SpaceX's Two-Front Battle: Gas Turbines for the AI Boom, and a Breakup With OpenAI

SpaceX's turbine plan and OpenAI contract termination with Cursor create mixed signals; shares hover near 50-day average amid growth and spending.

Investors tracking SpaceX are juggling two very different storylines this week: an aggressive push into power generation that could reshape how AI data centers get their electricity, and a contractual rupture with OpenAI that raises questions about the company's AI model supply chain. The shares, trading at roughly €121 in European markets, are hovering near their 50-day moving average as the market digests both developments.

Building Turbines in Bastrop to Bypass a Bottleneck

The company's most ambitious energy play involves manufacturing its own gas turbine components. Elon Musk said SpaceX's in-house foundry in Bastrop, Texas — which will cast turbine blades and vanes using single-crystal techniques at temperatures between 3,000 and 3,600 degrees Fahrenheit — could shave up to 18 months off turbine construction timelines. Musk called the move a "game-changer" for powering AI data centers, a sector where established suppliers are struggling to keep up. GE Vernova, for instance, is reportedly sold out through 2030.

The internal gas trading team being assembled will manage fuel needs for a Texas semiconductor plant, Tesla's operations, and Starship launches. Natural gas is framed as a bridge solution for several years while SpaceX and Tesla each build out 100 gigawatts of annual solar manufacturing capacity. The urgency is underscored by International Energy Agency projections that data center electricity consumption will double by 2030 — a trajectory that has environmentalists concerned about CO2 and nitrogen oxide emissions from gas-fired generation.

OpenAI Pulls the Plug on Cursor

In a separate development, OpenAI has terminated its agreement to supply AI models to Cursor, the coding assistant that came under SpaceX's umbrella through the roughly $60 billion all-stock acquisition of Anysphere. Access to OpenAI models ends November 12, and future models like Astra are also off the table. OpenAI cites a breach of contract terms by Musk-controlled companies, noting that xAI has acknowledged its own violations. Cursor co-founder Michael Truell, now an executive at SpaceX, is caught in the middle of the dispute.

The timing is awkward given the company's AI ambitions. SpaceX's AI revenue grew 247 percent to $2.6 billion in the second quarter of 2026, and Musk has said that segment will surpass all other business lines by September. The company is targeting over 2 gigawatts of compute capacity by year-end 2026 and 10 gigawatts by the end of 2027, with Musk projecting $300 billion to $500 billion in annual AI revenue if those targets are met.

The Numbers Behind the Story

The financial picture is one of breakneck growth paired with heavy spending. Second-quarter 2026 revenue rose 92 percent to $7.8 billion, but the company posted a net loss of $541 million. Capital expenditures reached $18.4 billion, with $15.8 billion funneled into AI infrastructure. Starlink remains the largest segment at $4.291 billion in revenue, up 66 percent, while the launch business contributed $962 million, a 29 percent increase.

Cathie Wood's Ark Invest has been buying shares, acquiring 200,000 for roughly $27 million, making SpaceX the second-largest position in the portfolio at about $680 million. Ark projects Starlink alone could generate around $300 billion in annual revenue by 2035. Meanwhile, some insiders have sold shares worth $1.2 million, a modest counterpoint to the institutional buying.

Analyst Views Diverge Sharply

Wall Street's consensus rating is moderately positive — 24 buys, six holds, and three sells — with an average price target of $228.59, implying roughly 62 percent upside from current levels. But the range is unusually wide: Citigroup sees $200, Deutsche Bank $235, and Morgan Stanley's Adam Jonas has a strikingly bullish $600 target. Fubon initiated coverage with a buy rating and a $183 target. The consensus sits at $219.22.

Not everyone is convinced. David Einhorn has warned of a speculative peak, and the stock's volatility — annualized at 88 percent — suggests the market is far from settled on a valuation. The shares remain about 38 percent below their 52-week high of €194.46, though they've gained a third from early August lows.

Starship and the Louisiana Megaproject

The next major catalyst is Starship Flight 14, slated for early September, following a successful static fire test of all 33 Raptor engines on the Super Heavy booster over the weekend. The launch cadence is central to the broader growth story, as is the proposed "Starbase Louisiana" development — a $100 billion investment on 125,000 acres featuring ten launch pads and roughly 3,000 direct and 8,000 indirect jobs. President Gwynne Shotwell has said the project's viability hinges on Starship's success.

Sunday also saw a Falcon Heavy launch carrying NASA's Nancy Grace Roman Space Telescope, a $4.3 billion mission to study dark matter. That operational breadth — from space missions to satellite internet to AI infrastructure — remains the core valuation driver, even as investors weigh the heavy capital spending against the growth trajectory.

For now, the market's attention is split between the energy strategy's long-term promise and the immediate fallout from the OpenAI rift, with both narratives likely to shape trading in the weeks ahead.