SpaceX's first quarterly report shows extreme disparity: revenue surged 92% year-over-year to $7.8 billion, while AI capital expenditures for the quarter reached $15.8 billion, exceeding NVIDIA's full-year R&D budget.Author and source: Wall Street Journal
SpaceX's first quarterly earnings report since its listing reveals an extreme dichotomy.
Financial statements show that SpaceX generated $7.8 billion in revenue during the second quarter, a 92% increase compared to $4.1 billion in the same period last year; adjusted EBITDA reached $3.5 billion, significantly higher than $1.2 billion in the corresponding period last year. However, SpaceX’s capital expenditures in the second quarter totaled $18.4 billion, 2.4 times its revenue during the same period, with $15.8 billion allocated specifically to AI-related capital spending—equivalent to an average daily expenditure of over $170 million.
During the earnings call, Musk and CFO Bret Johnsen spent over an hour attempting to reassure the market, providing detailed explanations of where the $18.4 billion quarterly capital expenditure was allocated and its potential returns. Although management emphasized that the massive current investment in AI computing power would quickly recoup its costs, the market was clearly unconvinced by this long-term promise, as the substantial spending had not yet translated into tangible profits on the income statement—leading to a post-market drop of over 7% in SpaceX’s stock price.
Another key factor intensifying market risk-off sentiment is the upcoming wave of large-scale lock-up expirations. On August 6, 910 million shares of insider holdings at SpaceX are set to unlock, amounting to 1.4 times the current float. Management’s lack of proactive communication regarding this liquidity impact—only briefly addressing it during the Q&A session—has further deepened investor uncertainty.
Starlink generated a daily net profit of $18 million. In the second quarter, Starlink revenue reached $4.29 billion, a 66% year-over-year increase. Operating profit was $1.66 billion, up 79% year-over-year, with a profit margin of 38.6%. Net user additions totaled 1.7 million, bringing the total user base to 12 million across 167 countries. Enterprise and government revenue reached $1.8 billion, more than doubling year-over-year.
Figure 1: Revenue and Operating Profit Comparison for SpaceX's Three Business Segments in Q2 FY2026 (Source: SpaceX SEC 8-K)
The U.S. government awarded over $6 billion in contracts during the second quarter. American Airlines signed an in-flight Wi-Fi agreement. President Gwynne Shotwell said on the earnings call that Starlink aims to become the fourth-largest carrier in the U.S., following AT&T, Verizon, and T-Mobile—whose combined annual revenues total approximately $600 billion.
ARPU has stabilized at $66. This figure was $85 in the second quarter last year and remained at $66 in the first quarter this year. The regions with the fastest user growth—Latin America, Africa, and Southeast Asia—have pricing significantly lower than North America, pulling down the average. However, a substantial portion of the 1.7 million new users also comes from aviation, maritime, and government clients, whose contract values per user are much higher than those of individual users.
Starlink's profit growth rate (79%) outpaces its revenue growth rate (66%), reflecting the benefits of fixed cost amortization. Currently, over 10,200 satellites are in orbit, with each V3 broadband satellite offering a downlink capacity of 1 Tbps—ten times that of V2. Shotwell stated that V3 satellite launches will not ramp up until mid-next year, at which point bandwidth will see a quantum leap.
If viewed in isolation, Starlink, on an annualized second-quarter basis, is a telecommunications company with $17.2 billion in annual revenue and $6.6 billion in operating profit. T-Mobile, the fourth-largest U.S. carrier, generated $81 billion in revenue and $13 billion in profit last year. Starlink is still far from that scale, but its growth rate is an order of magnitude higher.
AI generated $2.56 billion in revenue, a 247% year-over-year increase and a 213% quarter-over-quarter increase, with daily costs of $170 million. Cloud service agreements contributed approximately $1.6 billion, while AI solution revenue surged from $475 million in Q1 to $2.194 billion.
Adjusted EBITDA turned positive for the first time, rising from a loss of $609 million in Q1 to a profit of $1.146 billion. However, operating loss still stood at $1.257 billion—depreciation and amortization have not yet been accounted for.
What’s truly causing market tension is capital expenditure. The AI sector spent $15.8 billion in Q2. When compared to NVIDIA’s full-year R&D budget last year ($12.9 billion) and Meta’s full-year capital expenditure last year ($27.2 billion, covering all business segments), SpaceX’s quarterly investment in AI exceeded NVIDIA’s entire annual R&D spending and approached 60% of Meta’s total annual spending.
Figure 2: SpaceX AI segment capital expenditures vs. revenue trend (Source: SpaceX SEC filings)
Most of this funding is directed toward the Colossus data center in Memphis, Tennessee. As of the end of the second quarter, the nominal computing capacity was 1.4 gigawatts, with a year-end target of 2 gigawatts. When asked about long-term plans during the earnings call, Musk stated that the internal interim goal is to reach 20 gigawatts in power and cooling capacity by the end of 2027, though he personally believes the actual implementation will be around 15 gigawatts. That represents roughly a tenfold increase from 1.4 to 15.
CFO Johnson provided a figure during the earnings call: the payback period for current additional hashing power investments is less than one year. He said capital expenditures can essentially be treated as operating expenses—meaning that, based on current customer contract prices and volumes, the money invested today will be recovered within 12 months.
In the first three weeks of Q3, the company signed an additional $6.7 billion in cloud contracts, with a service period of approximately six months, billing to begin in October.
But $15.8 billion is money already spent; $6.7 billion is still just contractual. More than one analyst pressed the same logic on the call: You say the payback period is under a year, but last quarter you spent $7.7 billion—combined, that’s $23.5 billion over two quarters. When will we see corresponding returns on the income statement?
Management has not provided a specific timeline. Musk simply stated that by December, the company’s recurring revenue, annualized based on that month’s revenue, will reach $100 billion. He added that the actual figure could be higher. The internal target of $1 trillion in revenue has been moved up from 2031 to 2030, with a "non-zero probability" of achieving it in 2029—his exact words.
The market clearly has little interest in the "non-zero probability" of future events. The immediate concern is more specific: on tomorrow (August 6), 910 million shares of insider holdings will be unlocked, equivalent to 1.4 times the current float. Management did not mention this issue at all during the call until they were directly questioned during the Q&A session, at which point they gave only a brief response.
Starship continues to burn cash; launch revenue reached $962 million, a 29% year-over-year increase, but operating losses amounted to $542 million. Thirty-eight launches were completed in the second quarter, with the primary driver of the losses being Starship.
Over the past 90 days, Starship V3 completed two successful flights: the 13th validated core capabilities for orbital missions and catch recovery at the launch tower, and the 14th successfully deployed Starlink V3 satellites into operational orbit for the first time.
Thermal protection system issue—described by Musk himself as Starship’s biggest technical challenge—he says has been resolved. The next step is to attempt simultaneous recovery of the first-stage booster and the spacecraft during the next test flight at the end of this month.
R&D expenses increased by $389 million year-over-year, and the aerospace segment’s adjusted EBITDA was negative $200 million. Musk’s goal is to achieve at least one Starship launch per day within a year, reducing orbital costs to less than 1% of traditional methods. His exact words were: if you were to draw a bar chart of global orbital tonnage, competitors would be just one pixel high—assuming the chart could even fit SpaceX itself.
This quarterly report reveals three entirely different tensions pulling against each other—whether Musk can simultaneously fight three wars.
Starlink is profitable and rapidly so. With $1.66 billion in operating profit from 12 million users, Gwynne Shotwell aims to become the fourth-largest carrier; ARPU has stabilized, the V3 satellites have yet to drive a qualitative shift, and enterprise growth is nearly double that of consumer growth. This is a business worthy of independent valuation.
AI is spending aggressively—$15.8 billion per quarter, with a theoretical payback period of less than a year. In Q3, $6.7 billion in new contracts were signed, and token consumption tripled after the release of Grok 4.5. The power leasing agreement with Anthropic amounts to $1.25 billion per month through 2029. All these signals point in one direction: demand is real. But accounting-wise, the $15.8 billion has already been recorded as an expense, while profits haven’t caught up yet. This is the gap Johnson refers to—the difference between “like an operating expense” and what investors see as “a black hole.”
SpaceX is caught in the middle. The technical progress of Starship is real—thermal shield issues have been resolved, two successful flights completed, and V3 satellites deployed into orbit—but the R&D bills are also real. The return logic for this segment is the longest-term: things will only improve once launch costs drop to 1%.
With control of over 82% of the voting rights, Musk is attempting to balance three distinct commercial tensions: Starlink’s rapid profitability, AI’s aggressive expansion, and Starship’s long-term development. However, the market is still waiting for a clear answer on whether one company can successfully win all three battles.
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