SpaceX earnings takeaways: Soaring AI costs outweigh revenue beat in first report since IPO

Shotwell said on the call that during the quarter SpaceX launched Starlink mobile partnerships with international carriers, including SoftBank, NTT DoCoMo and Spark New Zealand.

She said the “near-term priority” is launching the company’s mobile V2 satellites on Starship before an integration with EchoStar spectrum next year. A spectrum transfer was recently approved by the Federal Communications Commission, and “represents a foundational competitive advantage for Starlink mobile,” Shotwell said.

SpaceX will later go after AT&T, Verizon and T-Mobile customers with its forthcoming Starlink mobile service as early as next year, and plans to build out a terrestrial network in the U.S. using the EchoStar spectrum, Shotwell said.

The company aims to fly satellites that can deliver the standalone service in 2027, she said, and to be able to provide Starlink Mobile to its first customers by the end of next year as well.

“I expect us to be able to acquire quite a few of their customers,” Shotwell said. “I think our service will be better. We will eliminate dead zones, leveraging, basically, satellites in orbit.”

— Lora Kolodny

As the earnings call was wrapping up, Musk responded to a question about the Cursor deal by choosing not to respond.

The $60 billion transaction is expected to close in the third quarter.

“We’re trying to get the acquisition closed as quickly as possible,” Musk said. “I think we’re pretty close to that. But we’re wary of sort of jumping the gun on regulatory closures.”

Musk has clashed with regulators in the past over social media posts concerning material information about deals, including his Twitter leveraged buyout, and a take-private deal for Tesla he said was in the works but that never materialized.

— Lora Kolodny

Nvidia shares rose about 2% in extended trading after Musk said the chipmaker has the “best AI computer” and pledged that SpaceX would use its Vera Rubin processors exclusively.

— Kif Leswing

Ad revenue in the quarter dropped 14% from a year earlier, a decline SpaceX blamed on a migration to a new advertising system.

In April SpaceX started to release the new technology, including the X Ads Manager, according to its prospectus. SpaceX said the X Ads Manager was meant to help advertisers more quickly launch campaigns, with one system for creation, optimization and monitoring.

Ad sales fell to $367 million from $426 million in the same quarter last year.

— Jordan Novet

Johnsen said that SpaceX’s capital deployment is so efficient that the company is seeing returns in very short order.

“All capex is not the same,” Johnsen said on the call. “Specifically on the AI compute side, we’re able to deploy capital in such a way that we’re getting less than a one-year payback.”

He added that capital is becoming an item that would otherwise be put in cost of goods sold, or COGS, “because it’s moving so quickly.”

— Ari Levy

On the earnings call, Musk talked up the potential for SpaceX’s Starlink satellite internet service to maintain and expand its lead.

“It’s not out of the question that, at some point, Starlink will deliver a majority of the world’s internet, at least in countries where we are allowed to operate, which is the vast majority of countries,” Musk said. He added that he thinks this can happen in “less than 10 years.”

SpaceX named more than 20 companies as competitors to Starlink in its prospectus, including Amazon, Blue Origin,Viasat,AT&TandT-Mobile. Some competitors are also customers, using SpaceX launches to get their satellites into orbit.

Shotwell said on the call that she’s “very bullish” on both enterprise and government growth for Starlink moving forward.

Musk said Starlink had offered only “patchy” connectivity in its early days, but that it has “incredible uptime and low latency” today, so more offices and agencies can treat Starlink as a “primary provider” of internet service, not a backup provider.

— Lora Kolodny

SpaceX CFO Bret Johnsen said on the earnings call that the company is on pace to reach $100 billion in annualized recurring revenue by the end of the year.

Johnsen said that in the first few weeks of the current quarter, SpaceX has contracted an additional $6.7 billion of cloud services revenue “over a six month period that begins ramping starting in October.”

The figure for the end of the year assumes contributions from cursor, Johnsen said.

— Ari Levy

Musk told shareholders in his opening remarks on the earnings call that SpaceX plans to build its AI data centers exclusively using Nvidia chips. He said he expects to end 2026 with over 2 gigawatts of compute, growing closer to 10 gigawatts by the end of 2027.

The AI infrastructure will go to support the company’s own AI model development and services, and will help cloud computing customers.

Musk said the company sees Nvidia’s Vera Rubin as “the best AI computer.”

“And we greatly value our close cooperation and partnership on many levels with Nvidia,” he said.

— Lora Kolodny

SpaceX announced a partnership with Nvidia to collaborate on the design of “space compute,” or hardware for use running AI models and services on satellites in orbit, powered by solar panels and the sun.

The companies will work “to design the Starmind AI1 satellite compute payload,” SpaceX wrote in a social media post, adding that each satellite “will include NVIDIA Rubin GPUs and Vera CPUs for datacenter class space compute.”

No company has proven space-based data centers can work. And SpaceX’s aim to launch up to 1 million orbital data centers has drawn the ire of scientists concerned about orbital debris, and other severe environmental risks.

In January, Nvidia took an equity stake in xAI as part of its $20 billion funding round, and the shares converted into stock in SpaceX.

— Lora Kolodny

Capital expenditures jumped more than sixfold from a year earlier to $18.37 billion in the second quarter. Most of that — $15.83 billion — was in AI.

The total capex figure exceeded the $13.22 billion average analyst estimate, according to FactSet.

Following results fromAlphabet, Meta,MicrosoftandAmazonover the past couple weeks, the company’s AI costs are under a microscope.

With the proceeds from SpaceX’s record IPO, the company now has cash and equivalents of $93.5 billion, up from $24.7 billion at the end of the first quarter.

Meanwhile, SpaceX’s debt and finance leases now total $36.8 billion, up from $22 billion three months earlier.

— Ari Levy

SpaceX said Starlink now has 12 million subscribers, doubling from a year earlier and up 17% from the first quarter.

Average revenue per user came in at $66, the same as the last quarter and down sharply from $85 a year ago.

— Ari Levy

SpaceX shares climbed 9.4% on Tuesday, closing at $125.33. It was the stock’s best day since June 15, when it rallied 20%.

Still, the shares are below the $135 IPO price.

SpaceX stock chart

SpaceX plans to build a huge AI chip manufacturing plant, called Terafab, in East Texas along with partners Tesla and Intel. The facility is projected to cost up to $119 billion if the full buildout comes to fruition, according to public hearing noticesfiled in Grimes County, Texas.

In its IPO filing, SpaceX said the initiative aims to extend the company’s “vertical integration” and to “alleviate potential future chip shortages at SpaceX, optimize compute performance, and potentially reduce overall compute costs.”

On a question-and-answer page on the SpaceX website, investors asked ahead of the earnings call: “Can you provide any update on the current thinking around funding and responsibilities for Terafab between the two companies?”

— Lora Kolodny

A lingering question for Musk has been: Will he ever merge Tesla and SpaceX?

Musk’ssecond-in-command at SpaceX, Gwynne Shotwell, didn’t dismiss the possibility of an eventual tie-up in an interview with CNBC’s Morgan Brennan on the day of the IPO.

Such acombination”might make Elon’s life a little easier,” she said.

Musk, who’s previously addressed the matter, has a history of merging his businesses.

In 2016, Tesla acquired SolarCity, where Musk was a significant investor and board chairman, in a controversial $2.6 billion deal. More recently, Musk in February combined SpaceX and xAI in a transaction that valued the combined entity at $1.25 trillion. Before that, he brought together xAI and X, formerly Twitter.

Tesla said early this year that it had invested about $2 billion into xAI, holdings that would later convert into SpaceX stock. Musk’s companies also share engineering and other resources.

— Lora Kolodny

SpaceX traded billions of dollars in options immediately after its IPO in June, and far out-of-the-money calls have been a popular play from the start.

But a Friday $330 call was purchased about 90,000 times Monday across hundreds of transactions of different sizes, totaling about $2.2 million, SpotGamma data show. At an average price of around 30 cents per contract, or $30 per trade, the total open interest in the contract is nearing $20 million.

— Oliver Renick

Prior to its mammoth IPO, SpaceX’s debt dwarfed its cash.

The company had debt and finance leases of $28.7 billion at the end of the first quarter and total liabilities of $60.5 billion, according to the prospectus. That compared to cash and equivalents of $15.9 billion.

Following the IPO, SpaceX’s cash pile swelled past $90 billion.

But analysts at Phillip Capital project cash and equivalents will remain relatively flat over the next four years as capex soars, while debt and finance leases will swell by almost 150%.

“The group returns to a net debt position” of $3.3 billion by fiscal 2030, they wrote.

— Ari Levy

SpaceX has historically used most of its commercial launches to deploy its own Starlink satellites into orbit. But it’s also provided a reliable, and relatively affordable, means for smaller players to get their satellites into space.

SpaceX reportedly stopped taking reservations beyond late 2028 or early 2029. Industry observers will be interested in hearing about the company’s plans.

One key question is whether the Starship rocket will be delayed beyond the expected timeline. If so, how much will SpaceX be able to make room for customers on older launch vehicles?

— Lora Kolodny

Days before the IPO, SpaceX announced an agreement with Google to provide the search giant with AI capacity in a deal expected to bring in $920 million a month.

The prior month,Anthropicagreed to use all of SpaceX’s compute capacity at itsColossus 1 data centerin Memphis, Tennessee.

And over a week after the IPO, SpaceX signed a deal withReflection AI to provide the startup with Nvidia’s top-of-the-line AI chips for $150 million a month.

Added up, SpaceX is showing that it can monetize its heft data center investment as it struggles to keep pace with AI leaders OpenAI, Anthropic and Google in developing models and services. But investors want to know if this is just a short-term fix or if Musk sees cloud infrastructure as a longer-term opportunity in a competitive market dominated by Amazon, Microsoft and Google.

— Ari Levy

As the stock started trading on the Nasdaq, Musk became theworld’s first trillionairebased on his combined stakes in SpaceX and Tesla.

He’s still the world’s richest person, but as Musk acknowledged in a post on X last month, he’s now a “(Former) Trillionaire.”

In addition to SpaceX’s market slide, Tesla shares are down by about 20% since the rocket maker’s IPO. That’s brought Musk’s net worth to about $750 billion, according to Forbes.

— Ari Levy

New Street Research partner and senior analyst James Ratzer told CNBC’s “Squawk on the Street” that there are three parts to the success story for Starlink.

Ratzner said the first element is in broadband, and he expects capacity to grow 20 times what the company has today.

“Secondly, we think there’s a path over the medium term to developing a direct-to-sell business with a slightly separate constellation that will be complementary, we think, to existing wireless offerings,” he said.

The final piece, which is “potentially the biggest opportunity,” is the development of orbital data centers with a separate set of AI constellation satellites, though Ratzner noted that is “going to take time to develop.”

“We’re maybe a little bit more conservative there than, I think, some of the more bullish analysts on the stock,” he said. “We still think it’s a huge opportunity, but that’s something looking into the next decade.”

—Chris Eudaily

SpaceX calls Starship the “key enabler” of its long-term growth strategy and says the rocket could unlock “entirely new categories of missions,” including commercial space tourism.

During a 13th test flight of Starship in July, SpaceX had trouble reigniting the Raptor engines in the rocket’s first stage.

“Any similar failure during landing at the launch site would no doubt cause severe damage to the launch pad,” TMF’s Farrar told CNBC at the time.

Ex-NASA engineers and aerospace researchers have also expressed concern about the Starship thermal protection systems.

The space segment generated revenue of $619 million in the first quarter of 2026, after pulling in sales for all of last year of $4.09 billion. That was mostly from established Falcon 9 rockets delivering customers’ payloads, including from SpaceX, into orbit.

SpaceX spent $3 billion on research and development last year, specifically on its Starship launch vehicle program.

— Lora Kolodny

SpaceX’s first earnings report comes about two weeks after Tesla, Musk’s other public company, failed to impress Wall Street with its second-quarter numbers.

While revenue beat estimates, free cash flow turned negative, expenses soared and Musk struck a cautious tone in discussing the company’s Robotaxi efforts. The stock plunged 15% following the report and is now down 28% for the year, trailing all of its megacap peers.

— Ari Levy

SpaceX’s slump has been a boon for short sellers betting against the stock. They were up up about $8.3 billion in paper profits as of Friday’s close, according to data from S3 Partners.

One catalyst for a potentially deepening slide is the possibility that a flood of new shares will hit the market once lock-up restrictions start expiring this week.

Musk takes personal umbrage with short sellers, whether they’re wagering against SpaceX or Tesla. He wrote in a post on X last month that, “The survival probability of firms who maintain a significant short position in SpaceX over time is very low.”

— Lora Kolodny

SpaceX shares climbed about 6% higher at the start of trade, looking to build momentum after a rough stretch of losses.

After an initial surge when it began trading at $150 on June 12, the stock has slipped and is about 10% below its IPO price of $135.

—Chris Eudaily

Ron Epstein, senior aerospace & defense analyst at Bank of America, told CNBC’s “Squawk Box” that he’ll primarily be watching for progress on rocket science with Starship and the path to resusability.

“They had a public release, but they’ll get some questions on it,” he said. “You know, what, what do they think went well? What do they think went better than they thought? What didn’t go as well as they thought?”

Epstein also noted that since this is the company’s first earnings call as a public company, it will be interesting to see how it is structured and how CEO Elon Musk and/or COO and President Gwynne Shotwell are featured.

—Chris Eudaily

SpaceX told investors in its IPO prospectus that it would “prioritize growth and investment to capture significant opportunities in AI applications and compute infrastructure,” for its relatively new AI business.

In merging with xAI, SpaceX brought in the company’s data centers, Grok AI models and chatbot, and social network X, formerly known as Twitter. In June, SpaceX struck a deal to acquire Cursor AI for about $60 billion in a transaction expected to close in the third quarter.

SpaceX reported capital expenditures of $10.1 billion in the first three months of the year, with AI expenses counting for $7.7 billion of the total. Analysts on average expect capex of $13.2 billion for the second quarter, according to FactSet.

— Lora Kolodny

Analysts at Phillip Capital took the rare step of recommending investors sell SpaceX shares.

In a report on Friday, the firm set its price target for the stock at $75, which would be a drop of about 35% from Monday’s closing price.

Of the more than three dozen analyst estimates on SpaceX tracked by FactSet, Phillip becomes just the second firm to rate the stock a sell. The other such rating was from Morningstar.

Phillip analysts cited the company’s big losses and negative cash flows expected until at least 2030.

— Ari Levy

The slice of the SpaceX investor base most focused on fundamentals will be paying close attention to Starlink, which provides global high-speed internet coverage using a constellation of more than 10,200 satellites in low Earth orbit.

In itsprospectusin June, SpaceXsaid the connectivity unit generated $11.39 billion in revenue in 2025, accounting for 61% of total sales. It was SpaceX’s only profitable business last year, generating income of $4.42 billion.

Also in June, the company raised prices for Starlink subscribers, initiating a $10 “monthly kit fee” to rent its terminals after also increasing rates for different subscription levels. SpaceX said in a post on X early that month that its Starlink subscriber count had surpassed 12 million.

Tim Farrar, a satellite services industry expert and president of TMF Associates, told CNBC that investors should watch for Starlink subscriber net adds and changes in average revenue per user.

— Lora Kolodny