may eventually sign up anywhere between 20m and 50m residential subscribers, although average revenues per customer are likely to decline as it adds users outside the rich world. At the moment, though, Starlink’s growth is held back by the size of the satellites that SpaceX can fit onto a Falcon 9. It plans “version 3” satellites that will each add 20 times more capacity than the “v2 Minis” it currently uses. But they are so big they can be launched only with Starship. SpaceX is investing heavily to keep Starlink growing. Last year it spent $19.6bn to acquire spectrum from EchoStar, an American telecoms firm, to bolster the nascent D2C business, and has sought authorisation to launch 15,000 specialised satellites. PitchBook, which gathers data on venture- capital-backed firms, notes that these are expensive wagers. The EchoStar deal represents more than a year of SpaceX’s revenues. But it expects Starlink to top 1bn subscribers over the next 15 years. Analysts are divided over Starlink’s potential. “I think D2C is just not going to live up to the hype,” says Mr Farrar, arguing that it will be used mostly in places where there are no terrestrial phone masts and therefore few people. Simon Potter of BryceTech is more optimistic: “It could enable ubiquitous connectivity between devices using standard smartphone kit. That could be transformational in applications such as cars, agriculture, logistics—and maybe in military ones, too.” Franco Granda, at PitchBook, thinks that Starlink and SpaceX’s launch business could justify a $1.75trn valuation by themselves. Launching lots of satellites, however, will not use up all Starship’s capacity. SpaceX is planning fleets of them. It is building a pair of huge factories, dubbed “Gigabays”, which Mr Musk hopes will eventually produce hundreds of Starships a year. Even with the Falcon 9, points out Mr Henry of Quilty Space, there was not a “clear commercial case for a high-cadence launcher”. In the end, SpaceX had to develop Starlink to give its rockets enough work to keep them busy. Its plans for data centres in space, he says, are an attempt to repeat the trick. Tom Mueller, SpaceX’s first-ever employee, the designer of its rocket engines and now the founder of Impulse, another space firm, summarised his old employer’s plans last year. Building a settlement on Mars requires
hundreds of Starships, he noted. But the movements of the planets mean they can travel to Mars only roughly every two years. “What do you do with the hundreds of Starships the other 25 months of the Mars cycle?” he wrote. “Fly data centres to space, paid for by investors.” SpaceX did not come up with the idea of putting AI in orbit. Last year Starcloud, a startup, flew a prototype (aboard a Falcon 9) to prove the idea could work. Google, a tech firm, hopes to test satellites of its own in 2027. (It is reportedly in discussions with SpaceX to launch them.) Proponents of orbital data centres (ODCs) cite several advantages. One is an abundance of power. With no atmosphere to get in the way, sunlight in orbit is about 30% more intense than on even the sunniest day on the ground. Putting solar-powered ODCs in certain “sun-synchronous” orbits could provide almost permanent sunlight. Efficiency is another plus. A terrestrial data centre might use a quarter of the electricity it consumes to cool its servers. ODCs could instead rely on the freezing vacuum of space. The final advantage is remoteness. The AI industry stirs fears of job losses and even human extinction. Many people take a dim view of the technology. Dozens of American state and local governments have banned new data centres or are considering it. Putting them in space might keep them out of mind as well as sight. With typical bravado, Mr Musk has said that within two to three years, ODCs will be the cheapest way to provide computing for AI. (Sam Altman, the boss of OpenAI, thinks that timeline is “ridiculous”.) The economics depend on how low launch costs go, how efficient satellites are at turning sunlight into data-crunching, and how much those satellites cost. SpaceX hopes to make use of its experience mass-producing Starlink’s satellites by building ODCs, at least at first, on the same chassis. In January the firm applied for regulatory approval to launch up to a million of them.
If they can be made to work, the market could be absurdly lucrative. Capital spending on data centres is forecast to exceed $800bn this year. The revenues of the top AI labs are growing fast, from about $17bn in 2025 to an anticipated $90bn-100bn this year. Both Anthropic and OpenAI are planning IPOs at valuations of about $1trn. SpaceX could profit in two ways. The first is by boosting xAI, which has struggled to compete with its longer-established rivals. If being part of SpaceX gives xAI access to cheap, quickly deployable computing power, that could provide the boost it needs to overtake its competitors. If that does not work, an industry-wide switch to space-based infrastructure could leave SpaceX occupying a similar position to Nvidia, which designs AI chips, or TSMC, which manufactures them—an indispensable provider of infrastructure. There have been hints of this latter approach already. On May 6th Anthropic signed a deal to pay as much as $1.25bn a month for the next three years to use some of the computing capacity at xAI’s existing, land-based Colossus data centre. Giant rockets, AI in space—science fiction made real: will investors buy it? There is likely to be appetite, especially given what Gil Luria of D.A. Davidson, an investment firm, calls the “hopes and dreams” premium that
Musk’s futuristic endeavours tend to command. The IPO includes a five-to- one stock split, which reduces the cost per share, a boon for Mr Musk’s legions of fans among retail investors. But investors should brace for volatility. Many of the venture capitalists who made early bets on SpaceX will be keen to cash out as soon as possible. That could hit the stock price. The firm’s two-tier share structure makes Mr Musk in effect unremovable, no matter how his plans go. Although some of his big bets have paid off—re-usable rockets, electric cars, Starlink—others have not, or at least not on schedule. Tesla’s fleet of robotaxis has been just over the horizon for years. Its humanoid robots are also late for work. xAI, meanwhile, is losing billions. If progress on Starship slows, Starlink’s growth will be hobbled, bringing in less cash to cover those losses. SpaceX’s dominance in launch could be eroded by competitors such as Blue Origin, which is owned by Jeff Bezos, the founder of Amazon. Markets are high and nervy; even if AI proves as useful as its pioneers hope, many see current levels of investment as unsustainable. Where would SpaceX’s plans stand if they slowed? Mr Musk’s lofty aspirations for SpaceX can be made to hang together, at least conceptually. As he is fond of saying when assessing a grand idea, nothing about them breaks the laws of physics. That means making it all happen is “merely” a question of engineering, both industrial and financial. But as Mr Musk knows, engineering is an unforgiving discipline. ■ This article was downloaded by zlibrary from https://www.economist.com//briefing/2026/05/21/spacex-has-initiated-the-biggest- ever-public-offering
Even by Trumpian standards, a $1.8bn fund for friends is bad Drained by war with Iran, America is stalling deliveries of arms to
America’s sermons are becoming op-eds Democratic primary voters chose a dicey candidate for Georgia governor Europe’s first known language is alive in America’s West Michigan’s Senate primary is a fight over the future of the Democratic Party Leftist populism’s next big test
Even by Trumpian standards, a $1.8bn fund for friends is bad The president threatened to sue his own administration, and will hand out the pay-off May 21st 2026 American courts are not supposed to be venues for performance art. If counter-parties in a lawsuit do not have adverse interests—say, because they answer to the same person—judges balk. So when Donald Trump sued his own administration seeking $10bn in damages, the judge had questions. Rather than address them, on May 18th the president dropped his suit altogether. In exchange he secured a commitment by his own administration to compensate victims of government “lawfare”, to the tune of $1.8bn. In maga-speak, that means political allies prosecuted by Democrats: think January 6th rioters, pro-life activists and the like. The scheme is of a piece
with the self-dealing and the shakedowns that have defined this presidency. Rather than line his own pockets with taxpayers’ money—Mr Trump is not taking a cut himself—this one will line those of his supporters. The lawsuit originated with a genuine wrong to the president. Between 2018 and 2020 a contractor at the Internal Revenue Service (irs) named Charles Littlejohn illegally leaked Mr Trump’s tax returns to the New York Times and ProPublica, an investigative outlet. Mr Littlejohn was prosecuted and sentenced to five years in prison. Other billionaires also had their information exposed, including Ken Griffin, a hedge-fund tycoon. Both Mr Griffin and Mr Trump sued the irs. But whereas Mr Griffin only sought an apology, which he got, Mr Trump demanded $10bn. Never before had a president sued his own administration. “Essentially the lawsuit’s been won,” he said back in February, a seeming acknowledgment of the stitch-up. A standard payout for people with breach-of-confidentiality claims is $1,000 per violation. Anything above that requires the plaintiff to show “extraordinary” damage, which should in theory match losses incurred. Mr Trump has not had to justify anything to anyone. Todd Blanche, the man defending the government, once worked as his private lawyer. “I love you, sir,” he told his boss last month. The melding of law enforcement with the president’s personal agenda is another hallmark of this administration. As part of the deal, the IRS also agreed to drop any pending audits of Mr Trump, his family or his firms. Nothing about the fund’s structure is normal. The Department of Justice (doj) says anyone who “suffered weaponisation and lawfare” for their politics can file a claim and that payouts can be kept secret. Really, it is a taxpayer-funded “slush fund for people with no legally cognisable injuries that was never authorised by Congress or the courts”, says Maria Glover of Georgetown University. That it was set up through a private deal makes it a handy way to circumvent Congress, which controls spending under the constitution. Barack Obama’s DoJ did something similar when it sued banks and diverted the proceeds to left-wing groups without congressional approval. Those deals were criticised by Republicans in Congress. There are no “partisan requirements” to seek a payout, according to the doj. In reality, the eligibility criteria are clear enough: only maga need apply.