Morgan Stanley analyzed emerging orbital datacenter opportunities as SpaceX scales low-Earth-orbit infrastructure.
Elon Musk has confirmed that SpaceX is going public with space-based data centers secured. According to Morgan Stanley's Adam Jonas, if SpaceX's valuation reaches $800 billion, it would rank 13th by valuation among S&P 500 companies, positioned between JPMorgan Chase and Oracle. Jonas noted that this valuation would exceed the combined market capitalizations of the publicly traded military-industrial complex, including contractors such as RTX (Raytheon), Boeing, Lockheed Martin, General Dynamics, Northrop Grumman, and L3Harris. Meanwhile, an $800 billion valuation would make OpenAI the highest-valued private unicorn, according to PitchBook data.
On orbital data centers, Musk described them as "by far the fastest way to scale [compute] within 4 years, because easy sources of electrical power are already hard to find on Earth. 1 megaton/year of satellites with 100 kW per satellite yields 100GW of AI added next year with no operating costs or maintenance costs, connecting via high-bandwidth lasers to the Starlink constellation." In an interview with investor Ron Baron, Musk characterized this as an impending "convergence" of SpaceX and Tesla, with Starship capable of delivering 100GW/year within "four to five years" assuming other technical hurdles are solved. This hypothetical constellation would leverage scaled-up versions of next-gen Starlink V3 connected by high-speed laser links to form an orbital compute cloud of GPU-equipped satellites.
Space-based datacenters offer distinct advantages over terrestrial alternatives. Cooling in space presents significant benefits, as space is approximately 2.7 Kelvin or −270°C; while removing heat from GPUs requires large metal radiators, the efficiency of radiating heat into deep space is argued to be superior to terrestrial cooling, which can account for up to 40% of total energy usage. Starcloud projects 10x lower energy costs versus terrestrial alternatives. Solar power in space is effectively uninterrupted and abundant, providing a near full solar constant of about 1,361 W/m², roughly 30% more than the best ground-level solar irradiance after atmospheric attenuation. Space-based datacenters positioned in optimal orbits can also theoretically improve connectivity for distributed users and edge-compute workloads, keeping compute resources within milliseconds of most population centers. Additionally, SpaceX currently holds 90% of mass-to-orbit capacity per Elon Musk, and with rising total mass-to-orbit capacity from competitors like Blue Origin, Rocket Lab, and emerging launch providers including China, the falling cost per kilogram to orbit is likely to enable larger deployments.
Space-based datacenters face significant obstacles, including harsh radiation environments demanding specialized hardened hardware, difficulty of in-orbit maintenance or repair, and orbital debris hazards given the size and scale of currently theorized systems. Regulatory complexities around spectrum, space traffic management, and multinational data governance present substantial hurdles as well. Two companies are pursuing this opportunity: Starcloud, a Redmond, Washington–based startup founded in 2024 by Philip Johnston (CEO), Ezra Feilden (CTO), and Adi Oltean (Chief Engineer), has raised over $20 million in seed funding from Y Combinator, NFX, FUSE VC, Andreessen Horowitz, and Sequoia Capital according to PitchBook. Axiom Space, a Houston-based company founded in 2016 by Michael T. Suffredini and Kam Ghaffarian, is developing an "Orbital Data Center" product line with plans to launch its first two free-flying ODC nodes into low Earth orbit by the end of 2025 to provide secure, cloud-enabled data storage and processing for commercial, civil, and national security customers.