SpaceX
SpaceX builds new orbital Starship sections as Starhopper loses its engine
Amidst the growing buzz centered around the imminent second launch of Falcon Heavy, SpaceX’s South Texas team has continued to work on Starhopper and the first orbital Starship prototype. wrapping up the first major tests of the former and making new progress on the latter’s aeroshell.
For unknown reasons, SpaceX technicians uninstalled Starhopper’s Raptor – the second full-scale engine ever built – shortly after the vehicle’s first true hop test and proceeded to package it up for shipment elsewhere, likely McGregor’s test facilities or the Hawthorne factory. Simultaneously, the third completed Raptor (SN03) was recently installed in McGregor according to photos and observations published by NASASpaceflight.com, preparing to continue to the engineering verification tests that began in February. Once those tests are complete and the engine design is modified to account for the lessons learned with Raptor SN01, SpaceX’s next step will be to begin ramping Raptor production in preparation for multi-engine Starhopper testing and – eventually – the completion of the first orbit-capable Starship prototype.
Needless to say, SpaceX is juggling a lot of interconnected projects in an effort to speed its Starship/Super Heavy (formerly BFR) development program, none of which are being discussed by the company in more than a cursory manner. What follows is thus meant to be an informed but speculative estimate of what is currently going on and what is next for BFR.
Starhopper slips the surly bonds
Over the course of the last two weeks, SpaceX has been almost continuously testing the first integrated Starship prototype, a partial-fidelity vehicle known as Starhopper. The testing primarily involved almost a dozen wet dress rehearsals (WDRs) in which the rocket was filled with some quantity of liquid oxygen and methane propellant and helium for pressurization as engineers and technicians worked through several bugs preventing Raptor from safely operating. According to CEO Elon Musk, some form of ice – potentially methane, oxygen, or even water – was forming in or around parts known as “prevalves”, likely referring to valves involved in the process of supply rocket engines with the right amount of fuel and oxidizer.
Less than 24 hours later, those valve issues were apparently solved as Starhopper’s Raptor ignited for the first time in a spectacular nighttime fireball. 48 hours after that first ignition, SpaceX once again fueled Starhopper and ignited its Raptor engine, lifting a spectacular handful of feet into the air before reaching the end of its very short tethers. According to Musk, the first Raptor ignition was completed with “all systems green”. After the second test, no additional comments were made. Less than three days later, SpaceX technicians uninstalled Starhopper’s Raptor (SN02) and shipped it somewhere offsite, indicating that it may have suffered a fault similar to the one that caused relatively minor damage to Raptor SN01 at the end of its February test campaign. Regardless, it appears that this development will keep Starhopper grounded for the indefinite future barring the imminent shipment of Raptor SN04 or the completion of SN01’s refurbishment.
The Raptor pack grows
Starhopper’s unplanned grounding ties
While the exact strategy behind SpaceX’s Raptor and BFR propulsion development programs
Regardless, the somewhat buggy behavior exhibited by the integrated Raptor and Starhopper indicate the obvious: both are fairly immature hardware still in some form of development, be it the late (Raptor) or the very earliest stages (Starhopper). By performing even more testing and continuing to optimize and gain familiarity with the hardware at hand, the fairly predictable process of development will arrive at more or less finished products.
Starship’s first orbital prototype
Last but not least, work continues on what will hopefully become the first orbit-capable Starship prototype, built in full-scale out of sheets of stainless steel that are far thinner than the metal used to construct Starhopper. This, too, is a normal process of development – as progress is made, prototypes will gradually lose an emergency cushion of performance margins, a bit like a sculptor starting with a solid block of marble and whittling it down to a work of art. Starhopper is that marble block, with inelegant, rough angles and far more material bulk than truly necessary.
As seen above, the orbital prototype – just the second in a presumably unfinished series – is already dramatically more refined. Instead of the first facade-like nose cone built for Starhopper, Starship’s nose section is being built out of smoothly tapered stainless steel panels that appear identical to those used to assemble the rocket’s growing aeroshell and tankage. As of now, there are five publicly visible Starship sections in various forms of fabrication, followed by a half-dozen or so tank dome segments waiting to be welded together as finished bulkheads.
Intriguingly, the only quasi-public official render of SpaceX’s steel Starship features visible sections very similar to those seen on the orbital prototype’s welded hull. They aren’t all visible in the render, but those that are are a distinct match to the aspect ratio of the welded sections visible in South Texas.
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Extrapolating from this observation, Starship, as rendered, is comprised of approximately 16 large cylinder sections and 4-8 tapered nose sections. Based on the real orbital prototype, each large section is 9m in diameter and ~2.5m tall. Assuming Starship is 55 meters (180 ft) tall, this would translate into 22 2.5m sections, a nearly perfect fit with what is shown in the official render. Back in South Texas, SpaceX has 6 tapered sections and 7 cylinder sections in work, meaning that they would reach around 32.5m (~105 ft) – about 60% of a Starship hull – if stacked today.
If we assume that SpaceX follows Falcon procedures to build the seven-Raptor thrust structure separately (~2 sections) and excludes most of the cargo bay (~2-3 sections) on the first orbit-capable Starship, those ~13 in-work sections could be just a tapered nose cone away from the prototype’s full aeroshell. Time will tell…
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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.
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.
Elon Musk
Another Tesla SpaceX merger prediction by ARK Invest has Elon Musk talking
Elon Musk again denies a Tesla China split as new SpaceX merger speculation resurfaces quickly.
Elon Musk restated that Tesla has no plans to separate its China business from the rest of the company, responding to a new round of merger speculation from ARK Invest.
On the firm’s “Brainstorm” podcast, Cathie Wood’s team, including chief futurist Brett Winton and research director Nick Grous, argued a Tesla and SpaceX combination remains likely, with an announcement possible before the end of the year even if the deal itself would not close that quickly. Winton called Tesla’s Shanghai operations a “small ish wrinkle” for a merger rather than a real obstacle, since SpaceX’s national security work with the U.S. government sits uneasily next to Tesla’s manufacturing base in China.
Musk pushed back on the framing directly. “China is awesome. I strongly encourage people to visit,” he wrote on X. He also repeated language he first used in late July, when the Wall Street Journal reported that Tesla executives had been told to prepare for a possible spinoff, sale, or closure of the China business ahead of a SpaceX tie up. Musk called that report “absurdly fake news” at the time, adding that a separation had “never even come up in a discussion ever,” a line he echoed again this week.
The repeated denial has not settled the underlying question, because Shanghai’s role in Tesla’s business is exactly what makes a merger complicated. Gigafactory Shanghai still ships more than half of Tesla’s global deliveries and functions as the company’s main export hub for Europe and Asia. Teslarati previously reported on Musk’s initial denial, and the merger conversation itself has been building since SpaceX’s IPO gave it public shares to use as acquisition currency.
Wedbush’s Dan Ives has pegged the odds of a Tesla SpaceX merger at 80 to 90 percent by early 2027, and ARK’s prediction of a year end announcement adds another data point to that timeline, even as Musk keeps rejecting the specific mechanics reporters have described. Neither position rules out the other. Musk can deny a China spinoff was ever discussed while analysts still expect some form of combination to move forward, since ARK and Ives are both describing convergence at the corporate level, not necessarily the internal restructuring the Journal described in July.
For now, Tesla’s China business remains intact, and Musk’s comments this week make clear he has no interest in publicly walking that position back, no matter how often the merger question resurfaces.
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