SpaceX Q3 earnings preview: What to watch from AI to Starlink

SpaceX reports earnings after the close on Tuesday, 20 October. Here’s what to look out for.

There was relatively short notice on the earnings release date, which suggests maybe management wishes to get updated financials out of the way before further financing rounds and give the market a bit of grace to absorb the 1.3bn shares of lockup releases coming two days after earnings, plus the other 329mn on 24/10 and the rest of the 857mn shares of the 180-day group after.

The earnings update will be largely about AI rather than rockets. SpaceX is expected to report third-quarter revenue of $12.74 billion, up sequentially from $7.8bn in Q2, which was +92% YoY, and be profitable at ~14 cents earnings per share, vs the loss of 9 cents in Q2.

Profit and positive commentary

The net loss narrowed by almost 50% to $541 million from $1.0 billion and signs of improving profitability are expected to be reflected by positive commentary from management. There has also been positive recent progressfrom the Starship launch and spectrum purchases. SpaceX said earlier this month it had agreed to purchaseUS mobile spectrum to further its Starlink mobile network ambitions, whilst in late September its 14th Starship launch marked the vehicle's first-ever orbital flight test and first operational payload delivery. Also expect some buzz around a potential Tesla merger to help underpin sentiment.

Launch is another area to look forward and expected positive commentary around the timings for the Starship mission 15, perhaps taking place in early November, and Starship 16 by the end of the year. The operational questions are Starship reliability, reuse, development spending and the timetable for expanding commercial capacity. Launch milestones are important.

AI contracted & recognised revenues

As for the key financials look to the AI unit, now called SpaceXSI, which posted an operating loss of $1.26bn last quarter vs estimates from a loss of $2.39bn. AI revenues were up 213% sequentially and 247% year-over-year to $2.6bn in Q2.

The immediate test is how much contracted computing demand becomes recognised revenue—and how profitable that revenue is after depreciation and financing costs. In Q2 SpaceX said it had entered into cloud agreements totaling $14.1 billion in contracted sales to provide customers with access to compute capacity, which resulted in $1.6 billion in incremental AI infrastructure revenues for the quarter.

Capex is the key

The pace of capex will be perhaps the key metric - AI spend jumped to $15.8bn in Q2 from $7.7bn in the prior quarter. At roughly $19bn, expected Q3 quarterly capex would equal about 1.5x expected revenue.

This will be an important tell on the requirement for financing, which remains an overhang for the stock, particularly following the crash for neocloud stocks. Reports indicate SpaceX will tap investors for $40bn in financing to fund purchases of Nvidia chips for its data centres, but the debt issuance is expected to rise to as much as $90bn annually by 2029, according to Morgan Stanley.

The other metric will be annual recurring revenue (ARR) that may include fresh AI compute deals – CFO Bret Johnsen signalled last month that SpaceX would hit $100bn ARR by the end of the year.

Starlink earnings

 In Connectivity, which includes Starlink, the Street expects a $1.6bn operating profit and revenues rising to $4.45bn, implying significant slowdown in the 66% YoY growth pace in Q2. Starlink remains the key earnings driver. Connectivity revenues were up 32% sequentially and 66% year-over-year to $4.3 billion, driven by strong Starlink subscriber growth. Starlink Subscribers hit 12mn as of the end of Q2 2026, doubling year-over-year and up 1.7 million sequentially.

But Connectivity costs rose almost $1bn and the question is whether subscriber expansion and enterprise demand can offset pricing pressure. It’s hard not to see spectrum purchases as positives and expect positive commentary from management.

Looking beyond the positive momentum around launches, spectrum purchases and a possible Tesla tie-up, the key question for the stock is whether the contracted backlog in AI combined with the Starlink cash generation offer SpaceX the ongoing headroom to keep servicing its mounting debt load. This highlights the importance of the compute buildout. In Q2 it expanded compute capacity to 1.4 GW, up from 1.0 GW in Q1 2026 and 0.4 GW in Q2 2025, so we will pay close attention to commentary on the continued build-out of Colossus II and incremental capacity under construction.

Space

Finally, it’s still a space company: Space revenues grew 55% sequentially and 29% year-over-year to $962 million in Q2 and are expected to rise about 50% to $1.46bn in Q3. I don’t headline Space numbers as material for the stock as much as launch timelines and the success of missions.