SpaceX's AI Cloud Ambitions & $100B ARR Target

Edison Yu, Deutsche Bank's Head of Global Space & Aerial Mobility, discussed SpaceX's burgeoning cloud services business and ambitious revenue targets in a recent Bloomberg Tech segment. Yu highlighted that SpaceX is actively leasing compute capacity to major players like Google and Anthropic, signaling a significant expansion beyond its core space exploration and Starlink services.

The cloud division is expected to reach a run rate of over $40 billion by the end of the year, forming the "bulk of revenue." This growth trajectory is further bolstered by a recently announced $6.7 billion cloud services contract, set to begin ramping up in October. Yu expressed confidence in this segment's contribution to the company's overall financial goals.

The full discussion can be found on Bloomberg Technology's YouTube channel.

SpaceX Targets $100 Billion ARR Driven by AI Cloud

According to Yu's estimates, SpaceX is on track to achieve an annualized revenue run rate (ARR) of $100 billion by the end of 2023. He broke down the company's revenue streams into three key areas: space, AI, and connectivity. The cloud business, specifically the leasing of compute capacity, is identified as a primary contributor to this ambitious target.

Yu elaborated on the breakdown, suggesting that the cloud services alone could reach a $40 billion run rate. Other AI-related ventures, such as Grok X and advertising businesses, are also factored in, along with the rapidly growing Cursor service. "We think you could probably get to something like $60 billion run rate," Yu stated, adding that the remaining $40 billion would need to come from other business segments, a feat he deems achievable.

Orbital Data Centers and Nvidia Partnership

The conversation also touched upon SpaceX's venture into orbital data centers. Yu noted that the company has decided to exclusively use Nvidia and Vera Rubin architecture for this initiative. "Next year they will start launching that orbital data design," Yu mentioned, indicating a near-term deployment phase for these facilities.

However, Yu cautioned that the true challenge lies in scaling these operations. "The real question is, how do we scale this up? And to do that, we really need to increase the volume, reduce the costs of solar, of the radiator," he explained. While the initial deployment of prototypes is seen as a starting point, achieving gigawatt-level operations will be the ultimate test for the orbital data center strategy.

SpaceX's $1 Trillion Revenue Projection

The discussion also addressed Elon Musk's updated expectation for SpaceX to hit $1 trillion in revenue by 2030, pulled forward from 2031. Yu acknowledged that while his firm's forecasts are currently lower, achieving Musk's target would significantly increase the company's valuation. "If by some chance you do, the stock is worth significantly more than what it is right now," Yu commented. He also noted that his firm's models, projecting roughly a third of that trillion-dollar figure, already justify SpaceX's current stock valuation.

Starship's Role in Future Growth

The critical role of Starship in SpaceX's future was also a key point. Yu indicated that the development and operational cadence of Starship are largely on track with expectations. He anticipates around 15-20 Starship flights next year, which would support the deployment of approximately 1,000 Starlink satellites. "We think there's certainly, you need to catch the second stage, you need to address some of the heat shield concerns. But in terms of the operational cadence of Starship, it is tracking roughly what we're modeling for next year," Yu concluded.