SpaceX Earnings: AI Splurge Overshadows Debut Report

SpaceX has released its first earnings report as a publicly traded company, revealing revenue that surpassed Wall Street's expectations at $7.8 billion. However, the debut report was tempered by an operating loss of $1.26 billion from its AI business, though this figure was better than anticipated.

The company's shares have seen a significant decline since its IPO, erasing over a trillion dollars in market value from their peak. Bloomberg Intelligence's Mandep Singh and Bloomberg Tech host Ed Ludlow discussed the implications of these results.

Key Figures and Segments

Mandep Singh, Bloomberg Intelligence Global Head of Technology Research, highlighted that SpaceX reported a backlog of $47.5 billion. He noted that this backlog is likely dominated by AI, with significant contributions expected from deals with Anthropic and Google in upcoming quarters. "Anthropic will be paying SpaceX about $1.25 billion a month," Singh stated, projecting at least $3.75 billion from Anthropic and another $2 billion plus from Google in the next reporting period.

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

Ed Ludlow, host of Bloomberg Tech, pointed out that while Starlink continues to be the main revenue driver and a "cash cow," SpaceX has improved the economics of its AI business. He described the company's strategy of renting out compute capacity, utilizing its data centers equipped with a mix of Nvidia GPU generations, from Hopper to Blackwell, and even older A100s.

AI Business and Competitive Landscape

Ludlow questioned what XAI, part of SpaceX, can offer that major cloud providers like Amazon Web Services (AWS), Microsoft Azure, or Google Cloud cannot. He suggested that SpaceX's offering is primarily its existing, unused compute capacity, which it is monetizing with "attractive economics."

Singh added that the AI segment's revenue for the quarter was $2.56 billion, a substantial increase from the approximately $800 million reported in the first quarter. He also noted that the AI business's adjusted EBITDA turned positive, indicating improved profitability.

Investor Sentiment and Valuation Concerns

Despite the revenue beat and positive AI segment performance, SpaceX shares have dipped following the earnings report. Investors are grappling with the company's high valuation, which Singh described as "crazy." He elaborated that the $1.5 trillion valuation embeds significant growth expectations and anticipated margin improvements. "Unless you come out and show positive surprises the way Nvidia has done consistently, I think it will be hard for SpaceX just to kind of keep this multiple," Singh commented.

The discussion also touched upon the company's capital expenditures, with SpaceX reporting $15.83 billion for its AI segment in the second quarter, exceeding the street estimate of $13.09 billion. Ludlow noted that SpaceX has a strong liquidity position, with $100 billion available, but emphasized the substantial spending required across its various ventures, including Starship, orbital data centers, and AI services.

Earnings Call Insights and Future Outlook

A key point of anticipation is whether Elon Musk will participate in the upcoming earnings call, a departure from the usual detailed shareholder decks provided by companies like Tesla. The lack of commentary from Musk and Shotwell in the initial release, with only the CFO's input, leaves many questions about the call's dynamics.

Singh remains optimistic about SpaceX's near-term growth, citing the $47.5 billion backlog as a strong indicator of accelerating topline growth over the next three to four quarters. He drew parallels to hyperscaler cloud companies that also reported large backlogs and strong quarters.

The company's ability to grow into its valuation will hinge on sustained revenue acceleration and continued margin improvements, particularly from its AI infrastructure business. While the Starlink segment slightly missed consensus, the overall narrative suggests a company aggressively investing in future growth areas, with AI compute rental emerging as a significant, albeit currently loss-making, component.