SpaceX: Lift Off!

SpaceX has achieved leading expertise in three areas: space, connectivity, and AI. These capabilities, when put together, are far more than a sum of parts.

Space: The foundation of SpaceX’s success has been its ability to reach space cheaply and reliably. Through the pioneering development of reusable booster rockets, the company has dramatically reduced the cost of access to orbit, supplementing a primarily government-driven space launch market with robust commercial-driven demand. The company’s innovations have paved the way for groundbreaking commercial space missions, including the first private and commercial human spaceflight missions, the first commercial spacewalk, and several government and private astronaut missions to the International Space Station (ISS). A SpaceX rocket lifts off, on average, three times a week, and the company accounts for more than 80% of the mass carried into orbit each year.¹

Connectivity: SpaceX has used its rocket capabilities to deploy a satellite network (Starlink), which offers fast internet access to millions of users across all seven continents and oceans. As of September 2026, the network has grown to more than 11,000² satellites, and the number of subscribers exceeds 13 million (more than double the subscribers at the close of 2024). An overwhelming majority of active satellites in orbit today are operated by SpaceX. The company’s goal is to extend this service to the entire surface of Earth, where more than 3 billion people lack access to fast internet.

AI: SpaceX is drawing upon its capabilities in rockets, satellite technology, and terrestrial data centers to develop its AI business. The company’s frontier model, Grok, is integrated with the X platform, which provides it with direct, real-time information. Ultimately, SpaceX believes its access to this and other sources of data, along with the efficacy of its data centers, will help it develop leading AI models that can deliver solutions to businesses, consumers, governments, and society. In addition, SpaceX has developed infrastructure to help meet demand for compute, which has been growing sharply and, in the view of the company, will exceed capacity on Earth. Ultimately, SpaceX aims to deploy a network in space that, using energy from the sun and cooled by space, could serve as massive AI data centers.

In hindsight, SpaceX’s development may seem like a natural progression. In reality, the company built expertise, scale, and proficiency to meet opportunities that, in many cases, did not yet exist. SpaceX was founded five years before the iPhone and two decades before ChatGPT, but the company is now a prime beneficiary of advancements in mobile communications and AI.

Today, we believe that SpaceX is even more favorably positioned to benefit from the secular growth trends—many of them still over the horizon—that will transform the global economy and beyond. Space, according to the company’s IPO filing, “represents the largest economic frontier in human history.” We strongly agree. Unlike most companies, which are constrained by activity on Earth, SpaceX’s long-term total addressable market extends into a multiplanetary future and the space economy. Over time, these could represent additional multi-trillion-dollar economic opportunities.

Falcon 9 Launch and Reusability

The Falcon 9, SpaceX’s “workhorse” rocket, has redefined the space launch market by offering more reliable and more available access to space at a fraction of the cost. SpaceX’s newest rocket, Starship V3, promises to revolutionize space access further by reducing costs by orders of magnitude over time.

The dominance of SpaceX’s launch segment is demonstrated by a record 165 Falcon rocket launches in 2025 and 114 through early October 2026, accounting for about 80% of global mass to orbit. (China, in comparison, achieved 93 orbital space launches in 2025 and 70 through early October, accounting for 10% to 15% of global mass to orbit.³) The 165 Falcon missions in a single year easily surpass the 135 Space Shuttle missions flown by NASA over a 30-year period.⁴ This increased launch cadence presents SpaceX with multiple advantages, including greater revenue potential, improved Starlink deployment efficiency, and reduced launch costs.

Central to SpaceX’s cost advantage is the reusability of its hardware—most notably boosters—which the company recovers, refurbishes, and reflies many times instead of discarding after a single use. Since its inception, SpaceX has launched more than 705 times, and about 85% of those missions have leveraged a flight-proven (reused) booster. As of September 2026, SpaceX had already launched a fleet of seven boosters, each flying at least 25 times.⁵ SpaceX’s crewed Dragon capsule has been reused 36 times.⁶

Spaceflight that historically cost billions per launch now costs in the tens of millions. The first version of Falcon 9 in 2010 had a launch cost of approximately $2,700 per kilogram, an 85% reduction from the historical cost of $18,500 per kilogram. The Falcon Heavy in 2018 further reduced this cost to approximately $1,400 per kilogram.⁷

SpaceX Falcon 9 rocket (Photo: SpaceX)

Starship

SpaceX is a proven disruptor and its own fiercest competitor. Despite being the clear leader in launch, SpaceX’s mission and innovation culture continue to drive the technology forward.

Starship, SpaceX’s revolutionary new launch vehicle, is poised to significantly expand SpaceX’s growth opportunities and strengthen its competitive position. When fully operational, Starship promises an unparalleled reduction in launch costs, enhanced availability, and expanded volumetric and gravitational capabilities for payloads destined for low-Earth orbit, the Moon, and eventually Mars.

Standing 407 feet and producing an unprecedented thrust of over 16 million pounds, Starship has earned its title as the largest and most powerful rocket ever flown. This behemoth is expected to enhance SpaceX’s reusability-driven efficiencies by becoming the world’s first fully and rapidly reusable rocket, while pushing the boundaries of orbital vehicle performance. With an anticipated payload capacity of up to 200 metric tons, in-orbit refueling capabilities, and a reliable and rapidly reusable architecture, Starship will allow the transport of larger payloads deeper into space than ever before.⁸

Starship V3 will launch 100 tons of payload to orbit in a reusable configuration and up to 400 tons as an expendable vehicle,⁹ significantly more than Falcon 9’s capacity of 17 to 23 tons.¹⁰ The efficiencies gained by Starship will be transformational, driving a substantial decrease from Falcon 9’s cost and lowering the price of launching a kilogram to low-Earth orbit to a fraction of today’s price.

Starship’s test Flight 14, which took place on September 28, was historic. It was the first Starship to achieve orbit successfully, to generate revenue, and to deliver a meaningful payload—26 Starlink satellites. The craft navigated reentry and splashed down in the Pacific Ocean (the booster detached and landed earlier in the Gulf of Mexico). The flight was cut short due to engine issues on the ascent and reentry, but the mission was a success. It provided SpaceX with critical test data and represented an important next step in Starship development.

In the coming years, SpaceX expects to meaningfully accelerate its launch rate and replace the Falcon 9. The goal for the next Starship (V4) is to launch “every hour,” said Musk, a schedule that would result in thousands of flights per year for SpaceX’s fleet.¹¹

The company has already been awarded contracts leveraging Starship’s unique capabilities, including multi-billion-dollar awards for the Human Landing System as part of NASA’s Artemis Program, which aims to return U.S. astronauts to the Moon.

“Ultimately, I think Starship will be the thing that takes us over the top as one of the most valuable companies,” said SpaceX President and Chief Operating Officer Gwynne Shotwell. “We can’t even envision what Starship is going to do to humanity and human … lives, and I think that will be the most valuable part of SpaceX.”¹²

The depth and range of SpaceX’s capabilities were on display in October. After launching test Flight 14 of Starship just days before, the company successfully completed three different, but very complex, missions within a few hours. SpaceX carried four astronauts in a Dragon capsule to the ISS, a Falcon Heavy launched and successfully returned two boosters, and a SpaceX rocket carried 130 payloads into orbit on a “ride share” mission. Even just a few years ago, any of these missions would have been an extraordinary achievement. Today, SpaceX has made them look routine.

Starship Test Flight Mission (Photo: SpaceX)

We view SpaceX’s satellite broadband segment, Starlink, as a key economic driver for the company.

The company is currently operating about 11,000 satellites for Starlink. This represents an unprecedented launch cadence and has positioned the company as the largest satellite constellation operator by more than a factor of 10. In fact, SpaceX is operating roughly 75% of all active maneuverable satellites.¹³

During 2025 and through September 2026, the company launched more than 5,300 new satellites.¹⁴ Virtually all Starlink satellites were second-generation (V2) satellites launched on Falcon 9 rockets, offering four times higher throughput than the original satellites. Going forward, however, the company plans to expand its capabilities by many multiples. Starship Flight 14 deployed the next generation of satellites (V3), which improve downlink capacity by about 10 times and uplink capacity by about 22 times compared to the V2 satellite. Starships carrying V3 satellites will increase overall capacity by about 20 times compared to the V2 satellites carried by a Falcon 9.¹⁵ SpaceX anticipates Starlink will help meet enormous future AI-related demand.

Starlink has also achieved robust growth among users, reaching over 13 million active subscribers—more than double the subscribers at the close of 2024.¹⁶ Starlink is now available in more than 170 countries and territories, covering an area with a total population of over 3 billion people. SpaceX is on track to have about 15.5 million Starlink SMB/Consumer subscribers by the end of 2026, according to our estimates, up from 8.9 million at the end of 2025.

Starlink Enterprise is in the early stages of monetization and is expected to be larger than Consumer over time. Demand from aviation, for example, is significant, highlighted by an announcement in October that American Airlines will install Starlink across its mainline jet fleet. Starlink has already been installed on more than 2,500 planes, signaling a rapid expansion of its footprint in the sector. In maritime, Starlink serves approximately 150,000 vessels that consume 50 petabytes of data each month. With over 300 cruise ships subscribed to the network, Starlink is used by 20 million passengers annually, or close to 30% of global cruise ship passengers.¹⁷ Starlink Enterprise is also being supported by government deals, which have been large and are growing (the company was awarded more than $6 billion in contracts).

In October, SpaceX won approval to deploy 15,000 Starlink satellites to provide direct-to-device connectivity¹⁸—Starlink Mobile. SpaceX plans to launch this next-generation network in 2027, which should show material improvement in capabilities from text and light data to a full 5G-like experience. This effort was boosted by an agreement to acquire a nationwide low-band spectrum license portfolio, which is suitable for terrestrial infrastructure and paves the way for Starlink Mobile to become a major mobile carrier in the U.S. Once SpaceX receives FCC approval, Starlink Mobile plans to combine its satellite-to-mobile constellation in space with a terrestrial network. The new low-band spectrum will allow Starlink Mobile’s signal to penetrate through obstacles and connect with devices in buildings. This will help Starlink Mobile provide reliable service regardless of the user’s location or setting. Ultimately, SpaceX is aiming to take share from the dominant mobile network operators in the U.S.¹⁹

Starlink Mission (Photo: SpaceX)

SpaceX will draw upon its unique infrastructure to develop frontier AI models. SpaceX’s ownership of compute infrastructure and vertical integration across the full AI stack gives it significant capabilities compared to competitors. The underlying hardware infrastructure is tailored to the model’s training and iteration, making the process faster, more efficient, and more effective. The infrastructure offers access to the computing power needed to run AI models, which is facing accelerating demand and limited capacity. Companies are increasingly challenged to build data centers due to rising local resistance, regulations, power constraints, land scarcity, and construction costs.

SpaceX plans to help meet growing AI-related demand with a network of data centers in space called Starmind. These data centers would consist of a network of satellites—each carrying powerful, efficient computers—that communicate with each other through radio links. Importantly, the data centers would have access to unlimited solar energy, space, a frigid environment, and a simpler regulatory framework. Moreover, as SpaceX’s rocket reusability improves and AI satellite and chip manufacturing becomes more efficient, orbital data centers should become increasingly cost effective, especially as terrestrial data centers become more expensive and challenging to build. Over time, we believe orbital data centers could become the lowest-cost and most scalable architecture for AI inference.

SpaceX’s frontier AI model, Grok, benefits from a unique blend of data sources and talent. Grok is integrated with X, which together have over 1.3 billion supported accounts, including approximately 600 million monthly active users (MAUs). These users generate about 350 million posts each day, and about 117 million MAUs use Grok’s AI features.²⁰ SpaceX cites the X platform as a competitive differentiator, since it allows Grok “direct, real-time access to information and human discourse,” which in turn enhances the model’s “truth-seeking capabilities by grounding outputs in up-to-date knowledge and diverse viewpoints.”²¹ The model’s capabilities make it ideal for high-frequency, high-value use cases across consumer and enterprise AI applications.

Grok’s token consumption has tripled since the release of Grok 4.5. Grok 5 will be trained on SpaceX engineering data and is scheduled for release by the end of 2026. SpaceX’s acquisition of Cursor, which closed in August, gave SpaceX access to, among other things, Cursor’s industry-leading AI talent, a sophisticated AI coding data set and harness, and a lucrative enterprise customer base supported by hundreds of sales representatives. SpaceX is also working closely with NVIDIA, and SpaceX is to receive NVIDIA GPUs in 2027. (It was reported in early October that SpaceX was seeking to raise $40 billion as part of a purchase agreement with NVIDIA for chips.²²)

One of SpaceX’s achievements is its world-class engineering and culture of innovation. This helped it build space capabilities, and it is now being used to build data centers more efficiently, with greater flexibility, and at lower costs than competitors. SpaceX is planning on significantly more compute. The company expects to have about 2 gigawatts of computing power at the close of 2026 and up to 10 gigawatts at the close of 2027.²³ The company has announced additional hosting deals, bringing the total to about $55 billion annual recurring revenue. These deals are allowing SpaceX to achieve “less than a one-year payback” on its AI capital expenditures.²⁴

AI Business (Photo: SpaceX)

Elon Musk, who was a co-founder and early financier of OpenAI, believes AI applications are fundamental to SpaceX’s long-term success. In its Form S-1 filing, SpaceX estimated its total addressable market (TAM) at $28.5 trillion—comprising $370 billion in Space; $1.6 trillion in Connectivity; and $26.5 trillion in AI, including $2.4 trillion in AI infrastructure, $760 billion in consumer subscriptions, $600 billion in digital advertising, and $22.7 trillion in applications.

Ultimately, SpaceX believes its access to unique sources of data, along with its access to its own data centers, will help it develop leading AI models that can deliver solutions to businesses, consumers, and governments. SpaceX plans to launch the first units for Starmind by the end of 2027, a constellation that it believes could eventually comprise up to a million satellites.²⁵ The potential impact of Starmind is enormous. It could make generative AI—deep knowledge and advanced intelligence—available to individuals all over the world to apply to their local challenges, transforming society.

Conclusion

SpaceX’s incredible accomplishments have transformed the space industry in ways that other companies and governments had not considered feasible. This has created significant value for stakeholders, including employees, shareholders, consumers, and governments. Its promise to make life multiplanetary has the potential to change the course of humanity.

SpaceX is an ideal example of a Baron Capital-style investment. First, SpaceX benefits from attractive markets supported by long-term secular trends. The space launch and space applications markets, such as broadband from space, are large and rapidly growing, driven by declining orbital launch costs, technology innovation, and an evolving regulatory environment. Second, SpaceX has built layers of competitive differentiation by leveraging its strong first-mover benefit, unique technology architecture, talent, culture, and significant scale. Third, management has proved, over many years and on many occasions, its ability to deliver high-quality results well beyond elevated expectations, which are often considered impossible by competitors and industry experts.

We have been studying SpaceX for close to a decade. Our confidence in the opportunity has increased dramatically over the years, and we remain extremely excited about SpaceX’s long-term prospects.