Starlink-powered revenue nearly doubled in the June quarter and operating losses narrowed sharply, but a massive surge in AI-related capital spending overshadowed the strong performance, sending shares lower in after-hours trading
Elon Musk-led SpaceX delivered a strong set of numbers in its first quarterly earnings report as a publicly listed company, with revenue nearly doubling and operating losses narrowing sharply. But the results also laid bare the enormous price tag of Musk’s artificial intelligence ambitions, as capital expenditure soared to more than $18 billion in the April-June quarter.
The company reported revenue of $7.8 billion for the quarter ended June 30, up 92 per cent from $4.1 billion a year earlier. The strong top-line growth was driven by continued momentum in the Starlink satellite internet business and rapid expansion of its AI operations.
Despite the earnings beat, SpaceX shares fell as much as 7.5 per cent in after-hours trading after investors focused on the sharp rise in spending. The stock had gained 9.4 per cent during regular trading ahead of the results announcement.
AI investments take centre stage
The biggest takeaway from SpaceX’s debut earnings report was the scale of its investment in AI infrastructure.
The company spent $18.4 billion on capital expenditure during the quarter, compared with $2.83 billion a year earlier. Of that, around $15.8 billion was directed towards AI infrastructure, up from just $749 million in the corresponding quarter last year.
More from BusinessChief Financial Officer Bret Johnsen said capital spending is expected to remain at similar levels over the next couple of quarters, signalling that the investment cycle is far from over.
Musk defended the aggressive spending, saying SpaceX is building AI computing capacity at an unprecedented pace.
“We’re building AI compute capacity at scale faster than anyone else, we believe, and we’re significantly improving our AI models,” he said during the post-earnings conference call.
Starlink remains the growth engine
Starlink continued to be SpaceX’s biggest business, contributing more than half of total revenue.
Revenue from the satellite internet division climbed 66 per cent, while operating income from Starlink jumped 79 per cent from a year earlier. The company said its global subscriber base doubled to 12 million, helped by the rollout of additional satellites and expanding consumer, enterprise, aviation, maritime and government services.
However, average revenue per subscriber declined 22 per cent as SpaceX expanded into more international markets and introduced lower-priced service plans.
SpaceX President Gwynne Shotwell said the company expects to win customers from established telecom operators such as T-Mobile, AT&T and Verizon as it expands Starlink into a broader mobile connectivity platform supported by ground-based infrastructure.
AI business gathers momentum
The company’s AI business, which includes xAI, Grok, social media platform X and its expanding data centre operations, emerged as one of the fastest-growing parts of the business.
Revenue from AI operations surged around 250 per cent from a year earlier. The business is already generating income through computing contracts with companies including Anthropic, Google’s parent Alphabet and Reflection AI, although some recurring revenue has yet to be recognised.
The rapid growth also helped narrow AI operating losses significantly. Total operating losses fell to $143 million from $970 million a year earlier.
Brian Mulberry, chief market strategist at Zacks Investment Management, said the AI division appears to be monetising much faster than many investors had expected.
He noted that one of the biggest surprises in the results was that the AI business was beginning to generate meaningful revenue on its own rather than relying solely on Starlink to fund its expansion.
Starship remains a long-term bet
While Starlink is driving current financial performance, SpaceX continues to invest heavily in Starship, its next-generation reusable rocket system.
Space revenue increased 29 per cent year-on-year, although the business remains a significant source of costs as Starship has yet to enter commercial service.
The company believes Starship will eventually enable deployment of higher-capacity Starlink satellites and orbital AI computing infrastructure. Investors continue to watch its testing programme closely, as successful reusability is considered critical to SpaceX’s long-term business model.
Separately, SpaceX announced a partnership with Nvidia to use the chipmaker’s processors in its Starmind AI1 orbital computing satellites.
Lock-up expiry could keep pressure on shares
SpaceX’s stock has fallen around 8 per cent since its record-breaking June initial public offering, which valued the company at roughly $1.75 trillion.
Investors are also preparing for the expiry of the company’s post-IPO lock-up period beginning later this week, which could result in additional selling by insiders and early investors.
The earnings report underscores a key challenge facing SpaceX as it transitions into public markets. While Starlink continues to generate robust cash flows and AI revenue is beginning to accelerate, investors will closely monitor whether the company’s multi-billion-dollar investment programme can deliver sustainable returns over the coming years.
With inputs from agencies.
