SpaceX has been declining since reaching its $2 trillion valuation milestone at its June IPO—one of the largest public market debuts on record—shedding close to $500 billion in market capitalization from its peak. The decline puts the company among a small group of publicly traded firms whose valuations have swung by half a trillion dollars or more in a matter of months. Tuesday marked the company's first-ever earnings report as a publicly listed entity, offering CEO Elon Musk an opportunity to reset the narrative.

SpaceX posted better-than-expected revenue growth for the second quarter and narrowed its losses to nearly half of what they were a year earlier. The results, however, failed to satisfy a skeptical market. Shares dropped more than 5% following the release and continued to decline during the conference call featuring Musk and President Gwynne Shotwell.

Musk presented an optimistic outlook for the rocket, connectivity, and AI conglomerate, announcing that SpaceX's internal timeline for reaching $1 trillion in annual revenue had accelerated by a full year since the IPO—moving from 2031 to 2030—with what he described as "a non-zero chance" of hitting the target in 2029. A $1 trillion annual revenue figure would place SpaceX in the same tier as Apple and Amazon, companies that took decades to reach that threshold. He urged investors to remain patient with the growth of Starlink, the company's satellite-based internet service.

"I think people are really underestimating Starlink," Musk told analysts. "It's not out of the question that at some point Starlink will deliver a majority of the world's internet, at least in countries where we're allowed to operate, which is the vast majority of countries."

Musk added that such a scenario is not distant, claiming "it's less than 10 years." Shares nonetheless continued to fall between 6% and 8% in after-hours trading.

The central concern weighing on the stock—the same issue affecting AI-focused tech megacaps—is investor anxiety over capital expenditures and the slow pace of returns. Across the technology sector, combined AI-related capex from the largest firms is projected to exceed $200 billion this year, and SpaceX's spending pace now ranks among the most aggressive. "The stock is down because the capex for the AI segment was more than double what was expected," Melissa Otto, global head of Visible Alpha research at S&P Global, told Fortune.

SpaceX reported capital expenditures of $18.4 billion in the second quarter, with nearly $16 billion directed toward AI compute infrastructure. That figure far exceeded the $13.2 billion analysts had anticipated and was well above the $10.1 billion spent in the first quarter. A similar dynamic led investors to penalize Alphabet and Tesla this earnings season, while rewarding Microsoft and Amazon for accelerating revenue growth and posting strong backlog numbers.

Additional selling pressure may arrive later this week, when close to a billion shares held by insiders become eligible for sale on Thursday—a development that traditionally weighs on newly public companies. Lockup expirations frequently introduce volatility because early investors and employees gain their first opportunity to monetize equity received before the IPO.

Otto said the $1 trillion revenue target, while ambitious, is within reach. "It's ambitious and remains a show-me story," she said in an email following the earnings release. "However, given the pace of revenue growth and investment this quarter, if the company remains in acceleration mode, it's possible."

Strong Revenue and EBITDA Growth Across All Segments

Despite the stock's decline, the earnings report contained several positive indicators. Revenue nearly doubled year-over-year to $7.8 billion, surpassing analyst expectations of $6.9 billion. Adjusted EBITDA tripled, and all three business lines—rockets, Starlink connectivity, and AI—exceeded expectations. Musk identified each segment as a pillar supporting the roughly 10x growth needed over three to four years to reach his $1 trillion revenue projection.

Musk suggested conceptualizing SpaceX's satellites as robots, noting that "they're autonomous and don't need servicing." Looking ahead, he envisioning robots being used to scale manufacturing on the moon, where they could enable the construction of a mass accelerator with solar production capabilities. Musk acknowledged the idea sounded "totally nuts" but argued it could ultimately allow the company to scale to 1,000 times the economy of Earth.

"It sounds super sci-fi right now, but it's going to happen," he said.

Starlink, AI, and Rocket Performance

Setting aside the hypothetical lunar scenarios, SpaceX's Starlink business generated $4.3 billion in second-quarter revenue, up 66% year-over-year. Its subscriber base doubled to 12 million, with 1.7 million new customers added during the quarter. Several airlines signed Starlink agreements in Q2, including American, Southwest, Virgin Atlantic, Iberia, and Ireland's Aer Lingus, deepening SpaceX's push into in-flight connectivity—a market long dominated by established providers like Viasat and Intelsat.

The AI business line recorded revenue growth of 247%, reaching $2.6 billion, driven primarily by cloud hosting agreements with Google and Anthropic, along with growth from Grok subscriptions and X advertising. The cloud hosting deals position SpaceX not just as a launch and connectivity provider but as a direct competitor to hyperscalers like Amazon Web Services and Microsoft Azure in the market for AI compute capacity. SpaceX has secured $6.7 billion in cloud services deals for the second half of the year, and Musk stated the division is on track to reach a $100 billion annualized revenue run rate by December, including contributions from the Cursor acquisition. SpaceX ended Q2 with 1.4 gigawatts of compute capacity, compared to 400 megawatts a year ago. Musk pledged that the company would exclusively use Nvidia chips going forward.

The rocket business posted $962 million in revenue. Musk said SpaceX could be launching Starship—its next-generation rocket—at least once a day within "probably a year from now." Starship's development underpins much of the company's growth potential, promising cheaper satellites, orbital data centers, and eventually lunar manufacturing.

The trajectory from $7.8 billion in quarterly revenue to $1 trillion annually depends on consistent Starship development, expanded Starlink satellite bandwidth, and the AI business successfully converting capital spending into revenue before investor patience runs out. Key milestones to watch include the pace of Starship launch cadence ramp-up, whether cloud services backlog converts at projected rates, and how the stock absorbs insider selling pressure this week.

Musk appeared undeterred by the challenge of generating an additional $961 billion in revenue. He said Starship's launch capacity is expected to grow from 2,500 tons per year to more than one million tons, with potential to reach 10 million tons annually.

"It's really a ridiculously profound difference," he said. "But that is our plan, and I think we will achieve that plan."