SpaceX reported a sharp increase in third-quarter revenue and earnings as its artificial intelligence business expanded rapidly, strengthening the case for Elon Musk’s effort to transform the rocket and satellite company into a major computing and AI infrastructure provider.
Revenue rose 161% to $14.58 billion, beating analysts’ expectations of $12.72 billion, while adjusted earnings per share reached 45 cents against a consensus estimate of 13 cents, according to LSEG data. The company reported operating income of $2.8 billion and net income of $4.4 billion, reversing a net loss of $1.05 billion in the same period a year earlier.
SpaceX shares rose sharply in extended trading following the results, with reports putting the gain at between 4% and 8% during the session.
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The earnings report also revealed a dramatic shift in the company’s business mix. Revenue from its artificial intelligence division, now branded SpaceX Super Intelligence, or SpaceXSI, increased ninefold to $7.56 billion from $813 million a year earlier, exceeding analysts’ expectations of $6.47 billion, according to StreetAccount.
The AI business has become SpaceX’s largest revenue-generating division, overtaking its established connectivity and launch operations. However, the satellite internet business Starlink remains the company’s principal source of operating profit, highlighting the difference between generating rapid revenue growth and building a consistently profitable business.
On the earnings call, Musk also said a merger with Tesla, his electric vehicle manufacturer, would be a “good idea.” He disclosed that the boards of both companies had formed special committees to discuss a potential combination. Tesla was scheduled to report its third-quarter results after the market closed on Wednesday.
A merger would bring together businesses spanning electric vehicles, satellite connectivity, rockets, AI models and computing infrastructure. But the potential transaction would also raise questions about valuation, capital allocation, governance and how investors would assess companies with different financial profiles under a single corporate structure. The formation of special committees signals discussions are under way, not that a transaction has been agreed.
SpaceX’s latest results underscore how quickly its AI operations have expanded since the company acquired Musk’s AI laboratory, xAI, earlier in the year. The division has been building computing capacity to develop and operate AI products, including Grok, while leasing infrastructure to external customers such as Google, Anthropic and Reflection AI.
During the quarter, SpaceX also completed its $60 billion purchase of AI coding startup Cursor, extending its presence in the market for AI-assisted software development.
The business has benefited from demand for computing capacity from companies seeking access to powerful AI infrastructure without having to build all of it themselves. Musk said SpaceX was receiving a large volume of requests from potential customers, including major cloud providers and smaller AI companies.
“We are also frankly hounded relentlessly by every hyperscaler and by dozens of smaller companies to rent more of our compute,” Musk said. “So we could rent out our compute several times over if we said yes to everyone.”
SpaceX has been leasing computing capacity to external customers while also reserving resources for its own AI development. Musk said the company’s rough objective was to divide its computing capacity approximately equally between internal use and external rentals, although the balance could change as demand and operational requirements evolve.
“I guess as a rough approximation, our goal is to kind of split it 50/50 more or less, where half of the compute is used internally, and half of it is rented to others,” he said. “But that number could shift 60/40 one way or the other.”
The approach offers SpaceX two potential sources of value from its computing investments: using infrastructure to develop its own AI models and products, and generating revenue by renting capacity to other companies. External leasing can help monetize expensive equipment while SpaceX’s own products are still developing, although the economics will hang on utilization, operating costs, pricing, and the durability of customer commitments.
The company is preparing to spend heavily to expand this capacity. Chief Financial Officer Bret Johnsen forecast capital expenditure of $35 billion to $40 billion in the current quarter as additional computing infrastructure comes online. That projected spending would represent a substantial increase in investment requirements and make the returns on new infrastructure increasingly important to investors.
Johnsen argued that the economics were attractive at prevailing prices.
“At current pricing, new compute deployments are generating a payback of less than a year,” he said.
The claim suggests SpaceX expects strong revenue generation relative to the cost of deploying new computing capacity. However, a short payback period is not the same as a guarantee of sustained profitability. Analysts say actual returns will depend on how long demand remains strong, how quickly computing equipment depreciates, future rental prices, power and operating expenses, and whether new capacity can remain heavily utilized.
SpaceX’s financial outlook is becoming increasingly dependent on the assumption that demand for AI computing will continue to outpace supply. The company’s ability to meet that demand without eroding prices or tying up excessive capital will be a central test of its expansion strategy.
Starlink Remains The Profit Engine as Forecasts Soar
Despite the rapid growth of AI, Starlink continues to provide the financial foundation for SpaceX’s broader ambitions.
The connectivity division generated $5.25 billion in third-quarter revenue, up 69% from $3.1 billion a year earlier and above analysts’ expectations of $4.84 billion, according to StreetAccount. Its subscriber base increased to 13.6 million from 12 million in the previous quarter.
Consumer Starlink subscriptions accounted for $3.12 billion of revenue, while government and enterprise customers contributed $2.13 billion. Operating income from the connectivity business nearly doubled to $2.37 billion, making it the company’s strongest disclosed source of operating profit.
By comparison, the AI division generated operating income of $431 million, while SpaceX’s launch business recorded a loss of $7 million. Launch revenue increased only modestly, to $1.77 billion from $1.67 billion a year earlier.
The figures show that SpaceX’s fastest-growing business is not yet its largest operating-profit contributor. Starlink’s established subscriber base and government and enterprise contracts are helping finance a capital-intensive expansion into AI infrastructure.
SpaceX is also exploring a larger role in mobile communications. Earlier this month, it announced plans to acquire 800 MHz of low-band spectrum, while the Federal Communications Commission approved a plan for the company to build a constellation of 15,000 satellites. These developments could support an expanded US mobile network, although the commercial opportunity will depend on deployment, regulatory conditions and the company’s ability to compete with existing telecommunications providers.
Johnsen also issued an unusually aggressive revenue forecast for the coming year. He said first-quarter 2027 revenue could reach $33 billion to $37 billion, far above the average analyst estimate of $22.2 billion cited by LSEG. He attributed the outlook to “increased visibility into our compute contract pipeline over the next six months.”
Musk went further, saying annual recurring revenue across infrastructure, cloud agreements and paying users of Grok AI products could reach between $500 billion and $1 trillion by the end of next year. The projection is substantially more ambitious than the roughly $110 billion in full-year 2027 revenue analysts were forecasting, according to LSEG.
Those figures should not be treated as equivalent measures. Annual recurring revenue is a forward-looking run-rate measure based on recurring business, whereas annual revenue reflects the amount recognized over a reporting period. The $500 billion to $1 trillion projection is also a management ambition, not an established consensus forecast or a guarantee of realized sales.
The gap between Musk’s projection and analysts’ estimates shows the scale of the expectations being attached to SpaceX’s AI expansion. The company is betting that demand for computing capacity, external leasing, and its own AI products will support a much larger business, but delivering on that ambition will require substantial spending and sustained customer demand.