SpaceX’s Vision of the Future Requires Sky-High Spending

SpaceX is poised to unleash a torrent of spending on physical infrastructure. Can its revenue keep up?

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SpaceX has launched a building spree. Next year, the company’s capital expenditures will be nearly $200 billion, according to an estimate by S&P Global. That’s up from nearly $70 billion this year and $21 billion in 2025.

The rapid growth highlights the company’s ambitious plans to build space-based data centers, a computer chip plant, new rockets, massive AI data centers here on Earth, and a lot more.

The company recently announced it will invest $100 billion in a launch facility in Vermilion Parish, Louisiana, with five launch complexes, each with two launch pads. It will also produce propellant and house employees. Construction begins next year and the facility will be able to support thousands of launches per year when completed. The huge chip plant, Terafab, has started construction already, with an initial investment of $17 billion. For the most recent quarter, which ended June 30, capex spending on AI totaled $16 billion.

The level of capex spending puts SpaceX in a class with the rest of Big Tech’s AI hyperscalers. The four major players — Amazon, Alphabet, Meta and Microsoft — will collectively spend more than $700 billion this year, and a lot more than that in coming years.

Such lofty spending comes with huge risk for SpaceX. Many of its plans are for the long term, and customer demand and sales could take years to pan out. Some markets, such as orbital data centers, have both untested business models and technologies. It’s likely SpaceX will push hard to build the infrastructure it needs, making a big bet that demand for rocket launches, orbital data centers, AI compute capacity and computer chips will materialize.

The company’s response to the challenges is to point to the huge potential market opportunities and fast-growing sales. SpaceX says it is on pace to hit a yearly revenue rate of $100 billion by December, mostly from its Starlink broadband service, but also from fast-growing AI sales. CEO Elon Musk says that internal projections show the company reaching $1 trillion in yearly revenue by 2030, which would be an astounding achievement, and frankly improbable. Capex spending is also buoyed by its $100 billion cash pile, which mostly stems from the company’s blockbuster initial public offering earlier this year.

The strategy behind all this building is to take the engineering prowess of SpaceX’s rocket scientists and deploy it elsewhere. There’s no telling what SpaceX will try to build next. For example, Musk is looking into building the blades of gas-powered turbines to accelerate new power generation for SpaceX’s growing AI data centers. S&P Global predicts the company’s yearly capex will be around $230 billion in both 2028 and 2029. We think there are good odds that the figure ends up far higher.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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John Miley
John Miley
Senior Associate Editor, The Kiplinger Letter

John Miley is a Senior Associate Editor at The Kiplinger Letter. He mainly covers AI, technology, telecom and education, but will jump on other business topics as needed. In his role, he provides timely forecasts about emerging technologies, business trends and government regulations. He also edits stories for the weekly publication and has written and edited email newsletters.

He holds a BA from Bates College and a master’s degree in magazine journalism from Northwestern University, where he specialized in business reporting. An avid runner and a former decathlete, he has written about fitness and competed in triathlons.