SpaceX's first results put Musk's AI spending under Wall Street microscope

SpaceX results offer investors a first test of whether its lofty valuation matches Musk's AI-space vision

SpaceX's  first earnings report since its record-breaking IPO will provide an early gauge of whether Starlink's profits can sustain the company's rapidly growing spending on AI and space ventures.

Due after ​the market closes on Tuesday, the results will give SpaceX's limited pool of public investors their first chance to judge whether the financial case behind the ‌company's lofty valuation supports CEO Elon Musk's vision of a powerhouse spanning AI, space and telecommunications.

Musk has pitched AI as SpaceX's future growth engine, with ambitions extending beyond renting compute capacity to other companies to developing frontier models, consumer and enterprise software, and, eventually, data centers in space. But until its AI business and Starship launch operations can stand on their own, Musk plans to use Starlink's profits to bankroll both ventures, a strategy ​critics argue is unsustainable.

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"Starlink is executing beautifully, but it cannot single-handedly fund a $30 billion annualized AI capex program," said Will Rhind, founder and CEO of GraniteShares, an asset ​manager that offers ETFs tied to SpaceX stock performance.

Analysts expect the AI business to nearly triple to $2.33 billion in the April-June quarter, up sharply ⁠from 12.5% growth in the prior quarter, according to LSEG-compiled data. Starlink growth is also expected to accelerate to 52.6% from 31.6%, driven mainly by expansion into more countries.

SpaceX's AI expansion ​consumed $7.72 billion in the January-March quarter, accounting for about three-quarters of the company's total capital spending. Analysts expect SpaceX to report capital expenses of nearly $14.05 billion in the April-June quarter. Capital spending ​in the AI segment is expected to surge more than six times to $10.2 billion from the same period last year, according to Visible Alpha data.

SpaceX shares have pulled back sharply since the company's $86 billion IPO in June, as investors questioned whether its lofty valuation of 77 times expected revenue can be justified.