Rick Orford, The Motley Fool
5 min read
On its Oct. 20 third-quarter earnings call, SpaceX (NASDAQ: SPCX) said that new compute investments are paying for themselves in under a year. But GE Vernova (NYSE: GEV) recently fell as much as 9.3% and Bloom Energy (NYSE: BE) dropped 6.3% on financing fears.
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GE Vernova’s slide followed analyst target cuts and a partly debt-funded $9 billion acquisition. Bloom Energy’s drop followed negative free cash flow (FCF) last quarter, despite record revenue.
That could make SpaceX an interesting outlier in a more cautious market.
Here’s what management said about how quickly new compute pays back.
SpaceX says new compute pays for itself in under a year
During that call, Elon Musk and his management team offered upbeat guidance on the company’s AI business.
According to the company’s CFO, new compute deployments are currently seeing a payback period of less than a year. He also noted that pricing was tracking slightly above the high end of the $30-$50 per-watt range discussed in the previous quarter.
That’s an encouraging development in an industry where investors are more concerned about the enormous investments required for the AI build-out. A shorter payback period means companies can recover their initial investment much faster, allowing them to reinvest capital in additional capacity rather than relying on external financing.
Management also said it was seeing strong customer interest in compute capacity, with cloud service agreements providing an additional revenue stream. Plus, it said the company will remain demand-led rather than simply building infrastructure without considering customer needs, noting that deployment decisions would be aligned with near-term demand.
Beyond that, what makes SpaceX interesting is that its AI ambitions are supported by several businesses. While Starlink provides a growing connectivity business, its expanding AI business creates opportunities to monetize both its cloud capacity and AI products. The company is also investing in its own semiconductor capabilities through its planned Terafab project, with management outlining a long-term roadmap toward high-volume chip production.
That should put the company in a better position as it expands further into AI.
SpaceX is building an AI business alongside Starlink
