the AI business to allow investors to value it separately. Musk dismissed the idea, saying the AI and space businesses are "fundamentally intertwined" and that separating them would destroy value.

The AI division, which SpaceX formally branded as "Starship Intelligence" in its earnings materials, generated only 1.9 billion dollars in revenue during the quarter—mostly from enterprise contracts to provide cloud computing and AI model access. With 1.9 billion dollars in quarterly capex against that revenue figure, the unit is running at a substantial operating loss, though SpaceX did not disclose the exact margin.

Lockup Expiration Looms Over Stock

Tuesday's earnings report comes at a precarious moment for SpaceX shares, which have already fallen more than 40 percent from their all-time high reached shortly after the company's record-breaking June IPO. The stock closed Tuesday's regular session at 108.37 dollars, and the after-hours selloff pushed it down to near 100 dollars—perilously close to the 95-dollar IPO price.

Compounding investor anxiety is the looming August 6 expiration of the lockup period, which will free more than 100 billion dollars' worth of insider shares for sale. Employees, early investors, and Musk himself will be able to sell their stakes for the first time since the public offering, raising concerns about a potential flood of supply hitting the market.

Despite the stock's sharp decline and the uncertainty around AI spending, SpaceX executives struck an optimistic tone on Tuesday's call. Musk pointed to the company's dominance in launch services, the explosive growth trajectory of Starlink, and what he described as "inevitable" breakthroughs in AI as reasons for long-term confidence.

"We're building for decades, not quarters," Musk said. "The market may not always appreciate that in the short term, but we believe history will prove us right."

For now, investors will be watching closely to see whether SpaceX's ambitious AI bet pays off—or whether the spending drain becomes an ongoing drag on what is otherwise one of the most impressive growth stories in aerospace history.