SpaceX’s AI segment now drives more than half its revenue. Here’s what advisors should watch next

SpaceX’s latest quarterly results have once again thrust Elon Musk’s space company into the spotlight, and have given advisors and their clients some key catalysts to watch over the coming months.

The space exploration company delivered third-quarter revenue of $14.6 billion, up 161% year over year, fueled by growth of its Super Intelligence, or AI, segment. Net income was $4.4 billion, after a net loss of $1.1 billion in the same period last year. SpaceX’s adjusted earnings per share were 45 cents, according to IBES calculations, well above the IBES analyst estimate of 13 cents per share.

The earnings were just SpaceX’s second as a public company. In June the company made its hugely anticipated debut on the public markets in the biggest IPO of all time.

“I think Elon and SpaceX are starting to deliver on the potential, and it has gone from a pure hype story to suddenly delivering on results,” Paul Kim, CEO and co-founder of Simplify Asset Management, told InvestmentNews at his firm’s Entering The Fall event at the New York Stock Exchange Wednesday. “Elon has been a tough guy to bet against and days like yesterday are why.”

Boosted by the results – and possibly residual buzz from the recent demo of the flying Tesla roadster, featuring thruster technology from SpaceX – the aerospace and AI company’s stock is surging more than 9% Wednesday, outpacing the S&P 500 Index’s gain of 0.6%.

SpaceX delivered the quarter the bulls wanted, at least on the top line, according to Will Rhind, founder and CEO of GraniteShares. “The story now is all about AI,” he said. “The Super Intelligence (SI) segment grew more than 800% to $7.6 billion and is already over half of group revenue, so the compute contracts signed earlier this year are turning into revenue faster than a lot of people thought.”

Investors who used GraniteShares 2x Long SpaceX Daily ETF (Ticker: SPAL) to position for this result will see the beat as confirmation that the AI conversion story is gathering steam, Rhind added.

Comments from SpaceX CEO Elon Musk during the earnings call about a possible merger between the space company and Tesla are also attracting plenty of attention Wednesday.

This was another impressive quarter from SpaceX, according to Andrew Chanin, CEO of ProcureAM, issuer of the Procure Space ETF (Ticker: UFO), who highlighted the ambitious tone of the company’s earnings call.

“Key themes were growth in revenues and capabilities, strong compute demand, a vision for competing with mobile wireless providers, and vertical integration,” he said. “There is no Tesla merger that is imminent, but it is being explored.”

During the conference call, Musk also said that the 15th test launch of the company’s Starship mega-rocket will take place next month. Citing Musk’s comments, Teslarati reports that, for the first time, SpaceX plans to catch both the Super Heavy rocket booster and the Starship orbital vehicle.

“A successful Starship 15 launch could help solidify them as the leader in launch,” said ProcureAM’s Chanin.  Additionally, their ability to successfully vertically integrate could further set them apart from many competitors in many lines of business even beyond launch and space."

“The print provides further evidence of SPCX’s execution and the tangible benefits of its incumbency, scale, unit economics, vertical integration, and AI compute primacy,” added Paul Golding, senior digital infrastructure and payments analyst at Macquarie.