SpaceX's 'space' business is now just 10% of revenue as AI compute dominates

SpaceX's first quarterly report as a public company upends the 'space company' narrative. The rocket segment didn't break $1B in revenue, contributing barely 10% of the total. Instead, Starlink's satellite internet led with $4.2B, and the real growth engine is leasing AI compute capacity—what SpaceX calls its neocloud business. CFO Bret Johnsen said deals with Google, Anthropic, and Reflection AI put the company on track for $100B annualized revenue, with Musk claiming that target is "not a question mark."

That pivot came after Musk acquired xAI and built the Colossus 1 data center in Memphis for Grok—but xAI struggled with latency and chip bottlenecks, so SpaceX rented the capacity out instead. Analysts expect neocloud spending to hit $65B next year, making SpaceX a direct competitor to CoreWeave and Nebius. Space launch now plays second fiddle, with SpaceX acting as its own biggest rocket customer. The irony is stark: the company's hype still revolves around rockets, but its money is made from bare-metal compute and satellite internet—businesses subject to commodity pricing and rapid hardware obsolescence.