Sam Altman Calls Out Elon Musk on Space Data Center Ambitions

Sam Altman and Elon Musk traded barbed social media posts over the weekend, drawing new attention to the gap between vision and reality for the space-compute business. Responding to Musk accusing him of being a scammer, Altman said, “homeboy you’re the one selling public market investors on short-term space datacenters.” Setting aside “homeboy,” Altman is saying what a lot of experts have concluded but public market investors seem to be ignoring: Space data centers are not going to be a serious business anytime soon. SpaceX’s plans to launch a fleet of orbital data centers to perform AI inference tasks are the main driver behind the company’s 2-trillion-dollar valuation.

Bullish analysts say that the potential for that processing power to fuel SpaceXAI’s models or act as an orbital neocloud are unprecedented in the AI boom. But when you talk to subject-matter experts — whether it’s the entrepreneurs behind other space data center startups, the team at Google developing that company’s orbital compute project, or engineers who have done the numbers for fun — you find the same answer: This isn’t going to make a big dent until we have much cheaper rockets and the ability to produce high-powered satellites at low cost, en masse. Musk’s answer to this is easy to predict: Starship, SpaceX’s huge new rocket, is expected to make its 13th test flight as soon as July 16.

If Musk’s team can get that vehicle to the point where it flies again and again, the data center business case could close. But even if the company successfully recovers both stages of the rocket on this test flight, operational reusable flight will still likely be years away, and space data center launches will likely take a back seat to SpaceX’s commitments to NASA and to building out its own Starlink network. SpaceX also conceded during its IPO road show that Starship may not be fully reusable in the near-term and will need to throw each of its second stages during each launch, which would put a kibosh on economical space data centers.

That’s why Musk’s rejoinder — “We start flying them next year” — falls a bit flat. There’s no doubt that SpaceX could launch a satellite equipped for high-speed data processing next year, but the big question is when it will be able to launch and manufacture them at scale. And that’s likely a question for the 2030s.

Why this matters: The spat between Altman and Musk highlights the skepticism surrounding space data centers, a crucial component of SpaceX's valuation. While the idea of orbital compute is intriguing, experts remain unconvinced that it's a viable business in the near term. The challenges in developing reusable rockets and mass-producing high-powered satellites at low cost are significant.