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Hello, Reader.
Since the Big Bang “banged” about 13.8 billion years ago, space itself has been expanding.
For decades, scientists thought that gravity would slow that expansion down. But observations through the Hubble Space Telescope in 1998 revealed the opposite.
The universe’s expansion is actually accelerating – about 5% to 9% faster than expected – and that’s forced astronomers to rethink the cosmos.
Today, the space economy appears to be entering its own period of rapid expansion.
Around a decade ago, the space industry was mostly viewed as government-funded rocket launches and scientific missions.
Think: The final years of NASA’s Space Shuttle program… government contracts awarded to traditional aerospace contractors, like The Boeing Co. (BA), and Lockheed Martin Corp. (LMT)… expensive rockets designed for one-way trips rather than commercial reuse.
Fast forward to today, and we just got our first real look inside the industry’s biggest company: Space Exploration Technologies Corp. (SPCX).
Elon Musk’s data-center-in-space enterprise reported its first-ever quarterly earnings report as a public company yesterday. And its earnings show that space is becoming more than a place for exploration…
It is an expanding, multibillion-dollar commercial industry.
Now think: Satellite internet. AI infrastructure. Communications. Defense. Data services.
So, the question for investors is no longer whether the industry will grow. It’s how to invest in a space economy that is expanding faster than many expected.
In today’s Smart Money, let’s take a look at SpaceX’s earnings. Then, we’ll explore where the biggest opportunities may emerge as this new space economy takes shape.
The Final Frontier Meets the Bottom Line
For the second quarter, SpaceX generated $7.8 billion in revenue, up about 92% year-over-year, and ahead of analyst estimates of $6.8 billion. The company is clearly becoming a real commercial business.
Its Starlink satellite internet service is generating recurring revenue, Falcon rockets are launching satellites, and SpaceX businesses across aviation, maritime, telecommunications, and defense are pouring money into space-based services.
Despite the strong revenue, the company still reported a net loss of $541 million, or 9 cents per share, due largely to AI data center expansion. SpaceX spent nearly $16 billion on AI infrastructure in the second quarter, pushing total capital expenditures (CapEx) to roughly $18.4 billion – far above what Wall Street expected.
This sent investor concerns into orbit and shares back to Earth. SPCX is down 8.6% today.
But the selloff was not about a lack of growth or demand for SpaceX’s services. The company was already down 15% from its $135 offer price heading into yesterday’s trading. Investors were pricing in massive AI spending concerns before the earnings report arrived. The report simply validated those concerns.
That puts SpaceX in the same issue facing just about all of Big Tech:
Is artificial intelligence generating enough revenue to justify the hundreds of billions they’re spending on data centers and other AI infrastructure?
Investors already believe in SpaceX’s vision. Now they want to know if it can generate enough cash to fund its ambitious AI and space plans.
The uncertainty isn’t demand; it’s valuation.
And that distinction is important. The market is not questioning whether the space economy will grow, but which companies will capture the profits.
That creates an opportunity in the companies supplying SpaceX.
And I’ve identified one company that sells the “picks and shovels” of the space economy, with products already operating in space today.
So, while SpaceX has to prove its massive spending can eventually pay off, this company simply has to keep selling more equipment into an expanding industry.
To SpaceX… and Beyond
Crucially, the company is not dependent on SpaceX’s success. (But if Starlink, AI infrastructure, and the Starship two-stage heavy-lift launch vehicle all succeed, suppliers across the space economy could benefit – including this one.)
Its customers include NASA, the European Space Agency, the U.S. military, and a growing roster of commercial space operators. These are same institutions that are driving the new space economy regardless of what any single rocket company does.
When you buy this stock, you are buying a front-row seat to several of the most consequential aerospace programs of the next decade through a companywith 50 years of combined flight experience and nearly 100 active customers.
And the company is expanding its reach into several new frontiers:
- A new contract with the U.S. Space Force.
- Quantum-secure satellites.
- The Golden Dome missile defense shield and more high-tech defense.
- The moon.
- The drone business.
But upon entering into this “final frontier,” I must warn you: The risks are real. The stock’s history of sharp swings tells you this is not a name for the faint of heart.
For the investor willing to accept those risks in exchange for exposure to the emerging space economy, however, this aerospace manufacturer offers real revenues, real contracts, and real hardware already in orbit. It is one of the very few publicly traded companies that can credibly claim all three.
Unlike SpaceX, it isn’t trying to build massive AI data centers or a global satellite internet network. Instead, its growth comes from winning contracts and making strategic acquisitions – not spending billions upfront and waiting light-years for a return.
It’s an overlooked opportunity in the growing space economy.
You can learn how to access the name of the space-based play by clicking here.
But, like I said above, the space economy is still expanding. That’s why I recommended another space-focused company on the opposite end of the spectrum. You can think of it as “space investing for chickens.”
Buried inside this very large, very profitable, very boring company is a robotics business with a direct connection to SpaceX.
Regards,
Eric Fry
Editor, Smart Money
