Key Highlights
- Morgan Stanley’s Stephen Byrd identifies SpaceX’s ability to deploy power infrastructure more efficiently and economically than competitors as a critical differentiator.
- The company reported 1.4 gigawatts of AI computing power at the conclusion of Q2 2026, with ambitious plans to reach 10 GW by late 2027.
- CEO Elon Musk expresses strong conviction that SpaceX will start deploying NVIDIA’s AI processors to space by 2027.
- NVIDIA serves as the sole chip provider for the space-based computing initiative and maintains an ownership position in SpaceX.
- Industry observers predict orbital AI operations won’t generate substantial revenue until approximately 2029, viewing 2027-2028 targets as proof-of-concept phases.
SpaceX (SPCX) shares declined 0.6% during Monday’s trading session, settling at $151.85, underperforming against a strong technology sector that pushed the Nasdaq Composite up 2.3%. Premarket activity Tuesday showed shares gaining 0.5%.
Space Exploration Technologies Corp., SPCX
While the near-term price action shows some weakness, the dominant narrative surrounding SpaceX centers on its expanding artificial intelligence operations, spanning both terrestrial and space-based infrastructure.
CEO Elon Musk has expressed strong confidence that the company will initiate orbital deployments of NVIDIA’s cutting-edge AI processors by 2027. The strategy calls for modified Starlink satellites equipped with NVIDIA silicon and photovoltaic arrays, expanding to larger-scale installations in 2028, with aspirational plans for a network containing up to one million computing satellites.
NVIDIA secured the position as sole chip provider for this initiative. The chipmaker’s existing equity stake in SpaceX signals a relationship extending far beyond conventional vendor arrangements.
For NVIDIA, a successful orbital expansion would create an additional revenue stream complementing the already robust demand from traditional ground-based data centers.
Power Infrastructure: SpaceX’s Terrestrial Advantage
Before orbital operations commence, SpaceX must continue scaling its ground-based AI infrastructure, where electrical power availability represents the primary bottleneck.
Morgan Stanley’s Stephen Byrd forecasts AI-related power requirements will surge to approximately 100 gigawatts by 2028. This figure represents roughly 8% of America’s total electricity generation capability, a pace traditional utilities cannot match.
According to Byrd, SpaceX holds a distinct advantage. “SpaceX has proven capabilities in scaling time-to-power solutions faster and cheaper than its competitors,” he noted. “We view this as a key competitive advantage given the magnitude of our projected US power shortfall.”
The company closed Q2 2026 with 1.4 GW of operational AI computing infrastructure. Management is targeting 10 GW by year-end 2027. Byrd’s analysis suggests ground-based capacity will reach maximum levels around 15 GW in 2031.
Space-Based Computing: Vision Meets Reality Checks
The orbital data center strategy carries compelling theoretical advantages. Space locations provide continuous solar energy, virtually unlimited expansion room, and freedom from local zoning restrictions. The vacuum environment also theoretically assists thermal management.
However, heat dissipation presents significant engineering obstacles. Without atmospheric convection, individual orbital facilities might require radiator systems spanning millions of square feet. Additional complications include radiation protection, data transmission infrastructure, the impossibility of physical maintenance visits, and uncertain regulatory frameworks.
Most market analysts anticipate orbital AI operations won’t produce significant revenue streams before 2029. The 2027 deployment timeline is generally interpreted as a technical demonstration rather than commercial rollout.
The company’s Starship launch vehicle plays a crucial role in achieving cost-effective orbital data center economics. Starship’s fourteenth test mission is currently slated for September 28.
SpaceX shares have appreciated approximately 45% since early August. The company completed its initial public offering in mid-June 2026.
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