Alphabet is preparing to put its artificial intelligence chips into orbit on Thursday, using a SpaceX Falcon 9 rocket to conduct the first in-orbit test of a project aimed at turning space into a potential new location for large-scale AI computing.

The launch, scheduled for 11:15 a.m. PT from Vandenberg Space Force Base in California, will carry Planet Labs satellites aboard SpaceX’s uncrewed Transporter-18 mission. One of the satellites will be a solar-powered prototype equipped with Google’s tensor processing units, or TPUs.

The mission marks the first orbital test of Project Suncatcher, an initiative Alphabet unveiled in November 2025 to investigate whether solar-powered computing infrastructure could eventually support AI workloads in space.

Alphabet described the project as an effort to determine “whether space could one day host scalable machine learning infrastructure.”

The idea marks a significant departure from the conventional data-center model, in which AI companies build large facilities on the ground and compete for electricity, land, cooling capacity and connections to already-strained power grids.

Google is instead exploring whether some of those constraints could be addressed by moving the computing infrastructure above the atmosphere.

Low Earth orbit offers one potential advantage that has attracted growing interest from the technology and space industries: abundant sunlight.

Alphabet said satellites in low Earth orbit can access near-constant sunlight and generate up to eight times more solar power than equivalent systems on Earth. The company eventually envisions linking multiple satellite constellations together so they can collectively handle larger AI workloads in orbit.

That would turn individual satellites into components of a distributed computing network rather than simply communications or observation platforms.

The concept remains highly experimental. Alphabet has already tested its TPUs running AI workloads at a facility at the University of California, Davis, but Thursday’s mission will provide the first opportunity to observe how the chips operate in the substantially harsher environment of low Earth orbit.

The test will matter much to the AI industry because conventional data centers rely on extensive infrastructure to maintain stable operating conditions. Space removes many of those physical advantages while introducing different problems, including radiation, extreme temperature variations, and the difficulty of dissipating heat.

AI chips generate substantial amounts of heat, meaning a space-based data center would need specialized cooling systems that can function without the conventional cooling infrastructure available on Earth.

The economics present another hurdle. Launch capacity remains limited and expensive, meaning that putting large amounts of computing hardware into orbit currently carries a significant transportation cost. Orbital debris and congestion could add another operational risk as more satellites are deployed.

Those constraints make space-based AI computing a long-term proposition rather than an immediate alternative to terrestrial data centers. But the potential payoff is large enough for major technology and space companies to begin testing the concept.

Alphabet and SpaceX Converge on Orbital Computing

SpaceX has been one of the most vocal proponents of space-based computing, arguing that orbit offers effectively “infinite real estate” at a time when AI companies are facing growing opposition to large data-center developments on Earth.

The company is also developing its own orbital data-center concept. SpaceX plans to deploy swarms of satellites equipped with graphics processing units and solar arrays, with the hardware expected to be manufactured in part through Tesla, Elon Musk’s electric-vehicle company.

Musk said earlier this year that space-based data centers would eventually become the cheapest way to train AI and argued that this could happen within two or three years. SpaceX’s historic IPO earlier this year was largely based on that.

SpaceX President and Chief Operating Officer Gwynne Shotwell said at an event in September that the company expects to deploy “supercompute in space” in 2027.

Alphabet and SpaceX therefore have overlapping ambitions even as their technology businesses compete in AI. Alphabet is also a significant investor in SpaceX, with its stake currently valued at more than $82 billion. That relationship gives Google an unusually close connection to the launch infrastructure required to test a technology that could eventually compete with conventional terrestrial data centers.

The economics are nevertheless far from established. A space-based computing network would have to overcome the cost of launching hardware, replacing failed satellites, maintaining communications links, and protecting processors from radiation. It would also need to demonstrate that the advantages of solar power and orbital real estate outweigh those costs.

For AI companies, the attraction is the scale of the infrastructure challenge. The rapid expansion of generative AI has created extraordinary demand for electricity and computing capacity, forcing companies to commit billions of dollars to new data centers and power infrastructure.

Moving some workloads into orbit could theoretically provide access to continuous solar energy while avoiding some of the land-use, permitting and grid constraints increasingly affecting data-center construction on Earth.

But that does not mean space eliminates the infrastructure problem. It only changes its nature.

Instead of transmission lines and local permitting, operators would have to manage launch capacity, orbital traffic, communications, thermal management, radiation protection and satellite replacement.

Against that backdrop, Thursday’s mission is seen as less a demonstration that orbital data centers are ready for commercial deployment than a test of whether one of the fundamental components, the AI processor, can operate effectively in space.

If Google’s TPUs perform reliably, the company will have taken an important first step toward validating the technical foundations of Project Suncatcher. Further progress would still require proving that large numbers of computing satellites can be launched, connected, cooled, and maintained at a cost competitive with terrestrial facilities.

The timing is notable because AI infrastructure is becoming one of the industry’s biggest constraints. Companies are racing to build larger clusters, while electricity shortages, permitting delays and community resistance increasingly complicate expansion.

Space offers an extreme solution to those problems, but it introduces an equally extreme set of engineering and economic challenges.

The Transporter-18 mission will also be a particularly busy day for SpaceX. The company is scheduled to conduct a separate launch from Florida’s Space Coast carrying astronauts to the International Space Station for NASA, beginning a six-month mission.

Japanese Prime Minister Sanae Takaichi has defended her government’s spending and investment agenda, saying efforts to strengthen Japan’s economic competitiveness will ultimately support confidence in the yen, even as the currency remains weak and investors remain concerned about the country’s fiscal trajectory.

In a recorded interview aired by Nippon Television on Thursday, Takaichi said her government was not pursuing policies aimed at manipulating the exchange rate and had instead focused on increasing Japan’s economic supply capacity through investment in crisis management and growth industries.

“Our economic policy is not aimed at manipulating exchange rates,” Takaichi said.

“My administration aims to boost Japan’s growth potential by increasing the economy’s supply capacity through bold investment in crisis management and growth areas,” she said. “Such efforts would strengthen Japan’s global competitiveness, thereby helping ensure market confidence in the yen.”

Takaichi also said she had raised the yen’s undervaluation with U.S. President Donald Trump when the two met last month. The disclosure comes after Trump himself expressed concern about the weak yen during their recent summit, while U.S. Treasury Secretary Scott Bessent has also signaled support for a stronger yen consistent with Japan’s economic fundamentals.

The currency issue has become complicated for Tokyo. The Bank of Japan has raised its policy rate to 1.25%, a 31-year high, yet the yen has continued to weaken against the dollar. The currency moved beyond ¥158 per dollar on Thursday after the latest BOJ meeting summary showed disagreement over the pace of further tightening.

That divergence reveals the difficulty facing Japanese policymakers: higher interest rates are intended to support the yen and contain inflation, but faster monetary tightening could also raise government borrowing costs and weigh on an economy that Takaichi wants to support through higher investment.

The government’s fiscal plans are at the center of that tension.

Budget requests for the fiscal year beginning next April have reached about ¥143 trillion ($903 billion), close to pandemic-era levels. The figure does not necessarily represent the final budget because ministries submitted requests before the government determines which programs will ultimately receive funding.

Takaichi sought to reassure investors that the record requests would not automatically translate into a similarly large final budget.

“We will set clear priorities,” she said. “This is part of our broader effort to reform the budget process. Within that framework, we will review both spending and revenues, while keeping a close eye on tax revenue trends.”

She said the government would set spending in line with its objective of steadily reducing Japan’s debt-to-GDP ratio and would “appropriately manage” the volume of new bond issuance.

“Let me be clear,” she added. “We will secure funding in responding to fiscal needs.”

The problem for the bond market is that the government’s growth agenda is arriving at the same time as borrowing costs are rising.

Japan’s 10-year government bond yield recently reached 3% for the first time in three decades, while the Finance Ministry is preparing for a sharp increase in debt-servicing costs. The ministry has requested ¥36.6 trillion for debt servicing in fiscal 2027, up 17% from the current year’s ¥31.28 trillion, using an assumed interest rate of 3.8%.

That has created a feedback problem for policymakers. Higher yields increase the cost of servicing Japan’s enormous public debt, while concerns about larger deficits and additional bond issuance can themselves push yields higher.

The market is already sensitive to that possibility. Takaichi’s government has faced scrutiny over plans to temporarily reduce the consumption tax on food and increase defense spending, with investors seeking greater clarity over how those measures would be financed.

Takaichi did not repeat a pledge she made last month to target a cap of ¥40 trillion on new bond issuance next fiscal year, adding another element of uncertainty around the eventual financing mix.

Yen Weakness Exposes The Policy Trade-Off

The yen’s weakness is particularly problematic because Japan remains heavily exposed to imported costs. A weaker currency raises the yen value of energy, food, and other imported goods, feeding into domestic inflation and reducing the purchasing power of households.

At the same time, allowing the yen to strengthen through more aggressive BOJ tightening could conflict with Takaichi’s emphasis on investment-led growth.

The latest BOJ meeting summary illustrates that tension. Several policymakers argued that rates should move higher or closer to the bank’s estimated neutral level because of upside inflation risks. But two board members dissented from September’s rate increase, while a Cabinet Office representative urged the BOJ to consider the cumulative effects of previous hikes on economic activity.

Markets interpreted those comments as evidence that further rate increases could face resistance from the government, contributing to renewed yen weakness.

The development leaves fiscal policy and monetary policy pulling in different directions. Takaichi wants to increase investment and expand Japan’s productive capacity, while the BOJ is trying to normalize interest rates after years of ultra-loose monetary policy. Meanwhile, the government needs to reassure bond investors that higher spending will not produce an uncontrolled increase in borrowing.

Takaichi’s argument is that stronger growth can ultimately provide the foundation for a stronger currency. Her government is also trying to reduce reliance on supplementary budgets by incorporating more spending into the regular annual budget process, a move intended to improve transparency around fiscal policy.

But investors are likely to focus on the numbers that emerge from that process rather than the stated objective alone. The ¥143 trillion in requests is only a starting point, while the eventual size of the budget, new bond issuance, tax revenue, and the government’s response to higher interest costs will determine how markets assess Japan’s fiscal position.

The distinction is expected to be equally important for the yen. Takaichi’s message is that competitiveness and productive investment, rather than direct currency management, should provide the basis for restoring confidence. The immediate market test, however, will be whether Japan can pursue that growth agenda while convincing investors that debt issuance and inflation will remain under control.

With the yen still under pressure and bond yields at multi-decade highs, Japan’s attempt to combine faster growth with fiscal restraint is becoming a driver of both domestic markets and the broader global rates.