CEO Elon Musk says SpaceX aims to significantly scale up its operations in 2028
SpaceX plans to make it much cheaper to operate space-based data centers through its Starship rocket.
SpaceX is using a new partnership with Nvidia to accelerate its plans for artificial-intelligence data centers in space - setting the stage for those to go into orbit as soon as next year.
The companies unveiled their deepened relationship last month, when SpaceX $(SPCX)$ CEO Elon Musk revealed that his company would exclusively use Nvidia chips going forward. On Monday, Musk said SpaceX aims to launch its first Starmind AI1 satellites by the fourth quarter of 2027 and "significantly scale" in the following year. In its prospectus, SpaceX had said it aimed for deployment in 2028.
"Our design is significantly simpler, lower cost, denser and lighter than a traditional rack," Musk said of the "space-optimized" system SpaceX designed with Nvidia (NVDA).
The benefits of space-based data centers, proponents say, are that companies can avoid regulatory red tape and community backlash. Critics say that Earth-based data centers will still be far cheaper to run for several years or more.
Wood Mackenzie, a research firm, estimates that a one-gigawatt orbital data center would cost $170 billion, more than triple the cost of a traditional data center. But costs are expected to come down over time as rocket launches also become cheaper, something SpaceX is working on with its Starship vehicle.
SpaceX also plans to expand the AI infrastructure powering its Grok chatbot and related services using Nvidia's Vera Rubin platform, according to Nvidia. Musk told investors earlier this month that SpaceX will receive a "very significant percentage" of Nvidia's graphic processing units in 2027.
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SpaceX plans to end 2026 with more than two gigawatts of AI computing power and reach "closer to 10 gigawatts" than five gigawatts by the end of next year, according to Musk. The company has data centers in Tennessee and Mississippi and is reportedly planning to build at least one new data center in Texas.
The company also plans to produce its AI satellites in Bastrop, Texas, and is working with Tesla $(TSLA)$ on a chipmaking project in the state. Those plans will be expensive: The companies plan to spend at least $16.8 billion on the initial stage of their Terafab project in Texas' Grimes County.
Morgan Stanley analyst Adam Jonas expects SpaceX to book about $53 billion in AI-related capital expenditures in 2026, along with another $130 billion in 2027. That comes out to $40 worth of capex per watt, Jonas said in a client note earlier this month. He rates SpaceX's stock a buy with a $300 price target.
"The industry is hurdling toward ever more compute demands," Musk told investors on Aug. 4, according to a transcript. "We're rapidly expanding our compute capacity to meet our own needs as Grok expands as well as those for other leading companies such as Google and Anthropic."
Nvidia on Wednesday is expected to report fiscal second-quarter earnings after the bell, and it could be a major market-moving event. Cantor Fitzgerald's C.J. Muse recently told clients that "it is time to close your eyes" and make a big bet on the stock.
Nvidia shares were down about 3% on Monday. SpaceX's stock was off around 1.7%.
-William Gavin
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