Shares of SpaceX jumped 9% to $161 in early premarket trade on Wednesday, October 21, after Elon Musk’s space and satellite venture reported its first quarterly profit since going public in June, driven by strong growth in its artificial intelligence (AI) business.
SpaceX’s revenue climbed 161% to $14.58 billion in the three months ended September 30 from a year earlier. Revenue from AI surged nearly tenfold to $7.56 billion, largely driven by renting out data centre capacity to developers such as Anthropic, Alphabet’s Google and Reflection AI, rather than by revenue from its own models.
Musk said the company was targeting $1 trillion in annual recurring revenue by 2028, as demand for its data centre capacity surges amid the AI boom.
The third quarter offered the clearest evidence yet that SpaceX’s heavy investment in AI is translating into revenue, even as spending on computing infrastructure remains enormous. Capital expenditure nearly tripled to $19.6 billion.
The rocket maker reported net income of $4.4 billion, compared with a net loss of $1.1 billion a year earlier and analysts’ expectations of a profit of $1.57 billion.
Meanwhile, Starlink, the company’s satellite internet unit, reached 13.6 million subscribers during the reported quarter, exceeding analysts’ expectations of 12.19 million.
Musk backs potential Tesla-SpaceX merger
During the earnings call, Elon Musk expressed support for a potential merger between Tesla and SpaceX, saying it would be a good idea with “a lot to be gained”.
He also suggested that SpaceX’s long-term goal of reaching $1 trillion in annual revenue could be achieved as early as 2028 rather than 2030. Musk said the committees were formed “at the request of shareholders” and comprise independent directors. As a conflicted party, given his personal stake in both companies, he cannot participate in their discussions.
News of the potential merger also lifted Tesla shares by 3% in premarket trade. Musk has previously floated the idea of combining SpaceX and Tesla, citing growing overlap between the two companies.
Speculation about SpaceX acquiring the electric vehicle maker has gained traction recently, with Barclays suggesting last week that a deal could be announced before Tesla’s annual meeting in December.
The world’s richest person, Musk, owns nearly a fifth of Tesla and just under half of SpaceX. Analysts have said a merger would give him control of the combined entity.
Musk plans to give SpaceX shares to US children
Earlier this week, Musk made a striking announcement, saying he planned to give every child in the United States one of his shares in the space exploration company next year.
Musk currently owns about 4.8 billion SpaceX shares, according to an August filing with the US Securities and Exchange Commission (SEC). That figure rises to 6.4 billion when unvested awards and stock options are included, representing a 48.4% beneficial stake in the company.
Following SpaceX’s initial public offering (IPO) on June 12, Musk holds 82% of the company’s voting power, highlighting his control over the business. Alphabet, Google’s parent company, holds around a 6% stake in SpaceX, valued at approximately $94.1 billion.
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