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Key Takeaways
- SpaceX expects to spend $35 billion to $40 billion on capital projects in the fourth quarter, up to roughly double the $19.6 billion it spent in the third.
- CFO Bret Johnsen says new AI compute pays for itself in less than a year at current rental prices, which makes the spending worth it if those prices hold.
- SpaceX rents its compute at spot rates and doesn’t sign long-term contracts, so a drop in GPU rental prices would hit its revenue quickly.
- Wall Street expects free cash flow of negative $61 billion in 2026 and negative $110 billion in 2027, and those estimates may not include the new guidance yet.
SpaceX (SPCX) just told investors it plans to spend up to $40 billion in a single quarter. (Yes, one quarter.)
Shares were up [9%] this morning after the third-quarter report. Revenue jumped 161% to $14.6 billion, and AI now brings in more than half of it.
But the number that matters most came from CFO Bret Johnsen: fourth-quarter capital spending of $35 billion to $40 billion.
His case for it? “At current pricing, new compute deployments are generating a payback of less than a year.”
That’s a bold claim to make about a check this size.
Up to double in one quarter
Johnsen said the third quarter’s $19.6 billion went “primarily in support of our SI compute build-out, starship infrastructure and satellite production.” He put the fourth-quarter jump down to “the additional capacity coming online this quarter.”
SpaceX ended September with 1.7 gigawatts of nameplate compute capacity and expects “2.5 to 3 gigawatts just by the end of this quarter.” Its spending was already climbing fast before this guide…
Wall Street didn’t see the guide coming. Investor Daniel Niles pointed out that it came in “almost 90% above consensus.”
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The payback rests on today’s prices
Johnsen said compute pricing is “tracking slightly above the high end of the $30 to $50 per watt range” SpaceX gave last quarter. SpaceX is talking to “a number of available pools of debt capital,” he said, but he leaned on the payback: “this capability starts to fund itself in a pretty near-term situation.”
That only works if the revenue shows up. Analysts expect it to nearly triple, from $45.9 billion this year to $132.4 billion in 2027, and then reach $249.4 billion in 2028.
SpaceX’s backlog was $63 billion on Sept. 30, and it expects to book about $42 billion of that over the next year. That’s roughly a third of what analysts expect in 2027. The rest has to come from new and renewed rentals.
Spot pricing cuts both ways
And that’s where SpaceX’s approach matters. As Elon Musk put it on the call: “our approach is to rent at the — effectively the spot market rate as opposed to sign these long-term deals.”
So far, it’s paying off. Musk said “we see them renewing at higher dollars per watt,” and that “It’s not impossible that we will have a six-month payback period for compute next year.”
But short contracts at spot rates also mean nothing props up revenue if GPU rental prices fall. A payback of less than a year depends on today’s price lasting that long.
Wall Street already expects a big burn
Analysts were modeling a huge cash burn before this guide came out. They expect free cash flow of negative $61 billion this year and negative $110 billion in 2027, improving to negative $66 billion in 2028…
Those estimates may not include the Oct. 20 guidance yet. With fourth-quarter spending guided so far above what analysts expected, this year’s burn could end up deeper.
If the payback holds, that burn turns around fast. If rental prices drop, SpaceX will have spent tens of billions, possibly with borrowed money, and have no long-term contracts behind the spending.
I’d take that payback
My take: at less than a year, the payback justifies the spending, and renting at spot is the right call while renewals keep coming in at higher prices. But it also makes SpaceX’s free cash flow a bet on GPU rental prices, one quarter at a time.
Johnsen has already said fourth-quarter gross margins should look “more consistent with the second quarter,” since the third quarter had some one-time benefits. When SpaceX reports the fourth quarter, the things to watch are renewal prices per watt and how much debt it takes on to pay for the build.
So what is SpaceX stock actually worth?
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