SpaceX's AI Value Grounded in Terrestrial Data Centers, Analysts Say

Wall Street analysts are focusing on SpaceX's rapidly expanding Earth-based data centers as the primary driver of its near-term value in the artificial intelligence sector, according to recent brokerage reports. While founder Elon Musk has outlined a future of orbital computing, the company's immediate financial payoff is seen coming from its significant investments in terrestrial AI infrastructure.

Terrestrial Compute Drives Near-Term Growth

SpaceX is already monetizing its AI capabilities by providing its Colossus supercomputer clusters to major enterprise clients. According to a Reuters analysis of company filings, these contracts are set to become a cornerstone of the company's revenue.

• Deals with customers including Anthropic, Alphabet's Google, and Reflection AI are expected to generate more than $28 billion in annual revenue.
• This figure would far exceed the revenue from SpaceX's established launch and Starlink connectivity businesses individually.

This strategy is backed by substantial capital. Filings show SpaceX invested nearly $18 billion in AI infrastructure and development in 2025, comprised of $12.7 billion in capital expenditures and $5.1 billion in R&D. This spending has established SpaceX as a major AI compute operator, with its current facilities providing roughly one gigawatt of capacity.

Analyst Outlook and Projections

Financial analysts are basing their near-term forecasts on this terrestrial expansion, viewing it as a more tangible opportunity than space-based ambitions. J.P. Morgan projects SpaceX will expand its Earth-based AI compute capacity to approximately 9 gigawatts by 2029, an amount roughly equivalent to four times the power generated by the Hoover Dam.

Ad

"Beyond 2029, we expect SpaceX to pivot to orbital compute for incremental capacity additions, while continuing to operate and maintain its terrestrial compute clusters," the brokerage said in a note. Analysts also point to SpaceX's reported $60 billion acquisition of AI coding startup Cursor as evidence of its strategy to move beyond infrastructure into monetizing AI applications.

Orbital AI Remains a Long-Term Bet

The vision for orbital, solar-powered data centers remains a more distant prospect, contingent on several technological and economic milestones. Most brokerages that initiated coverage of SpaceX following its IPO are treating orbital AI as a long-term opportunity with significant hurdles.

"We view the long-term viability of orbital data centers as unproven and highly dependent on key technological milestones that have yet to be fully realized," BofA analysts stated. The success of this strategy hinges on the Starship rocket achieving rapid reusability to dramatically lower launch costs.

Experts believe a shift away from Earth is not imminent. "Any kind of displacement of terrestrial data centers is 10 years plus out," Anthony Milovantsev, a partner at consultancy Altman Solon, told Reuters, adding that the disruption narrative is "a little bit overblown" for the near future.