SpaceX, a leading private aerospace manufacturer and space transport services company, reported a significant increase in AI revenue, which more than tripled from a year earlier. However, investors remain concerned about the company’s costly investments in data centers and Nvidia chips, which could overshadow the company’s early returns.

Investor Concerns

Despite the company’s faster-than-expected returns from its AI spending, investors are worried about how long its profitable Starlink business can continue to bankroll costly investments. The company’s shares fell 9% in premarket trading on Wednesday, dropping well below their $135 IPO price in less than two months since the company’s blockbuster debut.

Chief Financial Officer Bret Johnsen said the economics of those investments were improving rapidly, but also signaled that AI spending would remain elevated. The company reported quarterly capital spending on AI climbed to $15.8 billion, which is roughly a fifth of the $85.7 billion it raised in its June IPO.

AI Revenue Growth

SpaceX’s AI business generated $2.6 billion in second-quarter revenue, up more than three-fold from a year earlier. The company has signed another $6.7 billion in cloud computing contracts since the end of the second quarter and is on track to reach a $100 billion annualized revenue run rate by the end of the year.

The company’s executives said demand for AI computing continues to outstrip supply, and they expect to end the year with more than two gigawatts of compute capacity. If demand remains strong enough to keep that infrastructure fully utilized, AI could increasingly fund its own growth rather than relying on Starlink’s cash generation.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.