SpaceX Q3 2026 Earnings Call Transcript

SpaceX (NASDAQ:SPCX) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

SpaceX reported a significant financial turnaround in Q3 2026 with revenues of $14.6 billion, up 161% year-over-year, and net income of $4.4 billion, compared to a net loss of $1.1 billion the previous year.

The company highlighted major strategic initiatives, including the successful Starship Flight 14 reaching orbit and plans for Flight 15 to attempt full vehicle recovery, marking a potential milestone in reusable space flight.

SpaceX announced the development of a Louisiana spaceport to enhance launch capabilities, with plans for weekly Starship flights by mid-2027 and a ramp-up to twice-weekly launches by the end of 2027.

Starlink continues to expand with a significant increase in bandwidth and plans for 100,000 satellites, projecting a dramatic increase in global bandwidth demand driven by AI.

SpaceX’s superintelligence segment showed substantial growth, with revenues reaching $7.6 billion, driven by cloud services and the deployment of compute infrastructure.

Management outlined a plan for a potential merger with Tesla, emphasizing shareholder approval and strategic synergies in superintelligence and space technologies.

The company anticipates continued robust demand across its segments, with a focus on capital efficiency and aggressive investment in Starship, Starlink, and superintelligence infrastructure.

Full Transcript

Andrea Williams (Head of Investor Relations)

In order to understand the nature of the universe and all these fundamental questions, we must expand the scope and scale of consciousness. Hello everyone. We are coming to you live from our Starlink factory and future Star Mine production site here in Bastrop, Texas. I’m Andrea Williams, Head of Investor Relations and thank you for joining us for SpaceX’s third quarter 2026 earnings presentation. Joining us are Elon, Gwen and Brett and we are live streaming on X. Our third quarter financial results were announced just after 3pm Texas time and all relevant materials have been published to our investor relations website at ir.spacex.com.

For today’s presentation, our prepared remarks will be followed by a question and answer session. We will take live Q and A from equity analysts and then move to questions directly from our investors that were polled on our dedicated earnings Q and A platform which the SpaceX team built with Grok. During this webcast we will discuss our business outlook and make forward looking statements. These statements are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our earnings release and the most recent filings with the SEC, including our final prospectus. During the presentation we may discuss certain non-GAAP financial measures.

In today’s earnings release and our filings with the SEC, you can find additional disclosures regarding these non-GAAP measures, including all the reconciliations with comparable GAAP measures. For the third quarter of 2026, we announced the following financial results as compared to the prior year period: revenues of $14.6 billion, up 161% from $5.6 billion. Net income of $4.4 billion, an improvement of $5.5 billion from a net loss of $1.1 billion. Adjusted EBITDA of $8.8 billion, up 306% from $2.2 billion. With that, I’ll hand the call over to Elon.

Elon

Thank you. So we are in an inflection moment for SpaceX across launch, connectivity and superintelligence. Starting with Starship, Flight 14 was a critical milestone. Starship reached orbit for the first time and deployed operational Starlink V3 satellites. I think we have a recap video we’re going to. All right. For Flight 15, which we expect to happen next month, we’re going to attempt to catch both the booster and the ship. This will be the…

If we succeed, will be the first time that an orbital launch vehicle has been fully recovered. This is a massive technology milestone. The only way that we can extend consciousness beyond Earth on a sustained basis is with a fully reusable orbital launch vehicle. So this is, I think this is a profound technology milestone in the history of civilization consciousness. So let’s look at what a simulation of Flight 15 would look like if we succeed. If we don’t succeed in 15, we’ll, we’ll, we’ll get there.

So success is not guaranteed on these first flights, but I’d say it’s more likely than not that this succeeds next flight. And if not, we have a steady stream of Starship flight attempts through the end of this year and then accelerating next year. So with that, the Flight 15 simulation. We’ve also announced the development of the Louisiana spaceport. So that’s going to be an incredible asset to the country and to the world that will, I think at some point, probably have on the order of 20 or more launch towers and enable the transport of millions of tons per year to orbit and beyond. So that’s really going to be a big deal. We expect Starship to fly weekly at some point in the first half next year and then second half next year, twice weekly, or maybe even more frequently than that by the end of next year.

The rate at which we launch Starship will increase dramatically as we solve the rapid and complete reusability. So we’ll have complete reusability then. At first there will be a little bit of refurbishment that’s needed between each flight and we’ll iron out the need for any refurbishments so that you can immediately land the rocket and launch it again, just like an airplane. As I said, this is a profound technology milestone that most people in the world don’t realize how important it is.

But it will be obvious in hindsight. Starlink is also just getting started. Flight 14 deployed 26 terabits per second of Starlink bandwidth. That’s equivalent to 10 Falcon 9 launches. So a single Starlink launch, which wasn’t even fully loaded — it was about maybe half loaded — did the equivalent of 10 Falcon 9 launches. So what I expect over time, not in the distant future, probably within three years, is that we will have about 100 times the bandwidth of the current Starlink constellation.

Because we will have launched satellites with an order of magnitude more bandwidth and we will place into orbit an order of magnitude more Starlink satellites — probably something on the order of 100,000 satellites, each of which have more than 10 times the bandwidth of the current Starlink system. So I think revenue for Starlink will be at least somewhat proportionate to the total bandwidth delivered. And we also have direct-to-cell, high-bandwidth direct-to-cell capability. And we will be building out our terrestrial networks so that there’s broad-based connectivity anywhere that SpaceX and Starlink are allowed to operate — so anywhere in the world that we’re allowed to operate. And I think the demand for bandwidth is going to be dramatically higher than it is today. I think in three to five years there’s probably a demand for a thousand times more bandwidth than there is currently because AI or SI agents will, on a per-agent basis, use far more bandwidth than a person and there will be far more agents than there are people.

So this ends up requiring a several order of magnitude increase in communication bandwidth in order to satisfy that communication demand. So talking about SpaceX superintelligence — SpaceX SI, sexy, whatever. I think people are starting to realize the constraint on deployment of superintelligence is more in power and cooling and infrastructure than it is in chips. So what we’ve done at SpaceX is we’ve taken a team that has been able to achieve a market share in mass to orbit that is almost 90% of all mass to orbit of Earth, where China is about, I think, roughly 6% and the rest of the world combined, including the rest of us, is about 4%.

So a team that has been able to achieve results that are an order of magnitude greater than all competitors in space combined and applied that same team to the deployment of terrestrial compute. So this is a bit like the New York Yankees playing in Little League. It’s not fair, but the net result is being able to deploy power, cooling, infrastructure at a rate that is vastly faster than anyone else and may at some point be faster than everyone else combined.

So I just let that sink in for a minute. I’ve been spending personally a lot of my time in Memphis, often four days a week, night and day, just getting the Memphis supercompute cluster classes two online. We’re tracking to be able to bring roughly 200,000 GV3 hundreds online per month for every month for the remainder of this year and continuing that pace next year, with next year being primarily Vera Rubin compute. At this point I would say I’m fairly confident of being able to bring an incremental 10 gigawatts of compute online in 2027.

That would be in addition to the roughly 3 gigawatts, maybe 2 1/2, 3 gigawatts that we’ll have online by the end of this year. So I would be surprised if we brought on less than 13 gigawatts of compute by the end of next year. And as I mentioned earlier, the power, cooling, electrical equipment infrastructure is somewhat of a limiting factor. So to make sure that that is not a constraint for our build out, we’re actually going to aim for an incremental 20 gigawatts of power cooling infrastructure next year so that the amount of power cooling that we have is far in excess of what is needed to turn the GPUs on.

So there’s a non-zero possibility — maybe it’s a small possibility at this point; it’s not zero — of SpaceX having over 20 gigawatts of superintelligence compute online next year. A small possibility, but it used to be zero; it’s not zero anymore. We’re also planning to have the most powerful training cluster online by the end of Q2, which will be 440,000 Vera Rubin computers deployed for optimal training. This will, I think, be extremely helpful for getting Grok to be potentially the best model, but certainly to be extremely competitive. So on the Grokbot side, we’re seeing the fastest growth of a product that I’ve ever seen in my life. For Grokbot, I’ve just never seen anything grow this fast.

We’re also seeing that the usage of Grokbot grows over time per user; it does not decline. So as we make Grokbot more useful, we’re seeing users use it more per week, not use it less. And we’ll be deploying Grokbot at scale for enterprise customers, which is a very big deal, so that it can be used effectively in teams by companies as though it were a virtual human. We already are in early deployment with some trusted customers and we expect to be in wide deployment within a few weeks for enterprise customers.

For Grokbot, I think Grokbot may end up being what uses most of our superintelligence compute. In a nutshell, what this implies for SpaceX annual recurring revenue by the end of ’27 is somewhere between 100 billion and a trillion. Brett, are you going next? Sorry.

Andrea Williams (Head of Investor Relations)

It’s okay, Brett, you can go instead.

Brett

Sorry. I thought on that crazy note, I thought on that crazy note.

Elon

Yeah, I don’t want to give Brett a heart attack.

Gwen

Thanks, Elon. So we had an exceptional execution and quarter again. And today I’ll focus both on the operational and the commercial highlights as well as talk about the priority initiatives for next quarter. Showing a slide with the KPIs and I’ll go ahead and walk through it. Starting with our space business, we remain the leading launch provider for the world, flying the vast majority of payload mass to orbit. During the third quarter, our 35 launches included 21 flights of Starlink on Falcon 9, two flights of Starship, a Falcon Heavy which I’ll talk about in a second, and 12 high-profile customer missions, including the Falcon Heavy launch where we flew NASA’s Roman Space Telescope into deep space. We also flew six National Security Space Launch missions.

We’ve also secured important new business, winning three additional human spaceflight missions on Dragon which will take us through 2028, along with the Starlink communications contract on NASA’s Artemis 3 mission. In addition, we signed 18 new national security space launch missions, a contract to deliver payload to the lunar surface with Starship, and three new Starfall missions on Starship. We just did a Starfall mission today, by the way, on Falcon 9.

Starfall is our space capsule which provides routine, relatively low-cost access to microgravity environments for scientific research, including improving our understanding of diseases like cancer and diabetes and developing better protocols for patients here on Earth. During the final week of the quarter we flew Starship Flight 14 to orbit as Elon talked about, followed just after on October 1st by a triple-header. We flew three Falcon missions across our three Falcon launch sites in just 13 hours: Crew-13 we brought safely to the International Space Station, a Falcon Heavy NRO mission, and a rideshare mission flying 130 payloads. It’s an incredible display of what we can deliver in a single day across crew, commercial, and national security missions.

We’re also incredibly excited for what’s ahead for Starship, flying the largest payloads to help build the space economy in orbit and on other planets and the moon. As Elon said, Starship’s Flight 14 was a major technical milestone and we remain on track with our goals to bring back both the first and second stages to the tower this year, re-fly the second stage by early next year, and ramp our launch cadence as we make progress towards rapid reusability.

We’ll attempt an on-orbit refueling early next year and will begin flying Mobile V2 and Starmind satellites in 2027. We have had significant constructive engagement with the FAA and we expect the license for our Flight 15 to include return to launch site and tower catch for both stages. I’m also extremely excited about expanding the Starship operations to Louisiana with the second Louisiana Purchase. The geography of Louisiana, the community, and their work ethic is so aligned for an amazing Starship future.

Moving on to Starlink, we had another standout quarter driven by continued growth across both our consumer, enterprise, and government businesses. We ended the quarter active in 174 markets, including new market launches for Vietnam and Uganda. Looking at subscriber growth, we added 1.6 million consumers — not total users, but consumers — in the quarter, reaching just under 14 million global broadband consumer subscribers. As I mentioned, this number does not include additional hundreds of thousands of enterprise subscribers and aviation customers.

We remain incredibly inspired by the impact of Starlink on communities around the world, including providing service to hundreds of thousands of students and teachers in schools globally, as well as for emergency response during natural disasters. Over the third quarter, Starlink’s rapid response capabilities enabled support across 25 crises, including the Venezuela earthquake, the earthquake in western Colombia, and Hurricane Lowell in Hawaii. In Venezuela alone, Starlink donated over 1,400 kits to response agencies, providing critical Starlink broadband connectivity to over 250,000 people.

As we mentioned last quarter, we continue to see significant growth opportunities on the enterprise and government side of the business, with aviation a continuing major focus and fixed site gaining momentum. Starlink is now contracted for roughly 12,000 planes, almost a quarter of the available aircraft, and we’re expanding quickly with both new and existing customers. We signed agreements with three of the four major US carriers, along with a growing list of leading international airlines during the quarter.

Lufthansa, Swiss, COPA Airlines, Korean Air, Austrian Airlines, and Asiana Airlines all flew their first Starlink-equipped aircraft. To keep pace with this demand, we’ve quadrupled aviation production rates since the beginning of the year and we expect to double before the end of the year. Our aviation partners report that Starlink has become a key reason customers choose to fly with them, both business travelers who increasingly rely on full connectivity and even individuals who want to stay connected all the time, everywhere.

Our data shows — and frankly our customers tell us — that Starlink-equipped flights carry higher load factors on the planes, and full connectivity is quite quickly becoming table stakes for passengers. On the government side, Starshield continues to deliver unique mission-critical capabilities and we see further room for growth. We remain on pace for enterprise and government revenues to exceed consumer connectivity revenues in the future. The successful deployment of the operational V3 broadband satellites on Starship’s Flight 14 marks an important step and an inflection point for Starlink. The increased capability from these satellites, as Elon talked about, and the Starship launcher itself will provide additional capacity across markets and enable new sales in high-demand areas.

We expect the market for communications to grow far beyond just human communication that we traditionally think about. Connecting cars, robots, and the adoption of superintelligence will increase communication demands not in percentages, but in many orders of magnitude. In the years ahead, we expect Starlink alone to represent a significant portion of global Internet traffic. In mobile, we continue to expand international partnerships, turning on service with new carriers across multiple countries in the third quarter, including Uganda, the Democratic Republic of Congo, Kazakhstan, and Costa Rica. We surpassed 22 million monthly users on Starlink Mobile as of the end of the quarter, up 37% quarter over quarter. Our near-term priority remains flying the Mobile V2 constellation through next year and integrating our spectrum purchases to turn on service in early 2028.

Just a few weeks ago we received approval from the FCC to launch 15,000 Mobile V2 sats and announced an agreement to acquire a portfolio of low-band spectrum which will pave the way for Starlink Mobile to become a major mobile carrier in the US. Moving to superintelligence, the industry continues to demand ever more massive amounts of compute. We’re rapidly expanding capacity to meet both our own needs as Grok and related products scale and those of our cloud service customers. Enterprise feedback on recent model releases has been positive and Grokbot in particular is seeing strong adoption out of the gate. Grokbot, our agentic assistant, launched in August and we already had paid weekly users of 800,000 earlier this month, more than doubling over the last month.

B2B is our fastest growing category with companies increasingly using Grokbot as a force multiplier across sales, marketing, IT, and engineering, treating it as an always-on teammate for complex end-to-end workflows. We’re also accelerating our Grok model release cadence, with significant performance gains expected in the near term; we’ll have more in the near term. At the same time, the integration of Cursor continues to progress well, strengthening both our product capabilities and our go-to-market reach with a scaled enterprise sales force.

Early evidence of this momentum is already visible. Grok Enterprise customers with more than $1 million revenue, including Cursor, were up 50% quarter over quarter on a pro forma basis. Last week we further integrated the portfolio by announcing a new scheme that brings together Grok, Grokbot, Cursor, and X Premium on a single plan. In review, our business is experiencing extremely strong momentum across all three segments. Our engineering teams are scaling Starship and next-generation satellites across broadband, mobile, and Starshield, while our commercial teams expand Starlink across aviation, enterprise, government, and global markets. At the same time, we’re scaling our superintelligence business in the key areas of critical compute infrastructure, leveraging our hardware expertise.

Now, Brett, you get to go.

Bret Johnsen (Chief Financial Officer)

Thank you, Gwen. We delivered another strong quarter in Q3. Revenue grew an impressive 161% year over year to $14.6 billion, fueled by the continued momentum in the connectivity business and our clear inflection point in the superintelligence or SI business. Adjusted EBITDA once again grew faster than revenue to $8.8 billion, up 306% year over year. The combination of our launch leadership, recurring Starlink revenue, and a significant expansion of our SI infrastructure business have combined to drive meaningful operating leverage in the business.

Our balance sheet remains very strong and our focus on capital allocation continues to keep us in a position to accelerate the pace of innovation that underpins the significant revenue opportunity across all of our businesses. I’ll now walk through the financials by segment. The space revenues of $1 billion were up 84% sequentially and up 6% year over year, anchored by a favorable customer mix. We’re on track to deliver strong growth for the year based on our robust customer manifest for Falcon and Dragon vehicles. As far as capital allocation, we continue to invest in our Starship program, accelerating Raptor engine and vehicle production, advancing gigabay construction and progressing the multiple launch pads at both Starbase and the Cape.

And importantly, we secured the location for the next phase of United States space launch leadership in Louisiana. These investments remain essential to unlocking the step change in cost and capacity that Starship will deliver. Connectivity again delivered robust revenue growth and profitability with revenues of $5.2 billion, up 69% year over year and 22% sequentially. As Gwen mentioned, we reached 13.6 million Starlink consumer subscribers, adding 1.6 million subscribers just in Q3 alone, driven by growth in more developed markets. During the quarter, we began ramping production of our V5 kits, which supported our progress on alleviating inventory constraints. We strategically managed our channel distribution and prioritized delivery of kits to retail channels ahead of the holiday season, which we expect will lead to increased activations.

In Q4, Starlink consumer average revenue per user, or ARPU, monthly average revenue per user increased 5% sequentially to $69 per month, benefiting from a favorable customer mix dynamic in the quarter. Enterprise and government revenues grew 91% year over year and 18% sequentially, highlighted by growth in our Starshield program with the United States government and the continued momentum in the aviation industry. Aviation remains a major growth opportunity as we’re still early in the installation phase with many of the largest carriers worldwide and have line of sight into an accelerated activation path into 2027 for our key partners.

Connectivity gross profits doubled year over year with gross margins of 55%, including a one-time benefit of roughly 3%, primarily driven by tariff refunds in the quarter. Excluding the one-time benefits, adjusted EBITDA margins expanded roughly 2% year over year. Looking ahead, the satellite roadmap is a key driver of both the capacity and capability of our connectivity segment. Through the end of the year and throughout 2027, we expect to deploy V3 broadband satellites in meaningful volume, with each Starship launch ramping towards a payload that delivers over 20 times the downlink capacity of the current generation of Falcon 9 launches today. In parallel, we will ramp Starlink Mobile V2 satellites on Starship starting in 2027 and leverage our newly enhanced wireless spectrum portfolio to expand our direct-to-cell service and become a major mobile carrier.

As Gwen mentioned, in the United States, across all three of our connectivity applications—Starlink Broadband, Starlink Mobile and Starshield—the launch cadence on Starship is expected to drive a step change in total capacity, coverage and service quality. SI, or superintelligence, was again the standout growth driver for the quarter. Segment revenue increased substantially to $7.6 billion, up $5 billion quarter over quarter and $6.7 billion year over year, primarily powered by the ramp of our cloud services agreements. We meaningfully improved the segment’s profitability profile as we monetized newly deployed capacity and delivered powerful operating leverage for the business. We ended the third quarter with 1.7 gigawatts of nameplate compute capacity, with additional data halls already online in early October.

For SI solutions and infrastructure, revenues were $7 billion, of which $608 million came from the Cursor acquisition closed roughly mid-quarter, and even excluding Cursor, SI solutions and infrastructure revenues grew 192% sequentially, driven primarily by the activation of new cloud services agreements. There are many customers asking for compute and we’re actively building the supply to meet both internal and external demand. We expect to have additional new customers in future deals and will continuously evaluate the highest-margin usage for our compute assets across both new and existing cloud service agreements and serving inference for our own SI products. What we’re seeing in the market is extraordinary. At current pricing, new compute deployments are generating a payback of less than a year. Pricing is currently tracking slightly above the high end of the $30 to $50 per watt range we were discussing just last quarter, which further supports the attractiveness of these terrestrial SI compute investments.

We’ll continue to be demand-led and prudent in the pace of deployment, matching our disciplined and proactive capital planning for procurement of semiconductor supply to the near-term customer demand. Our current customer contracts for SI compute have the benefit of allowing us to flexibly manage our capacity for our own model training purposes, as well as be able to monetize for our SI cloud service agreements revenue at favorable pricing as the market availability continues to tighten.

Advertising revenues grew 19% year over year as we build more momentum on the new advertising tech platform that we rolled out just last quarter in Q2. SI segment adjusted EBITDA was $5 billion, up $3.8 billion quarter over quarter and $5.4 billion year over year, driven primarily by higher-margin cloud service agreements. SI segment operating income was $431 million, but excluding the $1.2 billion of stock-based compensation expense related to the Cursor acquisition, the segment delivered $1.6 billion of operating profit just in Q3.

Double-clicking on the share-based compensation expenses: of the $60 billion equity value for Cursor when we purchased it, $23 billion was attributed towards retaining key employees and replacing outstanding equity awards, including re-vesting agreements for key executives. These equity awards will be recognized as stock-based compensation over roughly the next three-year vesting period. Total company capital expenditures in the third quarter were $19.6 billion, primarily in support of our SI compute buildout, Starship infrastructure and satellite production. We ended the quarter with substantial backlog totaling $63 billion as of September 30, of which $17.5 billion was recognized as deferred revenue. Approximately $42 billion of this backlog is expected to be recognized within the next year. Looking ahead, demand remains robust across all three segments, particularly in our cloud services business.

We remain on track to our previously stated goal of $100 billion in ARR by the end of this year, defined as annualized revenue based on the month of December. SI infrastructure continuing to come online at Memphis and Southaven gives us visibility into an accelerated build path through the remainder of this year. As a result, we’re on track to reach nearly 2.2 gigawatts of nameplate compute at the end of this month alone in October and have a clear line of sight, as Elon highlighted, to nameplate compute in the range of 2.5 to 3 gigawatts just by the end of this quarter.

Because of the additional capacity coming online this quarter, we expect fourth quarter capital expenditures to now be in the range of $35 to $40 billion for this quarter. We also expect total company gross margins in Q4 to be more consistent with the second quarter, given some one-time benefits and customer mix that we highlighted in Q3. Given the increased visibility into our compute contract pipeline over the next six months, we have the opportunity to provide additional look-forward guidance on the acceleration we see in our business in Q1 2027.

We now see total company revenues in the range of $33 to $37 billion for Q1 of 2027. In closing, we are in a transformative phase for the company’s financial profile. We’re investing aggressively across SI compute, Starship development and production, and next-generation Starlink broadband and mobile constellations, the three areas we believe will generate the highest long-term returns. These are demand-led investments in markets with visible, tangible returns in the near term.

We’re building the infrastructure of the future with discipline, focused on capital efficiency, strong returns on invested capital and maintaining a strong investment-grade balance sheet while still moving with the velocity to capture the opportunity in front of us. The combination of our diversified earnings base, focus on extreme vertical integration and the robust demand in the market for superintelligence gives us conviction in the path ahead.

With that, I’ll turn it back to Andrea.

Andrea Williams (Head of Investor Relations)

Thanks, Brett. We’re now going to begin the Q&A section. If you’d like to ask a question, please use the raise hand function at the bottom of your screen. If you’ve dialed in today, please press star 9 to raise your hand and star 6 to unmute yourself. I think we’ve assembled a queue. We will take the first question from Adam Jonas at Morgan Stanley.

Adam Jonas (Analyst)

Hey everybody, can you hear me? Great. First, Elon, thank you for making flying cars real. That was freaking insane. It’s my first comment and that’s one of them. It’s super inspiring for people all over the world, especially young people that want to build. I got a two-part question on terrafab. You want to make chips? You want to make crazy amounts of chips onshore or in a safe and secure place. So first, can you confirm if SpaceX has placed orders for EUV machines? If so, when do you expect delivery? And just as a second part to the question, when you take a first principles approach to the semi fab supply chain—I know you’ve toured TSMC, ASML, AMD, Lam.

These are very impressive companies, as I’m sure you’d agree. But where do you see the biggest areas to improve their processes and supply chain when you do it, you know, your way? Thanks.

Elon

Well, I mean, we’re just figuring out chip fabrication. But I’ll tell you what our internal expectations are, which obviously I put big error bars on because we don’t know if we will actually achieve this or not. What we’re aiming for internally is to make our first sort of test chip functional in approximately May or June of next year. That’s just a kind of SRAM chip or something to basically test the line. That’s at the research fab in Austin. Our aspiration is to reach volume production around Q3 of ’28 at Terafab at Givens Creek, the main Terafab location. Now, these are very aggressive dates, and we’re very appreciative of ASML and all of our other suppliers in accelerating equipment deliveries in order to achieve this outcome. Let’s just say that the outcome of achieving volume production is at least in the set of possible outcomes for Q3 or Q4 of ’28. So these are obviously insanely fast timeframes for chip production.

We do have, I think, some significant potential breakthroughs in chip fabrication, but I don’t think I should discuss that on an earnings call. Let’s not give away the shop here. But I am optimistic that we will dramatically accelerate chip production and that Terafab will ultimately do what the name suggests, which is to make a terawatt of superintelligence chips per year.

Andrea Williams (Head of Investor Relations)

We’ll take our next question from Doug Anmuth at JPMorgan.

Doug Anmuth (Analyst)

Great, thank you. Elon, can you talk more about how you’re working through those constraints in power, cooling, and infra, and just what gets you comfortable with the 13 gigawatts ending ’27? And then, Brett, if you could also help us understand how you’re thinking about the funding requirements, just as you look out to that kind of capacity. Thanks.

Elon

Yeah. Well, I mean, 3 gigawatts of that, or very close to 3 gigawatts, is what we expect to have done in just the next few months. So you can just look at the rate at which we are actually deploying and turning on compute. What I think you hear from, I guess, other hyperscalers is you don’t hear a lot of detail about how many GPUs they’re actually turning on every month. And with us, you are. I’m being as precise as possible about this. It is absolutely insane to be deploying and providing the power and all of the electrical equipment, the cooling, the batteries, the networking, and everything else that’s needed to turn on 220,000 GB300s a month. But that is actually what we’re doing right now, and that pace will obviously accelerate next year. We’re not going to slow down, I don’t think. Again, I don’t want to—some of this, if you say, like, how are we going to get all this power?

Let’s just say we actually do have a plan that gets to 20 gigawatts of power and cooling by the end of next year. But that is not something that I should spell out. That is highly proprietary because if I tell you about it, others are going to try to do the same thing. And I’m not saying we’ll have 20 gigawatts of power. I’m saying we have a plan where, if everything goes right, we’ll have 20 gigawatts of incremental power next year—so 23 gigawatts roughly in total.

Now, I don’t expect everything to go right. That’s why I said I’m highly confident of 10 next year, and 20 is difficult but not impossible. I mean, some of the things we’re doing I have mentioned publicly. So we’re casting the blades and vanes for the turbines. SpaceX already has a very advanced castings capability that was developed for rocket engines. I think we actually have the most advanced casting capability on Earth because the demands for castings for rocket engines exceed the demands for anything else you could possibly imagine.

So taking that incredible team that has, I think, objectively the most advanced casting technology in the world and saying, hey, can you guys also make some blades and vanes for terrestrial turbines, is much easier than what they have done in the past. And when we talk to the turbine suppliers, they tell us that the blades and vanes are 12 to 18 months behind the rest of the turbine—meaning they can deliver everything except the blades and vanes 12 to 18 months before they can deliver the blades and vanes.

So casting is this really difficult bottleneck, and if anything it seems to be getting worse. That means we can bring power online 12 to 18 months faster than anyone else. That’s the kind of advantage that’s difficult to replicate. Unless someone else is building an advanced casting shop, they will be unable to compete with SpaceX in this regard. We’re looking at many different sources of power, not just gas turbines. We obviously want to use solar, wind, and every other source of power that we can obtain. There’s also a lot of opportunity for inference compute. If you manufacture modular inference compute at the factory level, such that the power and cooling are built in at the factory, and then you distribute modular inference compute clusters all over the country, if not all over the world.

That’s about as much as I should say about scaling power and cooling. But like I said, at this point I’d say I feel highly confident of 10 gigawatts incremental next year—so 13 total—and some number over 20. The probability of achieving that is rising rapidly.

Bret Johnsen (Chief Financial Officer)

Doug, the second part of your question related to funding. I think we certainly have the advantage, relative to others, in that we are investment grade, have a very strong balance sheet, and there are a number of available pools of debt capital that we are talking to at the moment related to funding this incredible growth. The other really important thing to emphasize is the payback period is very short, and so this capability starts to fund itself in a pretty near-term situation.

And so the fact even that we’re finishing this quarter with more capability starts the funding mechanism even into the first half of next year. So you have your operational cash flows first and foremost. You have multiple pools of capital available in the debt market, especially because of our investment-grade status and strong balance sheet. And then you also have the opportunity, from what we’ve seen, to partner with, I would say, the whole value chain related to, on the vendor and customer side.

There’s nothing easy about SpaceX for sure, and so might as well have the finance piece be part of the challenge at the same time. But we have a lot of conviction that we are going to be able to do this in a very measured fashion and continue to keep ourselves in that IG status along the way.

Elon

And certainly if you look at our track record with respect to capital efficiency.

Bret Johnsen (Chief Financial Officer)

Absolutely.

Elon

Starship and all of our other projects, you’d be hard pressed to find any company in the world that is as good at capital efficiency as SpaceX.

Andrea Williams (Head of Investor Relations)

Next question from Edison Yu at Deutsche Bank.

Edison Yu (Analyst)

Hi, thank you for taking our questions and echo Adam’s enthusiasm about the Roadster. So there’s been a lot of reporting, a lot of anticipation of a merger with Tesla. I realize maybe you may be limited on what you can say, but if we take a step back, how do you think about the pros and cons of a potential combination? And as part of that framework, are there any roadblocks that you would need to address before embarking on it? Thank you.

Elon

This is definitely a question where I feel like I’m tap dancing through a minefield, so I have to be thoughtful about what I say here. Both SpaceX and Tesla have formed special committees to discuss this idea at the request of shareholders. These special committees consist of independent directors, and because I’m a conflicted party, I can’t actually be in the discussions of the special committees. So it’s an odd kabuki dance where two groups of people are talking and I can’t be in the conversation.

I don’t think we should necessarily assume that—some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it. Do I think it would be a good idea? Yes. But at the end of the day the shareholders have to be supportive of this, and particularly on the Tesla side we’ll need a 50% vote of all shares—not just those who vote, but of all shareholders—and that’s quite a high hurdle to try to achieve.

I can just say that at this point the special committees have not reached agreement on the terms of any transaction, and obviously there’s no guarantee that they will. But I do think there’s a lot of merit to combining companies as we are pretty much in the superintelligence—there’s a lot to be gained from cooperating on developing superintelligence software, chip design, the Terafab, obviously robotics, mass to orbit with the Starlink constellation connectivity. So I think it would be a good idea. But it’s really up to the special committees of both companies. They’ve got to come up with something, and then that’s got to be put to the shareholders as a vote.

Andrea Williams (Head of Investor Relations)

Next question from Kutgun Maral at Evercore.

Kutgun Maral (Analyst)

Great, thank you for taking the question. I wanted to ask about Starlink Mobile, which has come a long way in a short time, including the recent low-band deal. Even so, there’s still some uncertainty about how your spectrum portfolio, even though it’s much improved and possibly will continue to grow, can compete with incumbents in the US, and part of the unknown for us on the outside is how much coverage and capacity the satellite layer can really provide to bridge the terrestrial gap to peers.

So what roles do you expect the satellite and terrestrial parts of the network will play, and how should we think about the traffic mix between them in delivering a 5G-like experience in the US? And maybe more broadly, how much of the connectivity focus is on traditional retail wireless versus what could be a massive physical AI opportunity? Thank you.

Gwen

Yeah, let me—Elon can fill in some details, but let me point out that the vast majority of mobile connectivity is actually Wi-Fi. I think it’s something between 85% and 93% is done through Wi‑Fi. And keep in mind Starlink broadband does a lot of Wi‑Fi work as well. As far as the mix goes, I think we expect that the S‑band spectrum will provide the majority, and then obviously you need the low‑band spectrum, the 800 MHz spectrum, to basically penetrate buildings.

So if you’re not on Wi‑Fi, you can still receive the signal. I think—and by the way, correct me if I’m wrong afterwards—but I think the S‑band will carry the majority and then the low‑band spectrum will carry less, but provide a critical piece. Also, we talked last quarter, at the last earnings call, about a smaller—kind of not quite tower‑capable—but smaller radio that we could put on already installed homes for Starlink, businesses for Starlink, towers as well. So it’s not just the spectrum that we’ve talked about with the S‑band. We will basically leverage the real estate from Starlink installs and other towers.

Elon

Yeah, I think we probably should do a longer presentation on the game plan for Starlink connectivity and why we think it will ultimately be a business that rates several hundred billion dollars in revenue a year, because you are missing some of the pieces that we know about internally. I can say we do see a clear path to several hundred billion dollars a year in connectivity revenue. But I think we should probably describe that in more detail in a forum that’s not limited to a few minutes at an earnings call.

Andrea Williams (Head of Investor Relations)

In fact, we only have three minutes left.

Elon

Well, we can go a little longer.

Andrea Williams (Head of Investor Relations)

I’ll take the next question from Eric Sheridan at Goldman Sachs.

Eric Sheridan (Analyst)

Thanks so much for taking the question. Maybe if I can turn to the scaling of compute you laid out at the beginning part of the call. When you think about a framework for applying that compute to the external opportunity that presents itself from cloud services relative to the internal needs of that compute for scaling cursor and Grok and Grokpot. How has your view evolved about striking the right balance in that mix and how to think through the output from a monetization standpoint of what that mix might produce for the business in the next 12 to 18 months?

Thanks so much.

Elon

Well, the relative allocation of compute to third parties versus internal is something that’s going to change from one month to the next. I guess as a rough approximation, our goal is to kind of split it 50/50, more or less, where half of the compute is used internally and half of it is rented to others. But that number could shift 60/40 one way or the other. It’s going to be dynamic. And obviously our approach is to rent at effectively the spot market rate as opposed to sign these long term deals.

Our belief is that the value of compute per watt will increase over time, not decrease. The reason for that, I think it should be obvious to people really, is that as you improve the AI software, as the models get better and better, you get more useful intelligence per watt. And the value of that compute is proportionate to the useful intelligence per watt. And that’s why you see things like even old computers like H100s renting for more than they rented when they were new.

And I think that’s likely to continue. I think we’re going to face a shortage of superintelligence compute and that shortage is going to remain for a long time. So I think the smart move is to do short term contracts and essentially to place the bet on useful intelligence per watt increasing rapidly, which obviously it’s done. So that’s what’s happened so far. And also if you look at, say, how are our short term contracts renewing? Are they renewing at higher dollars per watt or lower?

And we see them renewing at higher dollars per watt, not lower dollars per watt. We are also frankly hounded relentlessly by every hyperscaler and by dozens of smaller companies to rent more of our compute. So we could rent out our compute several times over if we said yes to everyone. That’s just the situation here. That’s why I posted that sort of video meme of the Monty Python cheese shop sketch where the guy goes into a cheese shop to get some cheese and they actually have no cheese. And so he goes like, what about this kind of cheese?

What about that kind of cheese? And they really just don’t have any cheese. So we’ve actually tried to offload some of our inference compute to other cloud providers so that we can use more compute for training. And we get the cheese shop sketch. You know, they’ll say like, well, we’ll ask them about, what about some, you know, GV3 hundreds? Nope, don’t have any of those. What about, you know, some G2 hundreds? Nope, don’t have any of those. What about some TPUs?

Nope. What about some trainings? Nope. What about some, okay, how about some H100s? And like, well, we might have some overseas somewhere. And then they’ll check and come back and say, nope, we don’t have that either. So it’s like ridiculous. Yeah, so I don’t think we’re going to have a demand issue here. And like, it’s not impossible—I’m not saying this will happen—it’s not impossible that we will have a six month payback period for compute next year.

Andrea Williams (Head of Investor Relations)

We’re now going to turn to some questions from individual investors that were posting directly onto our public Q&A platform. Since we’ve talked a lot about compute deployment terrestrially, let’s move to a question on V3 sats. So when will capacity gains from V3 satellites actually show up as meaningfully higher speeds and lower latency for users? How many V3 sats are needed before the network feels noticeably better in high demand areas?

Elon

I think we’ll need a few hundred satellites for people to really feel the impact. Because right now with very few satellites you’ll get an impact and then, you know, 10 minutes later it won’t be there. So a few hundred satellites, and I think we can achieve that by mid next year.

Andrea Williams (Head of Investor Relations)

Take number six, which is: Can you provide an update on Starbase Louisiana? What’s the timeline current confidence level in achieving a first Starship launch from the site as early as 2029?

Elon

Well, our internal aspiration for first launch from Louisiana is actually in two years. So 28 would be, is our goal, but I think 29 is highly likely. I think we’ll be at scale launching from Louisiana, and so at scale in 29. Highly confident.

Andrea Williams (Head of Investor Relations)

You ready to wrap, everyone? This wraps up the Q3 2026 earnings report. Thank you all for tuning in and we will see you next quarter.

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