Elon Musk's plans for orbital data centers may never make money, SpaceX admits - AOL

SpaceX is admitting that the idea of data centers in space is far from the "no brainer" its CEO has said. In fact, it's an incredibly expensive idea that may lose money.

Reuters (1) got an early look at the company's S-1 statement as SpaceX moves towards its initial public offering, and in that SEC document, the rocket company conceded that the plan to put data centers in orbit around the earth may never be commercially viable.

"Our initiatives to develop orbital AI compute and in-orbit, lunar, and interplanetary industrialization are in early stages, involve significant technical complexity and unproven technologies, and may not achieve commercial viability," the filing reads.

It's a reversal from how SpaceX and Musk have previously positioned the plan. In January at the World Economic Forum, Musk said (2) the increased effectiveness of solar energy and cooling properties of deep space made it "a no brainer for building solar-powered AI data centers in space," adding "the net effect is that the lowest cost place to put AI will be space and that will be true within two to three years, three at the latest."

Beyond the financial risk, SpaceX warned potential investors that the harsh conditions of outer space could be more disruptive than imagined for these data centers, saying "in the harsh and unpredictable environment of space, exposing [orbital data centers] to a wide and unique range of space-related risks that could cause them to malfunction or fail."

SpaceX and Musk have previously spoken of launching 1 million of these data centers into orbit. However, the company admits it has yet to build the rockets to do so, as its Starship vehicle has not performed as expected.

SpaceX also recently bought Musk's xAI, which is burning through money at an incredible pace. xAI, for instance, reported a net loss of $1.46 billion (3) in the quarter ending Sept. 30, 2025 and lost $1 billion the quarter before that. More than 60% of SpaceX's 2025 revenue came from the Starlink satellite internet service, according to separate reports (4) based on the company's confidential IPO paperwork.

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The sobering statements in the S-1, a document that's designed to warn investors of risks, comes on the heels of Musk adopting a less bombastic tone in Tesla's earnings call Wednesday afternoon. After the company beat Wall Street's expectations, Musk told investors Tesla would be "substantially increasing capital investments" and the rollout of its Robotaxi and Optimus robot would be slower than initially promised.

"We're preparing Fremont for the start of production later this year with Optimus," Musk told investors (5). "Again, totally new supply chain, totally new technology, so therefore the production S curve is always very slow in the beginning, but we'll ramp up to significant numbers next year."

SpaceX is reportedly planning to start its IPO road show in June (6), with an unprecedented number of shares allocated for retail investors. The company is hoping to raise $75 billion, which would put its valuation at $1.75 trillion.

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Reuters (1),(3),(6); Facebook (2); Yahoo Finance (4); Seeking Alpha (5)