Elon Musk is addressing one of the major concerns affecting SpaceX's stock. In a reply on the X platform on Sunday, Musk stated that the company's capital expenditure efficiency is severely underestimated. He was responding to a post from Milk Road Stocks, which cited analyst Kyle Reidhead's prediction that SpaceX will need to spend about $470 billion over the next five quarters. Reidhead's estimate is based on the goals set during SpaceX's third-quarter earnings call: achieving 13 gigawatts or more of computing power by the end of 2027.
According to his analysis, Nvidia will account for 83% to 89% of the expenditure. SpaceX had 1.7 gigawatts of nominal computing power at the end of the quarter and is expected to have capital expenditures between $35 billion and $40 billion in the fourth quarter, according to a report from Teslarati.
Musk did not attach specific numbers to his statement, but the earnings call provided relevant arguments. Chief Financial Officer Bret Johnsen stated that, based on current prices, new computing equipment could become self-sustaining within a year, while Musk mentioned that this timeframe could be shortened to six months next year. Based on this growth rate, Reidhead believes that about $230 billion of the $470 billion expenditure could come from operating cash flow, approximately $60 billion from SpaceX's roughly $90 billion cash reserves, and the remaining approximately $180 billion would need to be addressed through borrowing.
Musk confirmed last week that SpaceX has completed a new $40 billion debt financing to purchase GPUs. Ground infrastructure is not the final goal; it is merely a source of funding needed for entering orbit.
SpaceX Expects Significant Growth by 2028
In a reply to a SpaceX model chart created by Sequoia partner Shaun Maguire on Friday, Musk wrote, "Ground computing will be trivial compared to orbital computing," adding that the monthly deployment of orbital computing "could exceed ground computing by the end of 2028 and far surpass it in 2029." Maguire's model shows that the growth path is quite steep. The model predicts capital expenditures will rise from $88 billion this year to $290 billion in 2027 and $369 billion in 2028, with SpaceX consuming $77.8 billion in cash this year and $122.6 billion next year.
Then, in 2028, it is expected to achieve $114.9 billion in positive cash flow. Musk's response to the model was, "I think we can do better."
The orbital component of the plan is realized through Starmind. SpaceX plans to operate up to 1 million AI satellites, which will fly in groups of about 10, connected by approximately 10 terabits of bandwidth, and plans to start deploying thousands of units from the Gigasat factory located in Bastrop, Texas, by the end of 2027. Musk stated that each Starmind spacecraft will carry over 250 kW of solar power. Achieving this goal depends on launch volume.
Maguire's model assumes there will be 250 Starship launches in 2028, a significant increase from 2 this year and 38 next year. The current challenge is financial: SpaceX forecasts first-quarter revenue for 2027 to be between $33 billion and $37 billion, more than double the $14.58 billion from the third quarter, and Musk again retweeted this forecast on Sunday morning.