SpaceX's first results put Elon Musk's AI

What happened

SpaceX's first earnings report since its record-breaking IPO will provide an early gauge of whether Starlink's profits can sustain the company's rapidly growing spending on AI and space ventures.

Investors will also be keen to hear Musk's comments on a potential merger between SpaceX and Tesla after a media report emerged last week that executives at his EV company had been told to prepare for a separation of its China business ahead of a potential deal. Musk dismissed the report as "fake news," but he had previously declined to dismiss the possibility, citing growing overlap between the companies.

Why it matters

Due after the market closes on Tuesday, the results will give SpaceX's limited pool of public investors their first chance to judge whether the financial case behind the company's lofty valuation supports CEO Elon Musk's vision of a powerhouse spanning AI, space and telecommunications.

Musk has pitched AI as SpaceX's future growth engine, with ambitions extending beyond renting compute capacity to other companies to developing frontier models, consumer and enterprise software, and, eventually, data ‌centers in space. But ⁠until its AI ⁠business and Starship launch operations can stand on their own, Musk plans to use Starlink's profits to bankroll both ventures, a strategy critics argue is unsustainable.

"Starlink is executing beautifully, but it cannot single-handedly fund a $30 billion annualized AI capex program," said Will Rhind, founder and CEO of GraniteShares, an asset manager that offers ETFs tied to SpaceX stock performance. 5 per cent growth in the prior quarter, according to LSEG-compiled data. 6 per cent, driven mainly by expansion into more countries.

72 billion in the January-March quarter, accounting for about three-quarters of the company's total capital spending. 05 billion in the April-June quarter. 2 billion from ⁠the same period ‌last year, according to Visible Alpha data. The stock could face additional pressure from the expiry of SpaceX's post-IPO lock-up period starting August ⁠6, which may unleash a wave of insider and early-investor shares on the market.

What to watch

42 billion in the second quarter ended June 30. 19 billion. "The key question for investors is whether ‌SpaceX can monetize its AI infrastructure through third-party compute fast enough to offset xAI's extraordinary capital intensity," said Michael Monaghan, portfolio manager of the Founders 100 ETF , which holds SpaceX shares. 4 million in second-quarter revenue, while posting an operating loss of $773 million.

"The progress on Starship is essential for demonstrating to investors that the company is on the desired trajectory," said Micah Walter-Range, a space industry specialist who helped develop the index tracked by the Procure Space ETF.