Depending on who you talk to and listen to, the term “artificial intelligence” is out — and the term “super intelligence” is in. The linguistic pivot reflects evolving views about the capabilities of highly advanced computing, and you can count Space Exploration Technologies (NASDAQ: SPCX) CEO Elon Musk among those favoring the vernacular promoted by President Donald Trump.
In the company’s recent third-quarter report, SpaceX renamed its artificial intelligence segment to “Super Intelligence.” While the company made its name with its rocket-launching services and Starlink satellite communications business, Musk has been highlighting the increasing importance of compute to the business. Following SpaceX’s recent quarterly report, it’s clear that the company has made a major transition.
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SpaceX’s Q3 report marked a huge turning point
To a large extent, the distinction between artificial intelligence and super intelligence is academic. It’s a difference in terminology for the same essential technologies. Trump has been promoting the term “super intelligence” in recent weeks, saying it is a more accurate description of AI. And Musk has been one of Trump’s top supporters.
In the third quarter, sales for SpaceX’s recently renamed super intelligence segment rocketed 830% higher year over year to hit $7.56 billion. The growth made super intelligence the company’s largest segment by revenue.
In fact, the super intelligence segment now generates more revenue than the combined revenue of its space and connectivity segments. The connectivity segment increased its sales by 68% to $5.25 billion, and the space segment grew revenue 6% to reach $1.77 billion — bringing their combined sales to $7.02 billion. Performance in the SI segment drove the company’s sales, up 161% year over year to $14.6 billion in Q3.
With the super intelligence segment growing revenue far faster than either of the company’s other two segments, the core of SpaceX has changed substantially. It’s likely that the segment will only become increasingly central going forward.
In the company’s third-quarter conference call, Musk said that he expects SpaceX to reach between $500 billion and $1 trillion in annualized recurring revenue by the end of 2027. Even hitting the low end of that target range would be a massive achievement. The company’s Super Intelligence business segment will likely be the primary driver of the growth required to achieve that guidance level.
Following some recent market volatility, SpaceX now has a market capitalization of roughly $2 trillion. That’s an impressive valuation given that the business generated roughly $18.7 billion in sales last year.
On the other hand, the company’s SI segment is turbocharging growth. SpaceX remains a high-risk, high-reward stock, and the company’s huge bet on the artificial intelligence market carries inherent risks, but the incredible momentum in the business’s SI segment provides meaningful justification for the tech specialist’s valuation.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
