SpaceX burns cash on AI despite Starlink profits

Elon Musk is pitching SpaceX as humanity’s path to Mars—but behind the scenes, the company is rapidly transforming into something else: an AI-driven business with a growing appetite for cash.

At the center of this shift is Starlink, the satellite broadband unit that has become SpaceX’s financial backbone. The business doubled its operating income to $4.42 billion last year, helping offset heavy losses in other parts of the company, News.Az reports, citing Reuters.

But those profits are increasingly being redirected into artificial intelligence.

In 2025, SpaceX poured 61% of its total capital spending—out of $20.74 billion—into its AI division, which includes Musk’s xAI initiative. Despite the massive investment, the unit posted a $6.4 billion operating loss, highlighting the scale of the gamble.

The company’s strategy is ambitious: building a network of space-based data centers and positioning itself as a major player in the global AI race. Yet this transformation comes with risks, especially as spending continues to outpace revenue growth.

Unlike tech giants such as Alphabet, Microsoft, Amazon, Meta, and Oracle—which generate massive cash flows from advertising, cloud computing, and enterprise software—SpaceX relies heavily on rockets and satellites to fund its expansion.

That difference leaves SpaceX with a financial profile closer to a fast-growing startup than a mature tech giant.

As the company prepares what could be one of the largest IPOs in history, it is seeking to raise $75 billion at a valuation of $1.75 trillion. However, analysts warn that the funding may only provide a few years of runway if AI revenues fail to scale quickly enough.

The challenge is compounded by the sheer size of the competition. Big Tech companies are expected to collectively spend more than $600 billion on AI this year alone, far outpacing SpaceX’s already aggressive investments.

There are also new uncertainties on the horizon. A potential deal with Cursor—valued at up to $60 billion—could further increase capital needs. Even a partial cash component in such a deal might force SpaceX to raise additional funds sooner than expected or scale back its spending plans.

For now, the company’s vision remains bold: capturing a share of a projected $28.5 trillion market tied largely to AI. But investors are watching closely for signs that the business model can deliver sustainable returns.

Until then, SpaceX’s future may depend on a delicate balance—whether Starlink’s steady profits can continue to fuel an AI ambition that is growing faster, and costing more, than ever before.

News.Az 

By Aysel Mammadzada