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SpaceX CEO Elon Musk hints that Starship’s ‘sweating’ metal heat shield is no more
In the latest entry of SpaceX’s ever-changing Starship design process, CEO Elon Musk has indicated that the nominally reusable orbital spacecraft has moved away from a liquid-cooled steel heat shield to something slightly more traditional.
This information came as a SpaceX engineer announced during Cargo Dragon’s CRS-18 webcast that the twice-flown spacecraft would mark the first orbital test of a ceramic heat shield tile meant for use on Starship’s windward side. This major design change comes as a significant surprise and seems likely to either delay Starship’s orbital debut or hinder its ultimate reusability, although Musk just as recently claimed that the spacecraft could reach orbit for the first time less than six months from now.
Testing a possible Starship windward side ceramic tile. Maximizing emissivity is best for conductive/particle heating. Nice thing about steel is that tiles can be very thin, unlike carbon fiber or aluminum airframe.— ln(e) (@elonmusk) July 25, 2019
Thin tiles on windward side of ship & nothing on leeward or anywhere on booster looks like lightest option— ln(e) (@elonmusk) July 25, 2019
Back in late-2018 and early-2019, Musk took to Twitter to announce that SpaceX was pursuing an exotic metallic heat shield that would be cooled in large part by flowing liquid methane through tiny holes on its exterior, effectively ‘sweating’ away energy and preventing steel tiles from melting.
Despite incontrovertible evidence that SpaceX performed some amount of significant testing on the hexagonally-tiled steel heat shield concept, Musk’s July 24th tweets indicate that the liquid-cooled heat shield is unlikely to ever be used on Starship. For unknown reasons, SpaceX is instead pursuing some sort of thin ceramic heat shielding to protect the entirety of Starship’s windward side (i.e. the side facing the atmosphere during reentry). A handful of the first flight-qualified ceramic tiles – shaped for Dragon instead of Starship – will be tested on Cargo Dragon during the spacecraft’s orbital mission and eventual reentry.
Of note, this is not the only major design change Starship has undergone in just the last few months. Speaking on May 30th, Elon Musk stated that the design of Starship’s landing legs/fins and actuating wings and flaps has changed significantly since SpaceX revealed the new tripod fins + canard wings configuration in September 2018. According to Musk, that change will (or at least should) not significantly impact Starship’s schedule.
In fact, per his July 2019 claims that the first full-fidelity Starship prototype(s) could begin test flights in September/October and reach orbit as early as December/January, the Starship/Super Heavy schedule has actually radically sped up in the first half of 2019. In December 2018, Musk stated that he believed Starship had a 60% chance of reaching orbit in 2020, let alone late-2019.
For Starship, the massive spacecraft’s heat shield is arguably its single most important component. A failure to ensure that the heat shield is unprecedentedly reusable and reliable – even in the face of ultra-high-velocity interplanetary reentries – will severely limit Starship’s ability to achieve its ultimate goals of enabling affordable access to space and building a sustainable city on Mars. Musk’s comment that ceramic tiles are just “a possible” Starship heat shield element further indicates that SpaceX has yet to firmly settle on a heat shield design, let alone qualify said shield for orbital flight or kick off the mass-production necessary to completely cover multiple Starship halves.
Admittedly, there is still some good news in this unfortunate development. Most notably, the fact that Starship will still be made of steel means that the non-metallic heat shield tiles can be extremely thin and light, as they can be more or less directly attached to Starship’s steel hull. Additionally, steel Super Heavy boosters may be able to get away with zero heat shielding thanks to the relatively high melting point and heat resistance of certain varieties of stainless steel.
So long as both of those characteristics remain true, it’s likely that it will still make sense for Starship/Super Heavy to be built entirely out of steel instead of something like aluminum or carbon composite. With any luck, Elon Musk will provide a detailed update on the status of SpaceX’s next-generation launch vehicle soon after Starhopper survives its first untethered flight test.
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Elon Musk
SpaceX’s next trillion dollar bet has nothing to do with rockets, Musk tells staff
Elon Musk told SpaceX staff AI revenue will soon dwarf rockets and Starlink combined entirely.
Elon Musk told SpaceX employees this week that artificial intelligence, not rockets, will soon carry the company’s revenue. In a roughly 29 minute internal address posted on SpaceX’s X account on Tuesday, Musk said AI revenue will pass every other line of business at SpaceX “probably in September” and pull further ahead by the fourth quarter.
The numbers he gave are specific. SpaceX currently runs 1.4 gigawatts of AI compute capacity. Musk wants that at 10 gigawatts by the end of 2027, a jump he tied directly to revenue: “if we bring 10GW of AI online by the end of next year, it will be $300 billion to $500 billion a year in revenue.” He called those “big numbers,” which undersells a projection larger than what most countries produce in a year.
We made rockets reusable and are rebuilding the internet in space. The next challenge: making life multiplanetary and understanding the true nature of the universe
Watch @ElonMusk deliver a company update to @SpaceX employees pic.twitter.com/5c8rxoCQfu
— SpaceX (@SpaceX) August 11, 2026
Musk went further on where AI fits into SpaceX’s future. “Probably in four or five years, AI will be 99% of the value of SpaceX,” he told staff, adding that digital intelligence would eventually run “a trillion times” ahead of biological intelligence as computing scales. He tied that growth to the company’s founding mission, telling employees “we must win on AI, because the future is overwhelmingly AI and robots,” with the payoff meant to help fund Starship and a Mars program that increasingly runs through Terafab, the joint Tesla, SpaceX and xAI chip plant.
Elon Musk launches TERAFAB: The $25B Tesla-SpaceXAI chip factory that will rewire the AI industry
None of this is entirely new territory. SpaceX told investors much the same story during its first earnings call as a public company on August 4, where Musk moved the company’s $1 trillion revenue target up a year to 2030 and said Starlink could someday carry a majority of the world’s internet. What the all hands video adds is a hard deadline and a specific power figure Musk had not given publicly before, along with a franker pitch to his own workforce that AI, not launch cadence, is now the thing SpaceX is betting its future on.
The AI revenue itself is not coming from SpaceX training its own models. It is largely Starlink acting as the network layer for xAI’s workloads, plus SpaceX renting out compute capacity directly, the same approach behind the roughly $16 billion the company spent on AI infrastructure in a single quarter.
Musk closed the video with a pitch aimed at recruiting and retention rather than investors, telling employees that anyone who helps SpaceX win the AI race will eventually get the chance to go to the moon or Mars themselves. Whether SpaceX can turn 1.4 gigawatts into 10 in seventeen months is the more immediate question, and one that will show up in quarterly numbers well before anyone leaves Earth.
In a new note to investors on Tuesday, Morgan Stanley analyst Andrew Percoco said that Tesla has one big financial question to answer for investors regarding its Robotaxi rollout, Full Self-Driving software, and Optimus.
Percoco said in the note that, for the most part, investors are still very positive about the direction the company is headed. However, there are some things the firm would like to see, and they have to do with financials.
Tesla (TSLA) Q2 2026 earnings results: miss on EPS, beat on revenue
Tesla bulls are more than convinced that the company’s Full Self-Driving software is proof it can develop physical AI. Financially, however, there are still some questions, especially on elevated spending, which CEO Elon Musk said would occur as the company works to roll out Robotaxi faster and continue developing its Optimus robot.
The latter two are where Tesla will have to prove progress to investors, as Percoco writes that both projects “will require clearer evidence that Robotaxi is scaling and more tangible Optimus proof points to support the ROI on elevated capex.”
Percoco said the second quarter earnings call did not change his long-term thesis of where Tesla is positioned in the AI race, which is out in front. However, there are concerns that weaker gross margins and higher R&D spend will stress financials, and that has “sharpened our (and investors’) focus on measurable progress across Robotaxi and Optimus.”
Additionally, Robotaxi still needs to be proven with more operation in existing cities while maintaining safety but improving how many rides it gives in any given time, he said. For Optimus, Percoco wrote that he is “still looking for evidence beyond commentary around SOP.”
Morgan Stanley put Percoco in charge of covering Tesla after long-time analyst Adam Jonas transitioned to the automotive side.
Currently, Morgan Stanley has a $415 price target on Tesla and a ‘Hold’ rating on the stock. It is trading at around $330 at the time of publication, which was 2:30 P.M. on the East Coast.
SpaceX’s massive investment in AI will make it a big winner, Argus Research said after the company’s successful earnings call last week.
The firm also upgraded shares to a Buy from Hold and set a $160 price target.
SpaceX (NASDAQ: SPCX) is currently recovering from its heavy AI infrastructure investments, as it spent nearly $16 billion in Q2 alone. The company did this primarily by monetizing high-demand GPU compute capacity at a much faster pace than traditional data center economics would suggest.
Company CFO Bret Johnsen said that SpaceX would be able to pay back anything on new deployments within a year.
There are plenty of ways the company can do this:
Leasing excess compute capacity through contracts
SpaceX has already built Colossus and Colossus II, largely for its own model training. However, much of that capacity is already rented out to third parties. It already has major deals with Anthropic, Google, and Reflection AI. These partnerships are adding billions per month to SpaceX’s spreadsheet.
High utilization driven by industry-wide scarcity
The demand for advanced AI training and inference capacity continues to exceed what is available for use. SpaceX can fill new racks quickly after they come online, so the capital deployed converts into revenue with minimal idle time.
Additionally, management and outside observers have described the new compute capital as behaving more like a cost-of-goods-sold than traditional multi-year capex, especially because of this rapid monetization pattern.
Capacity has already scaled from ~0.4 GW a year to 1.4 GW annually by the end of Q2. There are targets of more than 2 GW by year-end.
High incremental margins on the rental business once capacity is online
GPU cloud providers often operate at strong gross margins. SpaceX can monetize capacity that was already partially built or can be added efficiently. This means that incremental EBITDA margins on the rental revenue are usually high. This accelerates cash recovery relative to the gross capital outlay.
Parallel monetization of its own AI software and applications
Beyond pure infrastructure rental, SpaceX also generates revenue from Grok through subscriptions and usage, from X through ads, data, and other related services, enterprise APIs, and the planned integration of the Cursor coding tools acquisition.
These application layers ride on the same compute infrastructure and provide additional high-margin streams that could offset build-out costs. AI-segment revenue overall rose sharply to about $2.6 billion in Q2, according to Motley Fool. This was driven primarily by the infrastructure contracts, but the software side is also partially responsible.
Efficient, large-scale deployment and vertical integration advantages
SpaceX has emphasized the rapid construction of power and cooling infrastructure and favorable cost-per-megawatt economics relative to industry benchmarks in some disclosures.
Combined with its ability to scale capacity aggressively and the fact that many contracts start generating revenue within months of capacity coming online, the effective payback compresses dramatically compared with more conventional multi-year data-center projects.
SpaceX’s dominant near-term recovery path will turn the AI clusters into a hyperscale-style compute rental business for other leading AI companies while still using a portion for internal models.
SpaceX’s next trillion dollar bet has nothing to do with rockets, Musk tells staff
Tesla has one big financial question to answer for investors: Morgan Stanley
