SpaceX says AI computing demand overwhelms supply, new investments to pay off within a year

SpaceX said Tuesday (local time) that demand for AI computing is overwhelming supply and that new computing investments can be recouped in under a year, according to its third-quarter earnings report. Its share price rose about 8 percent in after-hours trading.

SpaceX's third-quarter sales reached $14.58 billion, up 161 percent from a year earlier, driven by its superintelligence (SI) segment, where revenue surged 830 percent to $7.56 billion, MarketWatch reported. It was the first time the SI segment — which covers AI computing power sales and related services — accounted for more than half of the company's total quarterly revenue.

CEO Elon Musk said on a conference call that "every hyperscaler and dozens of smaller companies are persistently asking to lease more computing capacity."

He added that if SpaceX could accommodate all of them, it could lease out several times more capacity. "The shortage of superintelligence computing will persist for a long time, and there will be no demand problem," Musk said.

SpaceX shares closed down 0.1 percent at $147.79 in regular trading Tuesday (local time) before climbing 8.1 percent to $159.70 in after-hours trading following the earnings release.

Chief Financial Officer Brett Johnson said that "at current prices, new computing deployments are generating a payback period of under one year," to which Musk replied that "a six-month payback next year is not out of the question."

SpaceX's computing capacity stood at 1.7 GW at the end of the third quarter.

Musk said he is "quite confident" about bringing an additional 10 GW online next year.

On securing 20 GW of power infrastructure, he said it was possible "if everything goes well," adding that "the probability is small but not zero."

He went on to say that the casting process for turbine components used in power generation was a key bottleneck.

The overwhelming demand for SpaceX's AI infrastructure leasing has reinforced investor confidence that the company can sustain its rising capital expenditure plans, MarketWatch reported.

SpaceX projected fourth-quarter capital expenditure of $35 billion to $40 billion, up sharply from $19.6 billion in the third quarter.

Johnson said the company is in talks with multiple debt financing sources and cited maintaining an investment-grade financial structure as a top priority.

The company's outlook for coming quarters also beat Wall Street expectations. Johnson said visibility into the computing contract pipeline over the next six months had improved, and projected first-quarter revenue of $33 billion to $37 billion.

That would exceed by more than 50 percent the Wall Street consensus estimate of $22 billion compiled by FactSet.