SpaceX revenue nearly doubles in first public earnings, but AI spending surge sends stock down 16% from IPO

AI revenue surges but spending spooks investors

SpaceX's AI division brought in $2.56 billion in the quarter, more than triple the year-earlier figure, driven by cloud computing contracts with Anthropic, Alphabet's Google and Reflection AI. One customer, identified only as "Customer B" and believed to be Anthropic, accounted for 19.5% of total company revenue. The unit still posted an operating loss of $1.26 billion as capital expenditures on AI infrastructure climbed to $15.8 billion, part of a total $18.4 billion in quarterly capex that was six times the prior-year level.

The current economics have translated into a less than one-year payback on our new capital deployments for compute.

CFO Bret Johnsen said SpaceX had signed another $6.7 billion in cloud contracts since the end of June and was on track to reach a $100 billion annualized revenue run rate by year-end.

Starlink remains the only profitable unit

The satellite-internet business generated $4.29 billion in revenue, up 66%, and $1.66 billion in operating income. Subscribers doubled from a year earlier to 12 million, while average revenue per user fell to $66 from $85 a year ago, flat from the first quarter.

People are really underestimating Starlink.

Musk told analysts Starlink could deliver "a majority of the world's internet" within a decade. President Gwynne Shotwell said the company would soon challenge the three largest U.S. mobile carriers, a market she pegged at $600 billion.

Space segment lags but enables the rest

The core rocket business recorded $962 million in revenue and an operating loss of $542 million. SpaceX carried 80% of all mass launched into orbit during the quarter, much of it Starlink satellites. Analysts at MoffettNathanson estimated that if Starlink paid market rates for launches, the rocket division would have generated $12.6 billion in revenue last year instead of $4.1 billion.

Stock falls below IPO price as lock-up expiry nears

Shares closed at $125.33 on Tuesday, up 9.4% in the regular session and the best day since June 15, but fell 4% in after-hours trading and another 9% in Wednesday's premarket. The stock has dropped 16% since opening at $150 on June 12, leaving it below the $135 IPO price. The decline means 455 million shares that could have been unlocked this week if the stock had traded above certain thresholds will remain restricted, though 911 million other shares become eligible for sale starting Thursday.

The two things that stood out to me are the doubling of Starlink subscriptions from 6 million to 12 million...and then the actual AI revenue was up 350%.... I think that's a tremendous upside surprise today alone is the fact that AI is already monetizing itself.

What analysts are watching

Brian Mulberry of Zacks Investment Management said the AI monetization could soften concerns about heavy capex. Adam Sarhan of 50 Park Investments noted that the company made clear it is "not a quarter-by-quarter play" and that post-IPO volatility is normal. Investors are now focused on whether Starlink's cash flow can sustain AI investments until the unit turns profitable, and on the potential share overhang from the lock-up expiry.