SpaceX Revenue Soars 161% on AI Growth, Musk Weighs Tesla Merger

SpaceX's shares saw a significant increase in after-hours trading following the company's announcement of a 161% surge in quarterly revenue. This growth is largely attributed to its artificial intelligence business, which has now become the company's primary revenue source, surpassing its Starlink internet service.

During an earnings call, SpaceX CEO Elon Musk confirmed that special committees comprising independent directors have been formed by both SpaceX and Tesla to explore a potential merger. Musk stated that these discussions were initiated "at the request of shareholders." While Musk recused himself from the merger talks due to potential conflicts of interest, he expressed his personal support for the deal.

SpaceX reported third-quarter sales totaling $14.58 billion. Approximately $7.6 billion of this revenue came from its rapidly expanding AI division. In contrast, its Starlink-focused connectivity business generated about $5.2 billion. This marks a notable shift from 2025, when Starlink accounted for 61% of the company's revenue.

The company also reported a net profit of approximately $4.4 billion for the quarter, a significant turnaround from a $541 million loss in the preceding quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to roughly $8.8 billion.

Following these results, SpaceX shares climbed 4% to $154 in after-hours trading. The company's strong performance comes after its initial public offering in June, which raised about $85.7 billion and valued SpaceX at approximately $1.75 trillion. As of Tuesday's closing price, SpaceX's market capitalization was estimated at $2.01 trillion.

The company's AI division, which includes the Grok chatbot, the X social media platform, and a growing cloud computing operation, represented about 52% of SpaceX's third-quarter revenue. This is an increase from $2.56 billion in the second quarter and $818 million in the first quarter of the year. A substantial portion of this growth is derived from leasing computing capacity to external clients, establishing AI infrastructure as the company's fastest-growing revenue stream.

Musk indicated that the primary constraints on deploying superintelligence are related to power, cooling, and infrastructure, rather than semiconductor availability. He described SpaceX's capacity to build this infrastructure as akin to a "New York Yankees playing in Little League," suggesting their potential to outpace competitors significantly.

SpaceX has previously disclosed $14.1 billion in contracted AI cloud sales. Meanwhile, the Starlink connectivity business also showed strong performance, with revenue increasing by approximately 69% year-over-year, and operating income reaching roughly $2.4 billion. Starlink's subscriber base grew to 13.6 million users by the end of the third quarter.

Musk projected that Starlink could achieve bandwidth approximately 100 times greater than the current constellation within three years, with the deployment of more advanced satellites. He also noted that the most recent Starship mission, which carried 26 Starlink satellites, provided bandwidth equivalent to 10 Falcon 9 launches.

Despite its rapid expansion, SpaceX incurred significant capital expenditures, spending approximately $19.6 billion in the third quarter, with about $16.4 billion allocated to AI infrastructure.

The company plans to attempt catching both the Starship booster and spacecraft during its next flight, Flight 15, in November, a maneuver Musk described as a "massive technology milestone." He expressed confidence in the success of this attempt during the upcoming flight and indicated that SpaceX has further Starship launches scheduled before the year's end. Musk anticipates that Starship could begin launching weekly in the first half of next year, potentially increasing to twice weekly in the latter half.