SpaceX’s Power Bill Is Getting Bigger. Should You Buy the Stock Now or Wait for a Solution?

Space Exploration Technologies (SPCX -3.81%), also called SpaceX, has reportedly secured $40 billion in debt financing for artificial intelligence (AI) chips. But the transaction’s final terms and status remain unclear. SpaceX expects capital expenditures in the range of $35 billion to $40 billion in the fourth quarter of 2026.

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However, securing additional AI chips is only part of the challenge. SpaceX also needs sufficient electricity and supporting infrastructure to operate them. Any delays could leave billions of dollars invested in computing equipment that fails to generate its expected revenue.

The biggest power cost may be delayed revenue

SpaceX reported 1.7 gigawatts (GW) of installed AI computing capacity as of Sept. 30. However, GPUs do not continuously operate at full power. Their electricity consumption varies with how intensively they are used.

SpaceX calculates its reported capacity based on the power specifications of its installed graphics processing units (GPUs), rather than how much electricity they consume. The figure also excludes cooling and other data center operations.

SPCX – Space Exploration Technologies

$135.92-$5.39 (-3.81%)

NASDAQ · As of 4:00 PM ET 11/04/26

According to Reuters, electricity shortages and delays in grid connections are already leaving some expensive AI chips underutilized and depreciating. SpaceX could face a similar risk if its electricity infrastructure cannot keep pace with its GPU investments. Delays would postpone revenue generation while the equipment continues to lose value.

Getting power faster may not mean getting it cheaper

In its recent earnings call, Chief Executive Officer Elon Musk outlined plans to add about 10 GW of computing capacity in 2027, bringing the total to roughly 13 GW.

SpaceX is also developing its own electricity generation facilities to power its AI data centers. The company is using manufacturing techniques developed for its rocket engines to produce blades and vanes for gas turbines, which generate electricity. Musk said these components were taking 12 to 18 months longer to deliver than other turbine parts. SpaceX expects to bring electricity online sooner by manufacturing these components internally, potentially reducing delays in operating its AI data centers.

However, faster power generation can also be more expensive. According to Reuters, smaller gas turbines that can be installed sooner may have up to 50% higher capital costs per unit of electricity generated than larger, more efficient alternatives. Although this is an industry estimate rather than SpaceX’s actual cost, bringing electricity online sooner would be financially beneficial only if the additional profits justify the higher infrastructure costs.

However, manufacturing turbine components may not eliminate other supply constraints. According to a Reuters report in July, delivery times for certain power transformers had exceeded 160 weeks (or more than three years) by early 2026. On Oct. 22, cable manufacturer Nexans warned that limited cable production capacity was also becoming a bottleneck for AI data center construction. These industrywide shortages could complicate SpaceX’s expansion even if it resolves turbine-related delays.

Electricity costs could also increase due to changes in utility pricing. In August, the Tennessee Valley Authority approved a new rate structure expected to increase electricity charges for existing data center customers by about 10% over three years. New developments also face additional charges for securing grid capacity.

Strong earnings, but cash returns remain uncertain

SpaceX’s Super Intelligence (SI) segment (formerly the AI division) revenue reached nearly $7.6 billion, while operating income was $431 million in the third quarter. The Connectivity business, which includes the Starlink satellite internet service, generated another $2.4 billion in operating income.

These profitable operations provide SpaceX with a financial advantage as it expands its AI infrastructure. Additionally, SpaceX also held nearly $90 billion in cash and marketable securities at the end of the third quarter, providing substantial financial flexibility.

SpaceX generated $13.1 billion in operating cash flow but spent $48.1 billion on capital expenditures in the first nine months of 2026. This resulted in nearly $35 billion in negative free cash flow. The SI segment accounted for about $40 billion, or 83% of total capital spending, highlighting the enormous investment required to expand its AI business.

Management claims new computing deployments are recovering their investment in less than a year at current prices. However, it remains unclear whether this estimate includes the full cost of electricity infrastructure and financing. The need to eventually replace expensive GPUs could also affect long-term returns.

Customer concentration presents another risk. One unidentified customer accounted for 34.5% of SpaceX’s total third-quarter revenue. SpaceX also disclosed that its cloud-service contracts typically last three years but can generally be canceled by either party with 90 days’ notice.

SpaceX has $37.8 billion in commitments it cannot cancel, including spending on AI infrastructure and third-party cloud services. It also includes a separate spectrum purchase, payable in part in shares.

This creates a financial risk. Customers may be able to end their contracts relatively quickly, while SpaceX remains responsible for substantial long-term spending. If customers leave or computing prices decline, the company could find it harder to recover the money invested in building and powering its AI data centers.

Should investors buy SpaceX stock now?

SpaceX is currently trading at an elevated multiple of 61 times trailing-12-month sales (as of Oct. 29), which already assumes substantial expectations for future growth.

Strong AI demand, profitable Starlink operations, and ample financing support SpaceX’s long-term prospects. Waiting until all electricity constraints disappear could mean missing out on substantial upside.

However, at the current valuation, I would wait for evidence that new computing capacity can generate durable cash returns after infrastructure costs. SpaceX does not have to solve its entire power problem before becoming a buy.

Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.