Elon Musk Thinks Data Centers in Space Could Be Cheaper Than Texas Turning Blue. Let’s Check That $5 Trillion-Per-Gigawatt Price Tag.

“Data centers in space looking pretty appealing right now,” tweeted Elon Musk after Democrats notched a historic sweep of Texas, the state that’s home to his SpaceX-Tesla empire. The tech magnate notoriously poured hundreds of millions into this year’s midterm elections, only to watch his handpicked candidates get blown out in race after race.

SpaceX (SPCX) and Tesla (TSLA) shares each fell roughly 3% at last check after a historic Democratic sweep in the 2026 midterm elections installed Texas's first Democratic governor in over three decades — Gina Hinojosa, who has campaigned for a moratorium on new AI data center construction and stricter permitting in a state that accounts for approximately 27% of planned U.S. data center power capacity.

The sell-off arrived even as broader indices staged a sharp recovery, with the Dow Jones Industrial Average ($DOWI) surging over 1,000 points, underscoring how acutely the market views political risk for Musk's sprawling empire. 

Against that backdrop, Musk's recent suggestion that orbital data centers look "pretty appealing" has escalated from social media provocation to a claim investors must price — and the buried numbers suggest the math is far harsher than the headline implies.

SpaceX's Stunning AI Pivot

SpaceX's third-quarter revenue reached $14.6 billion, up a staggering 161% year over year, with its Super Intelligence segment alone generating $7.6 billion after growing 830%. The company has guided fourth-quarter capital expenditures of $35 billion to $40 billion, layered on top of $48.1 billion already spent in the first nine months of 2026, overwhelmingly directed at AI compute infrastructure. 

Management targets 2.5 to 3 gigawatts of nameplate compute capacity by December 2026 and at least 13 gigawatts by end of 2027, claiming new compute pays for itself in under a year at current rental prices.

The $5 Trillion Problem With Space-Based Compute

A senior data center energy executive at Alphabet (GOOG) (GOOGL) has estimated that space-based data centers could cost up to 100 times their terrestrial equivalents, a figure that prominent short seller Jim Chanos translates to roughly $5 trillion per gigawatt of compute. Even at one-tenth of that upper bound, the payback period stretches from under a year to approximately a decade — fundamentally undermining the near-term investment case that has powered SpaceX's valuation. 

Musk himself has suggested orbital compute deployment could exceed terrestrial volumes around end of 2028, but even bullish analysts do not see orbital compute becoming a dominant revenue line until 2030 or 2031, and the critical enabler — frequent, reliable Starship flights — has yet to demonstrate the cost reductions needed.

For Tesla, the numbers tell a different story of resilience amid political vulnerability, with $45.4 billion in cash, $30 billion in untapped borrowing capacity, $1.53 billion in free cash flow in Q3, and its highest order backlog in four years. Tesla's energy storage business — Megapacks nearly sold out through 2027 amid extreme demand from data centers — represents a potential upside catalyst that could paradoxically benefit from terrestrial data center constraints.

The Merger Cloud Over a $3.5 Trillion Entity

Separately, the proposed SpaceX-Tesla merger, which Barclays estimates would give Musk approximately 56% voting control of a combined $3.5 trillion entity while owning only 37% of it, now faces heightened regulatory and political scrutiny under a Democratic Congress that has signaled aggressive oversight of Musk's government relationships.

Goldman Sachs has offered a contrarian perspective, noting that AI stocks have been heavily sold, positioning is cleaner, and corporate decision makers may actually accelerate capital deployment into 2027 before a potentially more restrictive planning regime takes hold. 

Morgan Stanley analysts note SPCX trades at roughly 17.6 times estimated 2028 earnings — slightly below the S&P 500 Index ($SPX) multiple — implying the stock is not as expensive as conventional wisdom holds if revenue projections materialize.

The Next November Catalyst

The critical near-term event remains SpaceX's planned November Starship booster and ship catch attempt. Success would validate the path toward cheaper launches underpinning both Starlink expansion and any eventual orbital compute ambitions, while failure would compound pressure on a stock already trading 38% below its June IPO peak.

Earlier, SPCX hit lows right around the support levels identified by our Senior Market Strategist John Rowland, CMT, in this video clip. Watch to see one way he suggested trading SPCX ahead of the likely merger with Tesla.

This article was created with the support of automated content tools from our partners at Sigma.AI. Together, our financial data and AI solutions help us to deliver more informed market headline analysis to readers faster than ever. 

On the date of publication, Sarah Holzmann did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.