**SpaceX’s AI Profitability Test**

**SpaceX revenue jumped 161% to $14.6 billion**, with operating income of $2.8 billion. Its AI segment also reported $431 million in operating income, sending the stock up 8% and supporting the bull case for AI cloud providers.

The cash picture is less convincing. **Free cash flow burn was nearly $10 billion**, above the expected $8.6 billion, while the AI business alone spent $16.4 billion in the quarter. SpaceX is valued at $2.1 trillion, or about 36 times annualized revenue and 55 times annualized adjusted EBITDA. That is almost twice the combined value of the 7 largest defense companies.

**SpaceX has effectively turned its AI business into a neocloud**. Its xAI model trails Anthropic and OpenAI on reported token spend, so the company is selling computing power to other AI players. Musk expects 10 gigawatts of additional compute in 2027. 

Jim Chanos estimates that cutting-edge data centers would require more than $500 billion in capital spending, while SpaceX says debt financing is available. Higher borrowing costs would make profitability harder to reach, as they have for CoreWeave.

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