The company is adding computing infrastructure quickly, an Oppenheimer analyst notes. SpaceX is also getting large tech players to pay handsomely for its computing power.
SpaceX has artificial-intelligence computing deals that are collectively worth tens of billions of dollars.
SpaceX's artificial-intelligence division is growing quickly, giving it a big advantage as a key resource remains in short supply, according to an analyst.
The AI industry is hungry for computing capacity, which companies need to train and run their models. Companies are expected to spend $36.1 trillion through 2050 to build the compute capacity needed for AI, largely by investing in data centers and related technology, according to a new report from PWC.
And SpaceX (SPCX) looks poised to be a winner of the short-term computing shortage, Oppenheimer analysts led by Timothy Horan said in a client note on Wednesday. Horan argued that the company "has the ability to bring on infrastructure faster than anyone else, and is using this infrastructure and its data to improve its own models faster than anyone else."
Horan rated SpaceX's stock at buy and raised his price target to $280 from $250. His new target implies an increase of about 100% from current levels.
SpaceX wants to expand its computing capacity from 1.4 gigawatts to more than 2 gigawatts by the end of 2026. On an earnings call, Musk said SpaceX is aiming to have "closer to 10 gigawatts of compute than 5 gigawatts" by the end of 2027. He added that SpaceX wants 20 gigawatts of power and cooling by that time.
Reaching SpaceX's 2027 computing goal will likely cost between $300 billion and $500 billion, according to Mizuho. That will likely require the company to take on more debt. Morgan Stanley's Adam Jonas has said SpaceX will need to raise an average of $80 billion in net debt each year through 2035. Jonas, who is bullish on the company, expects SpaceX to spend $53 billion on AI this year, according to a client note.
SpaceX thinks its investment will pay off. Bret Johnsen, SpaceX's chief financial officer, told investors last month the company is able to recover what it spends on building AI computing in less than a year.
That's primarily because of compute-leasing contracts with Alphabet (GOOG) (GOOGL), Anthropic and at least two other customers. Combined, those deals are worth tens of billions of dollars in revenue to SpaceX over the next several years, though both Alphabet and Anthropic's contracts allow for an early end to their partnerships.
"While the environment remains compute-constrained, we expect that SPCX will be able to receive half of every dollar of revenue" that partners like Anthropic can generate using SpaceX's computing, Horan said.
In addition to selling computing capacity, SpaceX is using its resources to train its own frontier model, Grok. It also recently completed its acquisition of the AI startup Cursor, which Horan called "transformative," helping SpaceX develop its models and generate additional revenue.
On Tuesday, soon after Anthropic released its latest AI models, Musk said SpaceX would release its latest, Grok 4.7, in 10 days. SpaceX's Grok 4.6 was released less than a month ago and delivered strong capabilities at a cheaper cost than some leading models, according to Artificial Analysis.
-William Gavin