William Blair’s Louie DiPalma: We estimate SpaceX will spend about $50 billion on AI capex this year

THAT RIGHT, THAT CIRCULARITY. SEEMA THANK YOU. SEEMA MODY. WE'LL KEEP AN EYE ON SPACEX SHARES AND AS WELL, IF WE GET ANY NEWS ON POTENTIAL PRICING FOR THAT DEAL AS WELL. FOR MORE ON THE STOCK, THOUGH, LET'S BRING IN WILLIAM BLAIR INDUSTRIALS RESEARCH ANALYST LOUIE DE PALMA. HE HAS AN OUTPERFORM RATING ON SHARES OF SPACEX. WHAT DO YOU MAKE OF THIS BOND DEAL. >> WE'RE HAVING. >> ME BACK ON THE SHOW. SO WHAT DO I MAKE OF IT. WELL NVIDIA DOES NOT GIVE AWAY ITS GB 300 FOR FREE. NVIDIA IS A $5 TRILLION COMPANY FOR A REASON. AND SPACEX HAS TO PAY BILLIONS OF DOLLARS FOR THESE CHIPS. WE ESTIMATE SPACEX IS GOING TO SPEND APPROXIMATELY $50 BILLION ON AI CAPEX THIS YEAR AND NORTH OF 100 BILLION NEXT YEAR, AND SPACEX NEEDS FUNDING TO PAY FOR THESE CHIPS IN ORDER TO ACCOMMODATE ITS CUSTOMERS. ANTHROPIC IS COMING ONLINE IN OCTOBER AS WELL AS GOOGLE. AND SO SPACEX IS PART OF THIS COMPUTE FEEDING FRENZY. >> YEAH. ALL RIGHT. WELL, I GUESS THE POINT OR THE QUESTION IS WILL IT BE MONEY WELL SPENT? >> YEAH THAT'S FAR. SPACEX HAS BEEN ABLE TO ACHIEVE A A PAYBACK OF LESS THAN A YEAR. AND IT'S BEEN ABLE TO DO THIS BECAUSE THERE'S SUCH A SCARCITY RIGHT NOW. AND THAT IF YOU LOOK AT MICROSOFT WITH COPILOT, IT'S BEEN IT'S RAMPING CONSIDERABLY. META LAUNCHED ITS USE AGENTIC APP EARLIER LAST WEEK, AND THAT HAD A TREMENDOUS DEBUT. ANTHROPIC IS DOING AMAZING. THE DEMAND HAS BEEN THROUGH THE ROOF. YOU KNOW, WE COVER PALANTIR WHO'S SEEING ITS REVENUE GROW FOR U.S. ENTERPRISE BY MORE THAN 150%. SO RIGHT NOW, YOU KNOW, ENTERPRISES AND HYPERSCALERS, THEY CANNOT GET ENOUGH OF THE SUPERINTELLIGENCE AS THEY REFER TO IT. YEAH, YEAH. >> I'M LOOKING AT YOUR COVERAGE LIST. YOU OBVIOUSLY DO FOLLOW A LOT OF THINGS THAT DEAL IN OUTER SPACE. SO DO YOU THINK THAT ORBITAL DATA CENTERS WILL BE A REAL THING? AND IF SO, WHEN? >> WE DEFINITELY THINK THEY WILL BE A REAL THING FROM THE PERSPECTIVE THAT SPACEX, WHEN THEY LAUNCH THEIR STARLINK SATELLITES AND THERE ARE OVER 11,000 IN ORBIT RIGHT NOW, THESE STARLINK SATELLITES ARE EFFECTIVELY MINI COMPUTERS ALREADY, AND THAT THEY HAVE SOLAR PANELS. THEY HAVE PROCESSORS. THEY'RE NOT AS SOPHISTICATED AS NVIDIA GPUS, BUT THEY HAVE PROCESSORS FOR ENABLING THE THE KU BAND, SATELLITE UPLINK AND DOWNLINK. SO SPACEX IS MORE OR LESS TAKING THEIR STARLINK SATELLITE DESIGN AND ENHANCING IT WITH LARGER SOLAR ARRAYS IN ORDER TO PROVIDE ORBITAL COMPUTE. SO, YOU KNOW, THEY EXPECT TO HAVE, I BELIEVE, A DEMONSTRATION SATELLITE LAUNCHED BY THE END OF 2027. AND, YOU KNOW, HUNDREDS IN 2028. >> SO AS SO IF YOU'RE IF YOU OWN THE STOCK, IF YOU'RE AN EQUITY INVESTOR, DO YOU JUST IGNORE THE RISING CREDIT RISK OF THESE COMPANIES? BECAUSE, I MEAN, WE, WE ARE SEEING SPREADS WIDEN OUT ON THE US INVESTMENT GRADE SECONDARY MARKET, ON THE CREDIT DEFAULT SWAPS. I MEAN, NOTHING, NOTHING CRAZY. BUT BUT AS, AS THESE COMPANIES BORROW MORE, AT WHAT POINT DO YOU HAVE TO THINK ABOUT CREDIT RISK? >> IT'S A GREAT QUESTION. AND RIGHT NOW INVESTORS ARE LINING UP IN ORDER TO FUND, YOU KNOW, THESE TYPES OF VENTURES. OPENAI IS REPORTEDLY IN THE PROCESS, I BELIEVE YOU REPORTED THAT THEY'RE LOOKING TO RAISE $30 BILLION. BLUE ORIGIN IS IN THE MARKET RIGHT NOW RAISING MONEY. IF YOU LOOK AT SPACEX, YOU KNOW, GIVEN THE COMPANY'S TRACK RECORD AND THE COMPANIES THAT THEY HAVE SIGNED UP, YOU KNOW, THERE ARE, YOU KNOW, A MULTITUDE OF VERY LARGE INSTITUTIONAL INVESTORS. AND, YOU KNOW, WE TALKED TO SPACEX INVESTORS ALL THE TIME IN THE EQUITY MARKETS, AND THEY'RE VERY EAGER TO, YOU KNOW, OWN OWN POSITIONS GIVEN, YOU KNOW, THE DIVERSIFICATION BETWEEN ORBITAL COMPUTE, YOU KNOW, TERRESTRIAL COMPUTE, YOU KNOW, STARLINK, MOBILE, STARLINK BROADBAND, YOU KNOW, STARSHIP, WE DIDN'T EVEN TALK ABOUT STARSHIP AND THE FLIGHT 14 THAT THAT TOOK PLACE. SO THERE'S SO MANY THINGS GOING ON AND TARIFF AB AS WELL. YOU KNOW, THERE'S A LOT OF A LOT OF EXCITEMENT FROM INVESTORS, NOT ONLY