SpaceX Q3 Revenue Surges 161% as AI Business Overtakes Starlink for First Time, Musk Confirms Tesla Merger Committees

SpaceX delivered a sweeping third-quarter earnings beat after the bell on October 20, reporting revenue of $14.58 billion against the $12.87 billion Wall Street expected, a 161% increase from the same period a year earlier. Net income swung to $4.40 billion from a $1.05 billion loss, adjusted EBITDA jumped 306% to $8.81 billion, and EPS of $0.35 beat the $0.13 consensus by a wide margin. Shares climbed from roughly $143 to $159 in after-hours trading, a gain of about 11%.

The most striking development inside the results was the ascent of the Super Intelligence segment, SpaceX's umbrella for AI compute, data centers, and Grok-related products. SI revenue hit $7.56 billion, up 830% year over year and ahead of the $6.3 billion estimate, making it the first quarter in which AI revenue exceeded the company's Starlink connectivity business. The segment swung to $431 million in operating income from a $1.72 billion loss a year earlier. Growth was driven by new cloud services agreements, the $60 billion acquisition of coding tool Cursor, which closed August 14 and contributed $608 million of revenue, and rapid adoption of the newly introduced Grok Bot, an always-on agentic AI system. Musk said on the earnings call that Grok Bot may ultimately consume the majority of SpaceX's AI compute capacity, and he projected annual recurring revenue of $500 billion to $1 trillion by the end of 2027.

Connectivity revenue, the Starlink satellite internet business, rose 69% to $5.25 billion, with subscribers reaching 13.6 million as of September 30, up from 7.2 million a year earlier and 12.0 million at the end of June. Consumer average revenue per user slipped to $69 a month from $83 a year ago. Space segment revenue grew a modest 6% to $1.77 billion, with the segment posting a $7 million operating loss compared with $259 million of profit a year earlier. The quarter included the first revenue-generating Starship mission, which delivered 26 Starlink V3 satellites carrying roughly ten times the downlink capacity of a standard Falcon 9 launch. Total launches came in at 35, below the 41 analysts expected, and mass to orbit of 476 metric tons missed the 559-metric-ton estimate. Total capital expenditure was $19.59 billion, essentially in line with the $19.6 billion forecast, while AI-specific capex of $16.44 billion came in slightly below the $16.9 billion estimate. SpaceX ended the quarter with $51.3 billion in cash and $38.6 billion in marketable securities.

Musk also disclosed during the call that both SpaceX and Tesla have formed special committees to explore a potential merger, a combination that would rank as the largest corporate tie-up in history. He described discussions as feeling like "tap-dancing through a minefield," said a deal is not a certainty, but added, "Do I think it would be a good idea? Yes." Tesla shares rose on the news. On the AI infrastructure buildout, Musk said SpaceX is adding roughly 200,000 Nvidia GB300 GPUs per month through year-end, expects 2.5 to 3 gigawatts of compute online by December 31, and targets approximately 13 gigawatts by the close of 2027, with a 440,000-GPU Nvidia Vera Rubin training cluster planned for completion by the end of the second quarter of 2027.