SpaceX shares fall over AI spending concerns

Shares in Elon Musk’s SpaceX tumbled nearly 9% in after-hours trading following the release of the company’s first-ever earnings report as a publicly traded entity.

The sharp decline was driven by investor anxiety over soaring capital expenditure, primarily fuelled by the company’s aggressive push into artificial intelligence and massive data centre developments.

While quarterly revenue nearly doubled to $7.8bn compared to the previous year, overall spending ballooned to $18.3bn – more than six times higher than last year.

The staggering outlay resulted in a net loss of $143m for the three months leading up to June, pushing losses for the first half of the year to $2bn. Despite these figures, Musk defended the strategy during an investor call, arguing that critics and shareholders were “underestimating” the company’s long-term trajectory.

SpaceX’s emerging business segment, which focuses on selling compute power for AI projects – currently serving clients such as Google and Anthropic – generated $2.5bn in revenue during the quarter but posted a $1.2bn loss.

Musk revealed plans to rapidly expand computing capacity from its current 1.4 gigawatts to at least 10 gigawatts by next year through expansive data centre construction, assuring investors that building data centres is “a trivial problem compared to making reusable rockets.”

Market analysts remain divided over the pivot. Matt Britzman, a senior equity analyst at Hargreaves Lansdown, noted that SpaceX “could soon resemble an AI infrastructure company with an extraordinary space business attached.”

Other experts, however, pointed out that Starlink remains the only profitable unit within the broader corporate structure, bringing in $1.6bn in the second quarter.

Despite Musk’s bullish forecast that SpaceX could reach $1tn in revenue by 2030, investor enthusiasm has cooled. Since making history in June with the largest-ever public listing and briefly eclipsing titans including Microsoft and Amazon, SpaceX shares have steadily drifted downwards.

The stock has traded below its initial $135 debut price for several weeks, as Wall Street grapples with the immense costs of Musk’s high-stakes gamble on artificial intelligence infrastructure.