Second-quarter revenue rose 92% to $7.8bn. Growth was broad-based across the three main divisions, with AI as the standout, where revenue more than tripled.
Operating losses narrowed to $143mn, from $970mn, as margins improved. Connectivity (Starlink) remains the only business unit to generate an operating profit, up 79% on last year.
Free cash outflow widened to $16.0bn as capital expenditure rose to $18.4bn, with the bulk directed toward the AI business. Net cash, including lease liabilities, was $60.6bn at the end of the quarter.
The shares fell 6.5% in early trading.
Our view
Second-quarter results strengthened the growth story, but they also sharpened the trade-off at the heart of the investment case. SpaceX is bringing AI compute online and monetising it faster than expected, suggesting the near-term revenue and cash flow opportunity is expanding. But that opportunity is pulling capital expenditure forward, increasing cash burn and execution risk – a key driver of the post results reaction.
SpaceX spans three main areas: Space, covering rockets, spacecraft and launches; Connectivity, led by Starlink; and AI, including Grok/Cursor, X and data centres. Together, they make SpaceX far broader than a traditional aerospace company, with real strategic advantages.
Starlink remains the most established business. It’s growing quickly, already profitable, and benefits from SpaceX designing, building and launching its own satellites. Rivals need to buy launch capacity; SpaceX controls its reusable rockets and launch network. That creates a powerful flywheel, with launch-scale supporting Starlink while its profits help fund other ventures.
But the near-term shape of the business is changing. 86% of capex in the second quarter went to the AI business as SpaceX morphs into an AI infrastructure giant with a space business attached. AI compute has become a competitive advantage, and strong demand to rent that capacity makes it the clearest route to monetise capital. That looks like a logical path while demand remains high, but the data centre buildout requires huge investment. The faster the opportunity develops, the more cash SpaceX burns.
The longer-term opportunity still leans heavily on Starship. Falcon rockets have already transformed launch economics, but a fully and rapidly reusable Starship could lower costs again, accelerate Starlink deployment, support new satellite services and eventually open the door to orbital compute. Major proof points are coming as SpaceX attempts to catch the upper stage. Success would be an important step towards full reusability, while setbacks could delay several parts of the wider strategy.
If anyone can solve these problems, SpaceX is at the front of the queue. But the engineering challenge is huge. Starship remains in development, orbital compute is commercially unproven, and delays or cost overruns could ripple across the investment case.
All in, SpaceX is an exceptional business with a huge opportunity ahead. Having retreated from its post-IPO highs, it’s less of a stretch to justify the moonshot valuation. But that still relies on multiple projects going to plan, and this is unproven technology in an inherently high-risk industry. We think more realistic outcomes include delays, cost overruns and technical setbacks. Volatility will likely continue, especially as new tranches of shares are released into the market.
Environmental, social and governance (ESG) risk
The aerospace and defence sector is high-risk in terms of ESG. Carbon emissions from products and services and product governance are key risk drivers. Data privacy, business ethics, security, and labour relations are also contributors to ESG risk.
According to Sustainalytics, SpaceX’s management of material ESG issues is weak.
Governance is probably SpaceX's biggest risk factor, given its dual-class share structure that gives Elon Musk around 85% of all voting rights, limiting other shareholders' ability to effect change.
Environmental risks are elevated by its launch and satellite businesses, with limited public disclosure on environmental management, emissions-reduction targets, or a broader sustainability strategy. Activities relating to its AI language models and X (formerly Twitter) add data privacy, cybersecurity and content moderation risks.
SpaceX key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.