SpaceX shares fall 12.5% on AI spending worries

SpaceX shares fell 12.5% after the company reported second-quarter results, with investor worries focused on its artificial intelligence spending.

The company said revenue rose 92% in its first earnings report since going public in June. It said AI computing deals and growth at its Starlink satellite business fueled the results.

SpaceX also said capital expenditures exceeded $18 billion in the three months ending in June, with more than 86% of that spending going to its artificial intelligence division.

Starlink grew to 12 million subscribers, double the number a year earlier, SpaceX said. Starlink accounted for just over half of the company's revenue and was the only segment not losing money.

Rocket launches brought in $962 million in revenue but posted a $542 million operating loss. SpaceX said its AI segment, which includes X, the Grok chatbot and data centers, tripled to $2.6 billion in revenue but posted a $1.3 billion operating loss. The company reduced its net loss to $541 million.

During a Tuesday analyst call, CEO Elon Musk and COO Gwynne Shotwell sought to reassure investors that SpaceX is moving from being mainly a rocket company toward a conglomerate with AI at its core.

Shotwell said SpaceX won more than $6 billion in US contracts in the second quarter for Space Force programs. CFO Bret Johnsen said SpaceX computing deals are expected to bring in an additional $6.7 billion in compute leases over the six months beginning in October.

Anthropic started paying $1.25 billion a month in July to use SpaceX's Colossus data center near Memphis, Tennessee, while Google is set to pay $920 million a month for computing power. Reflection AI has also signed a computing deal.

SpaceX also pointed to Starlink connectivity partnerships with major airlines. United Airlines first added Starlink service in 2024, and SpaceX now has agreements with American Airlines, Southwest, Virgin Atlantic, Iberia Airlines and Aer Lingus.

Emarketer Senior Analyst Gadjo Sevilla told AFP that investors remain skeptical despite the revenue growth. He said investors want to see how the company's value can be turned around quickly.

A lockup period expires Thursday, allowing some SpaceX employees to sell shares after the IPO. SpaceX's share float is currently around 5%, and the expiry could more than double the number of shares in circulation.