SpaceX Is in Talks on a Multibillion Dollar Defense Contract. Here Is What It Means for Investors

In a determination that could assistance validate SpaceX's (NASDAQ:SPCX) tremendous concern successful artificial quality (AI), the institution is reportedly discussing a multi-billion-dollar computing declaration with the Department of Defense (DOD), arsenic primitively reported by The Wall Street Journal.

The presumption of the agreement, portion not yet confirmed by the Pentagon oregon SpaceX, would let the Defense Department to usage SpaceX's information centers to tally AI models. This could travel akin deals SpaceX has inked with Alphabet (NASDAQ:GOOG) and Anthropic, and spot it among an exclusive radical of cloud-computing providers that are supporting the Pentagon's AI operations.

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Although the woody remains tentative and, successful The Journal's words, "could autumn apart," the improvement whitethorn uncover thing important for SpaceX investors. Let's instrumentality a person look.

Image source: The Motley Fool.

Why investors should wage adjacent attraction to this woody

To truly recognize the value of this deal, we should measurement backmost and retrieve however intimately SpaceX's aboriginal is present tied to artificial intelligence.

Until Feb. 2, 2026, SpaceX was champion known for launching rockets and managing its satellite-based net service, Starlink. But successful aboriginal February, SpaceX acquired xAI, forming a monolithic entity that's present valued astatine astir $1.6 trillion.

The acquisition not lone brought 2 of Elon Musk's businesses nether the aforesaid extortion but besides provided xAI with a larger superior basal to assistance it standard faster. The thought is that eventually, the AI concern volition go SpaceX's large maturation engine, adjacent if it's burning currency close now. Indeed, successful SpaceX's pre-IPO roadside show, the institution claimed AI volition unlock a $26.5 trillion marketplace opportunity, whereas the marketplace accidental for the different 2 businesses is astir $2 trillion.

Here's the kicker, however: xAI generated an operating nonaccomplishment of astir $6.4 cardinal successful 2025. Although the remainder of SpaceX's operations helped offset immoderate of that damage, the institution inactive posted a nett nonaccomplishment of astir $4.9 cardinal for the year.

This is wherever the imaginable woody with the Pentagon comes in. If the Pentagon becomes a multi-billion-dollar customer, SpaceX's AI conception could commencement carrying immoderate of the fiscal load investors expect it to shoulder. At the precise least, it could assistance offset this segment's dense losses, bringing the abstraction institution person to profitability.