SpaceX Eyes Orbital AI Compute as Starship Reuse Pushes Costs Lower

Key Points

• Starship reuse is a key cost-reduction goal: Flight 13 demonstrated improved vehicle performance, while Flight 14 will carry production Starlink satellites. SpaceX plans to attempt recovery of both stages later this year, potentially lowering satellite deployment costs.
• SpaceX is expanding into orbital AI computing: The company targets its first orbital-compute satellite launches next year and believes the technology could reach cost parity with terrestrial data centers as Starship reuse improves. It also plans to increase terrestrial compute capacity from just over 2 gigawatts to 5–10 gigawatts next year.
• Connectivity businesses continue to broaden: Starlink is pursuing enterprise and mobility customers across more than 170 countries, while next-generation direct-to-device satellites could deliver full 5G-quality service beginning in the first half of 2028.

SpaceX NASDAQ: SPCX CFO Bret Johnsen outlined the company’s strategy across reusable launch systems, satellite connectivity and artificial intelligence infrastructure, emphasizing vertical integration as a central operating principle.

Speaking at an investor conference, Johnsen said the company’s approach extends from rocket manufacturing and satellite production to customer relationships, terrestrial computing infrastructure and planned orbital computing systems.

“We really believe that we are building the infrastructure of the future,” Johnsen said. He said the company adopted vertical integration early in its rocket and spacecraft operations because it could not find supply-chain providers moving at the pace or meeting the quality standards it required.

Starship milestones and reuse plans

Johnsen described Starship as central to the company’s businesses, including satellite broadband, direct-to-device mobile service and orbital computing. He said Flight 13 delivered demonstration V3 satellites, included a Raptor engine relight and achieved what he called the second stage’s “softest” and most precise ocean splashdown to date.

The company recovered the vehicle after the splashdown, allowing engineers to inspect it and assess how the heat shield performed, he said. Those findings are being incorporated into preparations for Flight 14 and subsequent missions.

Flight 14, expected later in the month, is set to be a revenue-generating mission carrying production V3 Starlink satellites, according to Johnsen. He added that the company expects attempts to recover both the first and second stages to be significant milestones later in the year.

Johnsen said achieving reuse of both Starship stages could materially reduce deployment costs. He cited SpaceX’s experience reusing Falcon 9 boosters, saying the company has reflown more than 500 rocket boosters to space.

Orbital and terrestrial AI compute

Johnsen said SpaceX is targeting its first orbital-compute satellite launches next year. The systems would largely use the V3 satellite platform being deployed for Starlink, with modified payloads and larger solar arrays, he said.

He argued that orbital computing could address power, cooling and permitting constraints facing terrestrial data-center development. While the company will continue expanding terrestrial computing capacity, he said orbital compute is “definitely the future” and may reach cost parity with terrestrial systems as soon as next year, contingent on progress in Starship reusability.

For terrestrial compute, Johnsen reiterated a target to deploy between 5 gigawatts and 10 gigawatts next year, following expected year-end capacity of slightly more than 2 gigawatts. He said the company has visibility into power, facilities and permitting because it controls some of the development itself.

Johnsen also said SpaceX had signed another hosting deal earlier in the month that is expected to generate about $1.11 billion per month beginning Dec. 1, or roughly $13 billion in annual recurring revenue. That agreement increased management’s conviction in its target of reaching $100 billion in annual recurring revenue by the end of the year, he said.

The company is NVIDIA-exclusive for compute infrastructure, Johnsen said, and expects its relationship with the chipmaker to support GPU allocation. He said SpaceX’s hosting arrangements have generally been structured as 90-day agreements with 90-day termination provisions, reflecting the company’s desire to preserve capacity for its own AI products over time.

Johnsen said management has forecast next-year compute monetization in a range of $30 to $50, adding that the company was at the high end of that range. He also cited relationships with Anthropic and Google.

AI products and connectivity growth

Johnsen said acquisitions involving AI and Cursor this year were aimed at accelerating time to market. He pointed to the release of Grok Bot and advances from Grok 4.5 to Grok 4.6, with Grok 4.7 expected soon, as evidence of a faster product cycle.

On Starlink broadband, Johnsen said the company has moved beyond its early consumer focus as it has developed the reliability and service-level capabilities needed to pursue enterprise customers. He said demand opportunities span fixed wireless applications and mobility markets including airlines, cruise ships, yachts and trains.

He said SpaceX has a large aircraft connectivity backlog and is increasing production to address it. The company operates Starlink broadband in more than 170 countries, according to Johnsen, although he said awareness remains a constraint in some markets outside the U.S.

Direct-to-device mobile plans

SpaceX plans to begin launching satellites for its next-generation direct-to-device network next year and expects it could activate service in the first half of 2028, Johnsen said. He characterized the planned offering as full 5G-quality service, compared with the company’s current first-generation service, which he described as primarily text messaging and light voice capability.

The company bought mid-band spectrum from EchoStar for U.S. operations, Johnsen said, and the spectrum has Federal Communications Commission approval for direct-from-space and terrestrial use. He said SpaceX could build terrestrial capabilities if needed or work with existing carriers.

Johnsen said the company’s near-term investment priorities are Starship and terrestrial compute. Over the longer term, he said orbital compute remains one of the company’s most misunderstood opportunities because management expects it to scale faster than many outside observers anticipate.

About SpaceX (NASDAQ:SPCX)

Space Exploration Technologies Corp. (SpaceX) is a privately held aerospace company founded in 2002 by Elon Musk. The company develops and operates launch vehicles, spacecraft and satellite systems, serving commercial, government and scientific customers.

SpaceX's principal products include the Falcon 9 and Falcon Heavy rockets, which are used to launch satellites, spacecraft and other payloads into orbit. The company also develops the Dragon spacecraft, which supports cargo and crew missions to low Earth orbit, including missions for NASA and other customers.

Through its Starlink business, SpaceX operates a large constellation of low Earth orbit satellites that provides broadband internet service to customers in numerous countries and regions.

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