SpaceX shares fell sharply in after-hours trading on Tuesday after the company reported significantly higher-than-expected spending on artificial intelligence infrastructure, raising concerns about costs despite strong quarterly revenue growth.
The stock dropped about 7.5% following SpaceX’s first earnings report since its public market debut in June. Investors focused on capital expenditure, which climbed more than sixfold from a year earlier to $18.4 billion.
More than 80% of the company’s capital spending was directed toward artificial intelligence infrastructure, including data centres, computing equipment, power systems and cooling facilities.
SpaceX executives attempted to reassure investors that the company’s AI investments could begin generating returns within a year.
Chief Financial Officer Bret Johnsen said the company had been deploying capital efficiently and expected its AI computing investments to achieve a payback period of less than 12 months.
Johnsen also said SpaceX had contracted an additional $6.7 billion in cloud-services revenue during the opening weeks of the current quarter. The revenue is expected to begin increasing from October over a six-month period.
Despite concerns over expenditure, SpaceX reported strong revenue growth. Second-quarter revenue rose 92% from the same period last year, supported by its Starlink satellite internet division and expanding artificial intelligence operations.
The company’s AI business generated $2.56 billion in quarterly revenue but recorded an operating loss of $1.26 billion. In the previous quarter, the division posted revenue of $818 million and an operating loss of $2.47 billion.
SpaceX entered the artificial intelligence sector through its merger with Elon Musk’s xAI business. The combined unit, known as SpaceXAI, is expanding its computing capacity and offering cloud infrastructure to technology companies.
The company has signed agreements to provide AI computing services to businesses including Google, Anthropic and Reflection AI.
Management expects the cloud-services contracts to strengthen revenue and improve margins as more computing capacity becomes commercially active.
Chief Executive Elon Musk said SpaceX was on track to reach $100 billion in annualised recurring revenue by the end of December 2026.
Musk said the target was based on existing contracts and expected business growth rather than uncertain future opportunities.
However, Wall Street remains cautious about the scale of SpaceX’s investment programme. The company is spending heavily across artificial intelligence, satellite communications, data centres and space infrastructure at the same time.
Investors are also assessing whether SpaceX can compete effectively against established AI developers and cloud providers, including OpenAI, Google, Microsoft and Amazon.
Legal and environmental concerns could create further pressure. SpaceXAI is facing legal action related to the use of natural gas turbines at its Memphis facilities. The company has recorded $354 million for probable litigation losses.
SpaceX said it is developing several major infrastructure projects that could provide up to 20 gigawatts of power and cooling capacity by the end of next year.
Musk acknowledged that some projects could face delays but said the company could still reach approximately 15 gigawatts of capacity.
The earnings report highlighted the central challenge facing SpaceX: balancing rapid growth and long-term ambition with the enormous cost of developing artificial intelligence infrastructure.
Although executives remain confident that cloud-services contracts will deliver quick returns, the share-price decline suggests investors want clearer evidence that the company’s spending can translate into sustainable profits.
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