SpaceX Stock Crash as Musk’s AI Spending Spooks Wall Street

SpaceX shares plunged 10 percent Wednesday after Elon Musk’s newly public company revealed a staggering surge in artificial-intelligence spending.

The SpaceX Stock Crash came despite quarterly results that beat Wall Street’s expectations. Investors instead focused on the enormous cost of Musk’s effort to transform the rocket and satellite company into a major AI-computing provider.

SpaceX reported $7.8 billion in second-quarter revenue, a 92 percent increase from the same period last year and well above analysts’ estimate of approximately $6.9 billion. Its loss of nine cents per share was also substantially better than the 26-cent deficit expected by Wall Street.

Yet the stock sank to around $113 Wednesday morning, far below its $135 initial-public-offering price and almost half its June peak.

SpaceX Stock Crash Fueled by $18 Billion Spending Spree

The biggest shock was SpaceX’s exploding investment bill.

Infrastructure and research spending jumped from less than $3 billion a year earlier to approximately $18 billion in the latest quarter. Most of the money went toward artificial intelligence, data centers and computing capacity. Chief Financial Officer Bret Johnsen warned that similarly elevated spending could continue for at least the next two quarters.

SpaceX is trying to challenge established cloud-computing giants by renting out computing capacity built with Nvidia chips. Musk said the company expects to receive a “significant percentage” of Nvidia’s highly sought-after graphics processors next year.

Johnsen defended the strategy, arguing that AI-computing investments could repay themselves in less than one year.

But investors remain nervous. Across Wall Street, companies spending tens of billions on artificial intelligence are facing growing pressure to prove that those investments will produce sustainable profits rather than simply burn through cash.

SpaceX’s AI revenue reportedly increased 350 percent, suggesting the new business is beginning to generate money. Nevertheless, analysts warned that the company remains dependent on a relatively small group of major customers while continuing to consume enormous amounts of capital.

Starlink Delivers Strong Growth

SpaceX’s established satellite-internet operation provided the strongest part of the report.

Starlink subscriptions doubled from six million to 12 million, while revenue from the company’s connectivity business increased 66 percent. Musk suggested that Starlink could eventually provide most of the world’s internet access.

The company has also narrowed its losses. SpaceX reported a net deficit of $541 million, far below analysts’ expectations.

Musk nevertheless asked investors to look far beyond the current quarter. He predicted that SpaceX could reach $1 trillion in annual revenue by 2030—one year earlier than previously forecast.

“The question is how quickly they can grow and how large the costs become before reaching profitability,” former Tesla board member Steve Westly told CNBC.

Insider Share Sale Adds New Danger

The SpaceX Stock Crash could deepen Thursday when an insider lockup expires.

More than 900 million previously restricted shares are expected to become eligible for trading—more than doubling the number currently available on the market. Early investors and company insiders will therefore be able to sell at least part of their holdings.

That creates the risk of a fresh wave of selling.

SpaceX completed its record-breaking IPO in June, selling shares at $135 and raising approximately $85.7 billion after underwriters exercised their full allotment option. The stock initially surged, briefly pushing Musk’s fortune to unprecedented levels.

Since then, enthusiasm has cooled sharply.

Investors are now asking whether Musk promised too much—and whether the company’s rocket, satellite and AI ambitions can justify its giant valuation.

SpaceX delivered stronger revenue, faster Starlink growth and a smaller-than-expected loss. But Wall Street delivered its own verdict: Even spectacular growth may not be enough when the price of Musk’s vision reaches $18 billion in a single quarter.