Overall, this quarter marks SpaceX’s debut financial report, showcasing a robust performance—revenue has consistently surpassed projections, and profit losses are narrowing at an accelerated rate, hinting at a near-term break-even. However, concerns loom over the escalating pace of capital expenditures. Key highlights include:

① Total revenue exceeded expectations, with the AI business propelling significant year-over-year (YoY) growth: In Q2, SpaceX’s total revenue soared to $7.8 billion, outpacing market expectations of around $6.9 billion, marking a 92% YoY surge—a substantial acceleration from Q1’s ~15%.

The primary catalyst for this revenue acceleration is the AI business, particularly the incremental AI business revenue from computing power leasing contracts, with AI segment revenue soaring by +247% YoY. This, coupled with notable growth in Starlink’s business-to-business/government (B2B/G) revenue, has been instrumental.

② Gross margin continued to improve quarter-over-quarter (QoQ): In Q2, SpaceX’s gross profit reached $4.3 billion, exceeding market expectations of approximately $3.7 billion, with the gross margin improving by about 6 percentage points QoQ to 55.3%. This significant margin enhancement is primarily attributed to the heightened profitability of the AI business—as computing power leasing revenue was recognized this quarter, high-premium leasing contributed to a robust gross margin, with the AI business gross margin improving by 32 percentage points YoY to 56.8% (from 25.2% in Q2 last year).

③ Operating leverage spurred a notable reduction in operating losses: In Q2, SpaceX’s operating profit stood at -$140 million, significantly outperforming market expectations of -$1.68 billion. The operating margin improved by 40 percentage points QoQ to -1.8% (Q1: -41.4%), primarily due to the substantial improvement in overall revenue and gross margin from the AI computing power leasing business, combined with the release of operating leverage, bringing operating profit to the cusp of breaking even.

④ Detailed business performance:

a. Rocket launch business: Increased external launches, with unit prices and margins on the rise

Revenue: In Q2, rocket launch revenue hit $960 million, surpassing market expectations of $870 million, up 29% YoY, primarily due to a 32% YoY increase in launch service revenue to $650 million, while launch and R&D services confirmed only $310 million in revenue this quarter, up 23% YoY.

Launch services: SpaceX’s launch services are grounded in mature commercial orders, charged per launch/weight. In terms of launch volume, external Falcon 9 commercial launches reached 10 this quarter, up from 7 in Q1 and 9 in the same period last year, mainly due to an uptick in launch missions for major clients.

Regarding unit launch price, revenue per launch is estimated to have climbed from $54 million last year to $65 million this year (estimated), with unit prices rising instead of falling, primarily due to an optimized customer mix (increased proportion of major clients).

This underscores SpaceX’s ability to leverage its monopoly position to secure high profits, given the scarcity of low-cost and mature alternative suppliers in the market (currently, Falcon delivers about 2,500 tons to orbit annually, while the rest of the world combined delivers about 300 tons, with SpaceX accounting for 80%–90% of global annual orbit insertion mass).

Launch and R&D services: Revenue from launch and R&D services stems from government R&D projects with NASA (HLS Crewed Lunar Lander) and the U.S. military. These highly customized projects are recognized using the “milestone/completion progress method,” with revenue contingent on government budget allocations and SpaceX’s progress in surpassing key technical milestones (e.g., preliminary design review, engine ground ignition, specific orbital tests).

The crewed lunar mission necessitates Starship achieving highly reliable satellite launches before meeting the safety standards required for crewed missions, anticipated by the end of 2027. Thus, the Artemis III mission is slated for 2027, docking with the Orion spacecraft, followed by an uncrewed direct lunar cargo mission, aiming for a crewed lunar landing in 2028, which will confirm significant launch and R&D service revenue.

Profitability: From the profit perspective of the rocket business, the gross margin improved by about 11 percentage points QoQ to ~66% this quarter. Despite the trial flight costs of Starship (including rocket hardware losses) being directly factored into current launch business costs and dragging down the gross margin, the rocket launch business’s gross margin still improved against the trend, mainly due to higher unit launch prices and systemic cost reductions from rocket reuse (primarily Falcon 9), leading to lower marginal costs as reuse frequency increased.

However, accelerated Starship R&D led to a 55% YoY increase in rocket launch service R&D expenses to $1.1 billion, resulting in a 7-percentage-point YoY decline in operating margin to -56%, still outperforming market expectations of -86.4%.

b. Starlink business: Revenue exceeded expectations, primarily due to B2B/G growth, with user growth largely meeting expectations

Revenue: In Q2, Starlink revenue reached $4.29 billion, up 66% YoY, slightly surpassing market expectations of $3.88 billion, mainly due to the B2B/G business revenue doubling to $1.8 billion, while consumer business revenue continued to grow steadily, up 44% YoY to $2.5 billion.

B2B/G business: SpaceX has forged in-flight WiFi agreements with multiple airlines and implemented them, with the Starshield business securing over $6 billion in multi-year contracts from the U.S. government.

Consumer (B2C) business: Starlink’s user base expanded to 12 million, doubling YoY and adding ~1.7 million net new users QoQ, largely meeting expectations. The company maintained stable unit prices (average revenue per user (ARPU) of $66/month) during user expansion this quarter, though still down 22.4% YoY.

In mobile communications, SpaceX has secured the right to use 65 MHz of spectrum within the U.S. (originally EchoStar’s 2GHz band) and several global mobile satellite service spectrum licenses. Although still in its infancy, SpaceX has directly challenged traditional telecom operators—planning to commence launching V2 mobile satellites using EchoStar’s 65MHz spectrum next year and constructing a ground network to capture market share from AT&T, Verizon, and T-Mobile.

As of the end of Q2 2026, there were 10,200 communication and direct-to-phone satellites in orbit (9,600 in Q1 2026), including 9,600 communication satellites providing 800TB/s downstream rates and 600 mobile satellites.

Profitability: Starlink’s overall profitability remained stable, with a Q2 gross margin of 52%, up 2.7 percentage points QoQ, driving a 2.1-percentage-point QoQ increase in operating margin, mainly due to the SaaS-like nature of the business, with high upfront fixed investments (rocket launch costs + satellite manufacturing costs) but extremely low marginal costs later, with user growth continuing to drive margin improvement.

c. AI business: Revenue exceeded expectations, with significant margin improvement

Revenue: In Q2, AI business revenue hit $2.56 billion, higher than market expectations of $2.08 billion, mainly due to a 6x YoY increase in AI solutions and infrastructure revenue to $2.2 billion (including ~$1.6 billion in incremental AI infrastructure revenue from cloud service agreements with Anthropic and others this quarter), with revenue from the Grok large model estimated at $600 million in Q2, up 26% QoQ from $470 million in Q1.

Advertising revenue from the X platform was $367 million in Q2, up 7% QoQ from $343 million in Q1, mainly due to a comprehensive overhaul of the underlying AI advertising infrastructure in Q1 2026 to fully reverse technical disadvantages, focusing on deploying: fully automated ad placement systems, AI probabilistic attribution tracking, Grok-driven real-time brand safety controls, and deep integration of ad and recommendation stream algorithms.

After the overhaul, ad revenue recovered somewhat but still fell 14% YoY, so whether this overhaul can truly recapture lost advertiser budgets remains to be seen.

Profitability: AI business profitability improved significantly, with a gross margin of ~57%, up 12.5 percentage points QoQ (Q1: 44.3%); operating margin of ~-49%, significantly outperforming market expectations of -115%; Adjusted EBITDA Margin of ~45%, a significant YoY and QoQ turnaround (first positive AI Adjusted EBITDA of $1.146 billion in Q2).

Margin improvement was primarily driven by profitability gains from computing power leasing premiums (estimated at $30–50 billion per GW, far exceeding peers’ $10–15 billion per GW) amid an extreme supply-demand imbalance for computing power.

However, it should be noted that AI leasing agreements include clauses allowing termination with 90 days’ notice by either party—meaning that despite strong current revenue, income visibility inherently carries uncertainty.

Dolphin Research’s overall view:

Overall, Dolphin Research believes that in terms of the financial report itself, SpaceX performed admirably—revenue and profit both exceeded expectations, with operating profit significantly reducing losses and nearing the break-even point. However, the stock price has plummeted nearly 50% from its peak and ~20% below its initial public offering (IPO) price, continuing to weaken after hours, mainly due to the following reasons:

a. Excessive capital expenditures, with new AI order volumes insufficient to fully match the explosive growth in capital expenditures (Capex)

In this earnings season, Dolphin Research observed a notable phenomenon—when cloud service providers announce higher-than-expected capital expenditures but cannot match revenue or order growth, the market begins to question the return on investment (ROI) of these investments, especially when free cash flow is deeply negative (e.g., Meta).

Although SpaceX boasts triple attributes—aerospace + Starlink + AI—in the short term, AI has emerged as the second-largest revenue source (Q2: ~$2.56 billion, second only to Starlink’s $4.29 billion), with ~86% of capital expenditures allocated to the AI business (Q2: ~$15.8 billion single-quarter), and AI business revenue expected to surpass Starlink for the first time in 2026 to become the top revenue source.

Meanwhile, SpaceX continues to accelerate computing power expansion: Q2 2026 nominal computing power reached 1.4 GW, up from 1 GW in Q1 and 400 MW YoY, expected to exceed 2 GW by year-end; cumulative online computing power will multiply by year-end 2027—according to management, closer to 10 GW than 5 GW in magnitude.

On the capital expenditures front, Q2 2026 single-quarter Capex reached $18.4 billion, with management expecting similar capital expenditures in the next two quarters, implying total 2026 capital expenditures of ~$65.2 billion, significantly higher than previous market expectations of $45.5 billion.

For 2027 capital expenditures, current market expectations are ~$89.7 billion, but under full-scale deployment scenarios (assuming ~$30–35 billion per GW, referencing Q1 2026’s ~$15.8 billion Capex for 400MW, or ~$39.5 billion/GW), the corresponding 2027 total capital expenditures could reach $240–280 billion—far exceeding current market expectations.

Although SpaceX’s computing power leasing business commands far higher premiums than peers (at ~$31–50 million per MW, 3–5x peers’) amid current computing power shortages and flexible agreements allowing 90-day notice for cancellation, with management expecting an investment payback period of just ~1 year, the market still needs to see order volumes matching these high capital expenditures.

This earnings report announced only ~$6.7 billion in new cloud service agreements, not devoid of new orders. However, the issue lies in the fact that with such large-scale Capex investments, the volume of new orders is marginally incremental compared to previously announced major deals—Anthropic ($45 billion/3 years) and Google (~$30.36 billion/33 months). The market is concerned that Capex investment pace may have outstripped verifiable order returns, especially given the cancellable clauses in SpaceX’s computing power leasing agreements.

b. Although operating cash flow has turned positive, free cash flow remains deeply negative amid soaring Capex

Operating cash flow turned positive this quarter, reaching approximately $2.4 billion. However, Capex remained as high as approximately $18.4 billion (primarily for AI infrastructure Capex), resulting in a free cash flow of -$16 billion, a further deterioration of nearly $7 billion sequentially.

The company recently raised approximately $75 billion through an IPO and subsequently issued $25 billion in bonds, bringing its current cash and equivalents to around $100 billion. However, given the massive capital expenditures and the low visibility of order volumes, SpaceX may need to initiate another round of significant financing by the end of this year or next year.

The market is beginning to worry whether the company’s financing needs represent a “bottomless pit”—whether the AI order volumes and revenues obtained at enormous costs can justify such high-intensity capital investments.

c. Large-scale lock-up expirations pose direct technical selling pressure

In addition to concerns over Capex ROI, more immediate pressure comes from the expiration of lock-up periods for 930 million shares (valued at approximately $100 billion) starting August 6. A substantial number of pre-IPO investors and employee holdings will become tradable in batches, with large-scale lock-up expirations exerting direct pressure on the stock price.

Subsequently, approximately 300 million additional shares will unlock every 15 to 20 days, with another approximately 1.3 billion shares set to be released simultaneously with the Q3 earnings report. Nearly 4 billion shares will become tradable in eight batches by January 2027.

Consequently, in the short run, the announced substantial capital expenditure (Capex) investments following earnings announcements, coupled with impending large-scale lock-up expirations, have exerted direct downward pressure on SpaceX's stock price. Currently, most investors maintain a bearish outlook for the near term.

However, SpaceX's strategic approach bears a strong resemblance to Tesla's—relying heavily on "event catalysts" rather than immediate "performance delivery" to drive market sentiment. The fundamental rationale is that long-term business ventures, particularly space-based data centers, constitute the majority of the company's current market valuation, yet these initiatives contribute negligible profits at present.

The further into the future one looks, the lower the confidence level in key underlying assumptions becomes. For instance, questions linger over whether Starship can genuinely reduce launch costs below $200 per kilogram—a highly probable but still uncertain outcome. Similarly, uncertainty surrounds the global user penetration ceiling for Starlink and whether space-based computing power justifies large-scale deployment and commercial viability—topics that remain even more contentious. These uncertainties hinder the formation of consensus market expectations.

As a result, the market effectively prices SpaceX's prospects based on "probability-weighted" scenarios. Investors continuously adjust their subjective probabilities regarding "whether the long-term vision can be achieved" based on the progress of current events. Differing judgments among investors aggregate to form market prices.

Each event catalyst effectively shortens the option's time to expiration or increases the likelihood of exercise, thereby boosting the option's value (i.e., the stock price). Conversely, when catalysts are absent and sentiment cools, the market reassesses the "option's" implied volatility, downgrading it and causing the stock price to retreat.

Thus, following the large-scale lock-up period, the market awaits the next round of key catalysts to reignite upward momentum. The stock's trajectory hinges critically on the successful achievement of several milestones: full Starship reusability (planned for Flights 14/15 in September-October to achieve orbital flight and upper stage capture), the first mass deployment of V3 satellites, the launch of Grok 5.0 by year-end (featuring a 6 trillion parameter model) that exceeds expectations, and sustained signing of AI computing power leasing orders (against a backdrop of computing capacity doubling to 2GW by year-end).

Specifically:

a. Launch Business: First and foremost, it must be emphasized that significant cost reductions in Starship operations are the fundamental prerequisite for large-scale V3 satellite networking and space-based data center deployment.

From the perspective of Starship's progress, the vehicle completed its 13th Integrated Flight Test (IFT-13) in July, deploying the first batch of V3 satellites. This mission validated the Raptor engine's secondary ignition capability in space and obtained critical data on the thermal protection system's integrity. Although the booster hard-landed and was destroyed due to secondary ignition failures in some engines, this represented a controllable technical iteration as the second landing attempt for the V3 booster.

Starship's 14th flight test is expected to deliver V3 Starlink satellites into operational orbits, with the possibility of achieving the first "chopstick arm" capture of the spacecraft's second stage. Management has also confirmed that even if the 14th flight fails to achieve this milestone, completing simultaneous first- and second-stage captures by year-end remains the established goal.

Additionally, management stated that the issues with Starship's heat shield have been resolved and believes that once validated, no other technical barriers to full rapid reusability will exist.

In terms of timing, the 14th test flight is anticipated in late August to early September (end of Q3), with the 15th potentially occurring in late September to October (Q4 2026).

If full reusability is achieved—with both the booster and spacecraft recovered and ready for reflight—it will significantly enhance the market's subjective probability of SpaceX's long-term success by proving that launch costs can be reduced to $200 per kilogram.

b. Starlink Business: High uncertainty surrounds direct-to-consumer (DTC) operations; short-term focus remains on large-scale V3 satellite deployment milestones.

Mobile broadband: SpaceX believes that translating V3 broadband improvements into enhanced Starlink services requires V3 satellites to reach a critical mass of at least 1,000 units, likely by Q2 2027.

V3 broadband satellite deployment plan: The 12th flight (V3 Starship's maiden voyage) successfully completed suborbital deployment verification of 20 simulated V3 satellites, validating the next-generation Starlink satellite deployment process. The first orbital-scale batch launch is expected in the second half of 2026, but large-scale, high-frequency deployments will only become economically viable after Starship demonstrates and achieves full reusability (expected post-Flight 15).

Key V3 satellite parameters: A single Starship launch can deploy approximately 60 V3 broadband satellites. Each V3 satellite offers a downlink capacity of up to 1 Tbps, over 10 times that of the current mainstay V2 Mini satellites (96 Gbps).

Large-scale V3 satellite networking represents a fundamental supply-side upgrade for Starlink, enabling its transition from a broadband provider serving remote areas to a global connectivity platform serving hundreds of millions of users (including new scenarios like direct-to-phone and enterprise dedicated lines).

DTC direct-to-phone: Beyond tracking user count and average revenue per user (ARPU) trends, management's latest statements on U.S. terrestrial mobile network roadmaps—whether to build independently, partner via mobile virtual network operator (MVNO) agreements, or acquire existing networks—are closely watched.

For DTC operations, the next-generation V2 Mobile satellites are planned for batch launches via Starship starting in 2027. Per-satellite capacity will increase approximately 10-16 times over V1 Mobile, with beam counts rising from 256 to over 1,024, supporting 5G-level performance. Services are expected to begin in late 2027.

From a strategic positioning perspective, SpaceX has expressed ambitions to become a potential fourth major competitor in the U.S. mobile market. Given that satellites face strong competition from terrestrial networks in dense urban areas (due to irreplicable satellite spectrum limitations that cap urban speeds below suburban levels), establishing ground stations for complete coverage becomes essential.

Regarding market concerns over massive ground station Capex (potentially reaching hundreds of billions in the long term, including spectrum investments), SpaceX proposes using small cells and femtocells to provide mobile band connectivity. This approach involves adding mobile base station functionality to Starlink broadband antennas located on rooftops of houses and businesses, aiming to deliver superior bandwidth compared to existing operators.

However, without a nationwide MVNO partnership—given that all three major U.S. carriers currently appear unwilling to wholesale mobile services to SpaceX—and given uncertainties around ground station deployment, large-scale DTC expansion remains challenging. Thus, the short-term focus remains on large-scale V3 satellite deployment milestones.

c. AI Business: Aggressive annual recurring revenue (ARR) targets still require new orders in computing power leasing.

"What is the essence of the AI business, and what valuation multiple should it command?" represents the core question influencing stock price trends over the next year. Compared to aerospace and connectivity operations, the AI business demands substantial capital expenditures, while the profit model and success probability of space-based AI computing centers remain highly uncertain.

Management stated that SpaceX aims to reach $100 billion in AI-related ARR by year-end and advance its trillion-dollar revenue target to 2030. Dolphin Research believes AI will remain the primary contributor to this aggressive goal.

Regarding the $100 billion ARR breakdown (equivalent to monthly revenue of $8.3 billion, achieved one year ahead of schedule), management has not provided specifics. Dolphin Research makes a relatively optimistic assumption (absent new major computing leasing orders) that AI operations will contribute approximately $50 billion in ARR, with Starlink and rocket launch operations contributing $26-30 billion by year-end. This implies that the computing leasing business still requires new orders to meet the aggressive ARR target.

① Computing power leasing: To date, SpaceX holds approximately $88.4 billion in computing leasing backlog (including Q3 additions, per public contracts), corresponding to roughly $30 billion in ARR (monthly revenue of $2.5 billion).

② Cursor—A supercatalyst for AI monetization:

In April 2026, SpaceX reached a cooperation agreement with AI programming platform Cursor, obtaining an option to acquire Cursor for $60 billion (or pay $10 billion in partnership fees if not exercising). The company formally exercised the acquisition in June (via share swap), with closing expected in Q3 2026.

Cursor's performance has far exceeded expectations: Its software-as-a-service (SaaS) ARR doubled from $2 billion in February 2026 to $4 billion in June (up from just $500 million in June 2025 and approximately $1 billion by year-end 2025), corresponding to a monthly compound annual growth rate (CAGR) of approximately 19%. Under optimistic assumptions, if Cursor maintains 19% monthly growth through year-end, its ARR would reach approximately $11.4 billion (monthly revenue of $950 million).

③ Grok models: Musk recently stated that Grok 4.6 (approximately 2 trillion parameters, per market rumors) will launch on August 7, with Grok 4.7 following weeks later. Grok 5 is expected by Q3-end or Q4, representing a ~6 trillion parameter Mixture-of-Experts (MoE) model aiming to compete with frontier models from OpenAI and Anthropic. All new versions will likely be trained using Cursor's proprietary code data, similar to Grok 4.5.

Currently, Grok large models are estimated to generate $600 million in revenue in Q2, up 26% sequentially from $470 million in Q1 (per Dolphin Research estimates), representing relatively slow growth. Assuming 10% monthly growth through year-end, Grok models could contribute approximately $5-6.4 billion in ARR.

④ Advertising: Expected to contribute approximately $2 billion in ARR.

Thus, Dolphin Research believes SpaceX's stock price still faces significant short-term pressure from questions over capital expenditure return on investment (ROI) and technical selling pressure from lock-up expirations, carrying substantial downside risk.

Successful Starship test flights (achieving full reusability, the most critical factor), mass V3 satellite launches and deployments, Grok 5 or Cursor ARR performance that exceeds expectations, and any new AI computing leasing orders could serve as positive catalysts for SpaceX.

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