- Elon Musk indicated that SpaceX's capital expenditure efficiency is underestimated.
- Analysts predict that SpaceX will need to spend approximately $470 billion over the next five quarters.
- Musk stated that new computing equipment could achieve self-profitability within a year.
- SpaceX plans to operate up to 1 million AI satellites, with deployment expected to begin in 2027.
Elon Musk is addressing one of the major concerns impacting SpaceX's stock. In a response 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 forecast that SpaceX will need to spend approximately $470 billion over the next five quarters. Reidhead's estimate is based on the targets set by SpaceX during its 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 a nominal computing capacity of 1.7 gigawatts 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 by 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 achieve self-profitability within a year, while Musk mentioned that this timeframe might be shortened to six months next year. Based on this growth rate, Reidhead believes that approximately $230 billion of the $470 billion expenditure could come from operating cash flow, about $60 billion from SpaceX's roughly $90 billion cash reserves, with the remaining approximately $180 billion needing to be addressed through borrowing.
SpaceX's Capital Expenditure Forecast
Musk confirmed last week that SpaceX has completed a new $40 billion debt financing for the purchase of GPUs. Ground construction is not the ultimate goal; it is merely a source of funding needed for the venture into orbit.
In a response on Friday to a model chart created by Sequoia partner Shaun Maguire, Musk wrote, "Ground computing will be insignificant compared to orbital computing," adding that the monthly deployment of orbital computing "could surpass ground computing by the end of 2028 and far exceed 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 expected to consume $77.8 billion in cash this year and $122.6 billion next year.
Then, in 2028, it is projected to achieve $114.9 billion in positive cash flow. Musk's response to the model was, "I think we can do better."
Future AI Satellite Plans
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, with deployment of thousands of units expected to begin by the end of 2027 from the Gigasat factory located in Bastrop, Texas. 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 test is financial: SpaceX forecasts revenue for the first quarter of 2027 to be between $33 billion and $37 billion, more than double the $14.58 billion from the third quarter, and Musk retweeted this forecast again on Sunday morning.
How Musk Addresses Capital Expenditure Concerns
Elon Musk expresses confidence in SpaceX's capital expenditure efficiency, believing that current forecasts are overly pessimistic. As the company plans to significantly increase computing capacity, future capital expenditures will be a key factor. The AI satellite plans mentioned by Musk demonstrate SpaceX's ambitions for the future market, particularly in the potential of orbital computing. These plans not only require substantial financial support but also necessitate reaching new heights in technology and launch capabilities, which are crucial for the company's long-term development.