SpaceX's AI Compute Leasing Set to Eclipse Rocket Business as Starship Flight 14 Exposes Engine Gaps

Starship's 14th flight deployed 26 Starlink V3 satellites, but engine issues persist as TD Cowen and UBS highlight AI compute growth.

SpaceX's 14th Starship test flight delivered a genuine first on Monday: the giant launch system reached Earth orbit and deployed 26 Starlink V3 satellites as paying cargo. Yet the milestone arrived alongside a reminder of how much engineering work remains, and it landed in the middle of a week in which analysts made clear that the company's financial future may lie somewhere other than rocketry.

In German trading, the stock was quoted at EUR 131.46 on Tuesday, easing 0.3%, still 32% below its 52-week high of EUR 194.46. On European venues a day earlier, the shares had added 3.0% to reach EUR 131.82, putting them 11% above the 50-day moving average of EUR 119.17.

TD Cowen Sees AI Revenue Overtaking Everything Else

TD Cowen initiated coverage on Tuesday with a Buy rating and a USD 200 price target, arguing that leasing computing capacity for artificial intelligence could generate more revenue than all other SpaceX business lines combined as early as the start of 2027. Analyst John Blackledge projects AI compute leasing revenue of USD 14.4 billion for 2026, roughly 35% of total group sales. That figure is seen jumping to USD 66 billion in 2027, lifting the share to about 58%, and potentially reaching USD 133 billion by 2028.

The momentum rests on multi-billion-dollar contracts with major technology firms. SpaceX counts AI startup Anthropic and Google among its customers. A confidential Anthropic prospectus puts potential payments to SpaceX for computing capacity through 2029 at up to USD 84.5 billion. Google, according to media reports, secured access to roughly 110,000 graphics processors over 32 months in a deal worth more than USD 30 billion.

UBS Flags Heavy Capital Demands Behind the Growth

UBS confirmed its Buy rating and USD 210 price target on Tuesday, forecasting third-quarter 2026 total revenue of USD 13.8 billion — about 7% above average Wall Street estimates. The AI segment is expected to contribute the bulk at USD 7.6 billion, while the Connectivity satellite division housing the Starlink network is projected to grow 59% to USD 4.9 billion. The same estimates underscore the capital intensity of the buildout: UBS calculates third-quarter investments alone at USD 19.3 billion.

TD Cowen expects AI investments of USD 160 billion in 2027 and a persistently negative free cash flow through 2030, with financing needs likely to push new borrowing sharply higher in the coming years.

Flight 14: A Partial Win With Engine Troubles

The Starship mission demonstrated that stage interaction works in principle, but reliability of the complex engines remains a serious construction site. A Raptor engine on the upper stage shut down prematurely, and a booster engine failed early, forcing the flight to end after just over three hours instead of the planned ten. It was not the first such warning: the twelfth test flight in May already brought ignition problems with the Raptor units.

Isolated anomalies can be dismissed as teething troubles. Should a fundamental design flaw in the engine architecture emerge, however, costly delays across the entire fleet would follow — affecting not only commercial operations. NASA's timeline is also under mounting pressure: the agency plans a crewed test mission in Earth orbit for Artemis III no earlier than summer 2027 and aims for a lunar landing in 2028. If SpaceX cannot deliver the lander on time, rival Blue Origin could seize the race with its Blue Moon system.

Scaling Ambitions Meet an Unproven Roadmap

The economic case remains enormous regardless of the technical shortcomings. Deploying the new Starlink V3 satellites showed what is at stake: the units offer ten times the data capacity of the previous generation. If SpaceX can eventually carry up to 60 of them per launch, it would secure a cost advantage over global competitors that would be hard to match.

Goldman Sachs reaffirmed its Buy recommendation with a USD 220 price target after the flight, stressing that the milestones reached underpin the long-term potential. UBS likewise points to the company's technological leadership and vertical integration, which it says is unmatched in the space sector.

Risks the Market May Be Underpricing

Flight 14 offers a clear picture: the technical vision holds, but the market is pricing the risks too casually. Full reusability of the spacecraft and the planned capture of stages at the launch tower still require clearing decisive hurdles in heat shield and engine durability. Orbital refueling, indispensable for lunar missions, remains theoretical.

For long-term observers, the chances offered by unprecedented transport capacity outweigh the drawbacks. In the near term, investors should not underestimate the risk of setbacks ahead of the 15th test flight. Only when SpaceX proves that the Raptor engines burn flawlessly for the full duration of a mission will the path open for a sustainable revaluation.