SpaceX posted a blockbuster third quarter, with revenue surging 161% year-on-year to $14.58 billion, driven by explosive growth in its artificial intelligence infrastructure business and rising demand for data-centre capacity. The results sent the company's shares up more than 8% in extended trading.

AI Unit Leads the Charge

SpaceX's AI division — now rebranded as Super Intelligence — emerged as the star performer, generating $7.56 billion in revenue during the quarter, nearly 10 times higher than the same period a year ago. The unit has rapidly established itself as a major provider of compute infrastructure and data-centre capacity, counting Anthropic, Alphabet's Google, and Reflection AI among its clients.

The AI business also turned profitable: xAI reported net income of $431 million for the quarter, compared with a loss of $1.7 billion in the year-earlier period — a dramatic swing that underscores how quickly the segment has scaled.

Profitability and Capital Expenditure

SpaceX reported net income of $4.4 billion for the quarter, a sharp reversal from a net loss of approximately $1.1 billion a year ago. Capital expenditure nearly tripled year-on-year to $19.6 billion as the company continued expanding computing capacity to meet surging AI demand.

Looking ahead, Chief Financial Officer Bret Johnsen said fourth-quarter capital spending is expected to range between $35 billion and $40 billion. Johnsen also guided for first-quarter 2027 revenue of between $33 billion and $37 billion — significantly above analysts' average estimate of $22.2 billion — citing improved visibility into a growing pipeline of compute contracts.

Starlink Connectivity Stays Strong

SpaceX's connectivity segment, which includes Starlink, remained a steady contributor, with revenue rising 69% year-on-year to $5.25 billion. Starlink subscribers grew to 13.6 million from 12 million a year earlier, reflecting continued demand for satellite internet services globally.

Musk Floats SpaceX-Tesla Merger and $1 Trillion Revenue Target

During the earnings call, Elon Musk said a merger between SpaceX and electric-vehicle maker Tesla 'would be a good idea' and confirmed that special committees at both companies had been formed to evaluate the proposal. The remark is likely to attract regulatory scrutiny given Musk's controlling stakes in both entities.

Musk also outlined an ambitious revenue target, saying he expects annual recurring revenue to reach between $500 billion and $1 trillion as demand for AI-related infrastructure accelerates. In a post on X, he wrote: 'As crazy as this sounds, $1T in SpaceX revenue in 2028 is no longer impossible.' SpaceX shares had closed regular trading at $147.79 on Tuesday before the after-hours rally, which also lifted Nasdaq futures.

With AI infrastructure demand showing no signs of slowing and Starlink continuing its subscriber growth, all eyes will be on whether SpaceX can convert its surging revenue guidance into sustained profitability through 2027 and beyond.