Space infrastructure just had its first earnings moment. SpaceXSPCX

went public in June in what became the largest IPO of all time, raising ~$86B. Its first quarterly report as a public company landed with a beat on nearly every line.

SpaceX reported Q2 revenue of $7.8B, up 92% year-over-year while the net loss came in at $541M

The company runs three segments. Connectivity, which houses Starlink satellite internet, is the only one generating operating profit. The Space segment covers rockets and launch services. The AI segment covers xAI, Grok, X, and a rapidly expanding data center business.

Starlink is the engine, AI is the bet

Average revenue per user fell to $66 per month from $85 a year earlier. That decline reflects expansion into lower-priced international markets and new lower-cost plans, a deliberate tradeoff SpaceX is making to grow the subscriber base.

Connectivity revenue grew 66% year-over-year. Starlink hit 12M subscribers, doubling in a year.

Enterprise and government revenues within Connectivity more than doubled, boosted by airline partnerships with Southwest, Virgin Atlantic, and others, plus over $6B in US government contracts for Starshield, a secure satellite network for national security use.

The AI segment is where the capital is going. Capex hit $15.8B in AI alone during Q2, up from $749M in the same quarter a year ago.

Total company capex reached $18.4B for the quarter. AI revenue surged 247% year-over-year to $2.6B, driven largely by new Cloud Services Agreements.

Alphabet'sGOOGL

Google agreed to pay $920M per month as part of one arrangement. Anthropic PBC signed a similar deal.

The AI segment still ran an operating loss of $1.3B in Q2, though that improved sharply from a $2.5B loss in Q1. Adjusted EBITDA for AI turned positive at $1.1B.

SpaceX also announced an agreement to acquire Cursor, an AI coding tool, for $60B, with the deal expected to close in Q3. Grok 4.5, described as the company's largest model yet, launched in July after the quarter closed.

Where to rotate if the trade lags

The stock peaked at ~$226 shortly after the IPO and has since fallen nearly 50% . That wiped out over $1.5T in market value.

The post-IPO lock-up period expires this week, which could add further selling pressure as over $100B in shares become eligible for sale.

The selloff has dragged down adjacent names. Rocket Lab and AST SpaceMobileASTS

have both dropped roughly 40% since the SpaceX IPO. Defense sector multiples have contracted broadly over the same period.

That compression is where the rotation argument begins. Applied Aerospace & DefenseAPLD

supplies SpaceX with landing hardware for the Falcon 9 rocket. The company formed in 2025 via a merger and builds components for space, missiles, and drones.

Six of seven analysts covering Applied Aerospace rate it a Buy. Bank of America's Ron Epstein has a $24 price target. Jefferies analyst Sheila Kahyaoglu has a $25 target.

Applied Aerospace is sole-source on more than 80% of its contracts, meaning it faces no direct competition on most of what it builds. Its backlog exceeds $1B.

The primary risk for Applied Aerospace is that private-equity firm Greenbriar Equity still owns ~75% of shares. That stake is expected to unlock near the end of 2026, and large secondary sales typically pressure the price.

SpaceX stock volatility will also continue to affect sentiment across the space supply chain, as Reuters noted that SpaceX has partnered with NvidiaNVDA

to use its chips in planned orbital compute satellites, adding another layer of supplier exposure to watch.