Can SpaceX Overcome the AI Trade Sell-Off? |

Artificial intelligence (AI) stocks are stumbling lately as shareholders scrutinize tech companies’ latest quarterly results. What they’re looking for are signs of life from the monumental investments the companies are making in AI infrastructure.

Not all of them are finding it.

Space Exploration Technologies (SPCX +4.38%) investors initially seemed enthused by the company’s AI revenue surging 830% in the third quarter. It was an impressive gain and indicates that SpaceX’s spending — as high as it is — could potentially be worth the costs. But shareholders quickly pivoted back to their skepticism, and it’s kept SpaceX’s stock below its initial IPO price months after its debut.

So, can SpaceX overcome the current AI trade sell-off? Here’s why SpaceX shareholders are facing an uphill battle right now.

What’s causing the AI sell-off right now?

Many AI stocks have stumbled over the past couple of months as investors have questioned whether the massive ramp-up in data center infrastructure investments will pay off over the long run.

And there are mixed messages about whether it’s working. Microsoftrecently reported that its Azure cloud revenue for Q1 of fiscal 2027 (ended Sept. 30), which includes AI sales, rose 48% to $33.1 billion. And management said Azure revenue will increase by up to 50% this quarter. That comes after Azure’s annual sales topped $100 billion for the first time in fiscal 2026.

Accelerating Azure sales is a good indicator that Microsoft’s capital expenditures — which were $45 billion in the first quarter — are paying off.

But other AI stocks haven’t fared as well. Investors punished Alphabet after its recent third-quarter results (ended Sept. 30), as its capital expenditures reached $51.3 billion and the company missed analysts’ estimates for consensus sales and earnings. Alphabet stock fell about 10% the day after its Q3 results were released.

In short, investors are looking very closely at whether capex is paying off, and if they think a company is missing the market, they’re not very forgiving.

How SpaceX is weathering the AI storm

It’ll come as no surprise to tech investors following the AI market that SpaceX shares have been a disappointment since the company’s IPO back in June. They’re down about 5% from their opening price of $150, as of this writing.

But the company is showing significant signs of life in its artificial intelligence segment (which includes its Grok bot and the rental of AI cloud capacity to customers). SpaceX’s AI sales spiked 830% to $7.6 billion in the third quarter (which ended Sept. 30), now accounting for 52% of the company’s total revenue.

That’s impressive growth, but shareholders are still hesitant to get excited. That’s likely because SpaceX’s capex surged 185% to $19.6 billion in the quarter, with 83% of that allocated to AI.

The good news for SpaceX is that the company isn’t completely reliant on its AI business. Sales from its Starlink satellite internet business rose 69% to $5.2 billion, and it has 13.6 million subscribers and is profitable. And its space launch business is growing, with 12 launches in the quarter and a 6% revenue increase to $1.8 billion.

Still, SpaceX can’t shake its high AI spending, and I think it’s perfectly reasonable for shareholders and potential investors to be skeptical about spending right now. While the company’s AI investments are starting to pay off, it says capex will reach up to $40 billion this year.

This means investors need to keep an eye on whether SpaceX can maintain its artificial intelligence sales acceleration as spending rises. I think the (justified) pessimism about so much capex could hamper SpaceX’s stock for a while.

Adding all of the above together makes it unlikely that SpaceX will overcome the AI trade sell-off at the moment and could struggle to gain ground if investors continue to doubt tech companies’ AI investments.