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SpaceX is accelerating its artificial intelligence (AI) infrastructure expansion and now targets 13 gigawatts (GW) of computing capacity by the end of 2027, as demand for computing power from major technology companies continues to exceed available supply, according to a report by UBS.
The report said SpaceX had significantly exceeded its estimates, largely due to stronger demand for leasing AI computing capacity. The company is targeting an additional around 10 GW of capacity by the end of 2027, compared with the 2.5-3 GW it had expected earlier. On the back of this, the company now targets 13GW of compute by YE27, or an incremental ~10GW from the 2.5-3.0GW expected by YE27 (vs 1.7GW for 3Q and 2.2GW in Oct), the report said. The report said Elon Musk indicated that demand was strong enough for SpaceX to sell its computing capacity several times over. He also expected spot rental rates to rise further, potentially reducing the payback period on investments to around six months next year. UBS said Musk had suggested that SpaceX could potentially reach as much as 20 GW of computing capacity in 2027, depending on the availability of power generation. Based on a roughly equal split between capacity retained for its own use and leased to customers, the infrastructure could support annual recurring revenue (ARR) of USD 500 billion to USD 1 trillion by the end of 2027, compared with an expected USD 100 billion at the end of 2026. The expansion will require substantial investment. SpaceX has guided for capital expenditure of USD 35 billion to USD 40 billion in the fourth quarter of 2026, up from USD 19.6 billion in the third quarter. UBS estimates the company would need to spend around USD 350 billion to achieve its 13 GW capacity target. The report also highlighted strong growth in SpaceX's AI-related business. Revenue from its SI segment, which includes AI cloud services and infrastructure, rose to USD 7.6 billion in the third quarter from USD 2.6 billion in the previous quarter. Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased to USD 5 billion from USD 1.1 billion, UBS said. Beyond AI computing, SpaceX recorded USD 5.2 billion in connectivity revenue, up 70 per cent year-on-year. Its space business also reached a technical milestone, with Starship Flight 14 completing its first orbital and revenue-generating mission. UBS said SpaceX's expansion would depend on the execution of its computing infrastructure plans, new AI deals and progress in its Starship programme. (ANI)
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