SpaceX drops 10% after announcing $16 billion in AI spending in the last quarter.

SpaceX’s stock plunged nearly 10% after the company announced it spent $16 billion on artificial intelligence during the last quarter, according to reports from El Mundo. The drop came just weeks after the company made its highly anticipated public offering (OPV) on July 12, 2026, which saw its shares rise over 20% within hours and solidify Elon Musk as the world's first trillionaire. Since then, however, the market has been volatile, with sharp fluctuations driven by investor sentiment toward Starlink, lunar exploration, and the integration of xAI. In the early weeks following the IPO, enthusiasm was high due to Starlink’s rapid expansion, doubling in size within a year, and Musk’s vision of providing global internet access. The company also benefited from renewed interest in space exploration, including human return to the Moon, and the ongoing integration of xAI into its operations. At one point, shares surged more than 50% above their initial listing price, reflecting optimism about the future of space-based services and AI-driven infrastructure. However, this momentum began to reverse in August. Despite surpassing analyst expectations across all metrics, including a 92% increase in revenue compared to the previous year, reaching nearly $8 billion, and a reduction in losses to $541 million, the market punished the company heavily for its massive investment in AI and infrastructure. This shift reflects growing concerns among investors about the pace and scale of these expenditures, particularly given that SpaceX, historically known for satellites and rockets, is now pivoting rapidly toward cloud services and broadband. Musk, who holds almost complete control of the company, invested over $18 billion in the second quarter alone, with nearly $16 billion allocated specifically to AI and data centers. This represents double the amount spent in the prior quarter. During a presentation as a publicly traded company, Musk emphasized that SpaceX is developing large-scale AI computing capacity faster than anyone else, highlighting the strategic importance of these investments. Following the release of financial figures, shares dropped between 7% and 12%, bringing them below the IPO price. The decline follows warnings from Musk about plans to expand data center power capacity from two gigawatts to up to 10 gigawatts by 2027, using primarily NVIDIA chips. Additionally, the first orbital data centers may begin operating as soon as next year. These ambitious goals have raised questions about the long-term viability of such projects, especially since they will likely continue to burn cash for some time. The situation mirrors past patterns observed in other major tech companies during their early days on the stock market. Investors, while optimistic about Starlink’s expanding global presence and 12 million customers, remain cautious about the speed of investment and the potential profitability of AI initiatives. There is consensus that substantial spending is necessary, but AI remains a speculative bet. Analysts suspect that many investors are wary of the risks associated with such aggressive growth strategies. Other tech giants are also making similar moves. Amazon recently projected a capital expenditure of around $220 billion for the year, led by AI-related projects. Alphabet, parent company of Google, increased its forecast for capital spending to between $195 billion and $205 billion. Microsoft expects to invest up to $175 billion in 2026, while Meta estimates between $130 billion and $145 billion. These figures underscore the broader industry trend of heavy investment in AI, even as the path to profitability remains uncertain. As the market continues to digest the implications of SpaceX’s strategy, the outcome will depend on whether the company can deliver tangible returns from its AI and infrastructure investments. With the possibility of a merger with Tesla still pending, the stakes for Musk and his team have never been higher. For now, the focus remains on how quickly and effectively SpaceX can translate its vast ambitions into sustainable business outcomes.