Space data centers are a long way off, and most experts already knew it

Key points

• Sam Altman publicly accused Elon Musk of misleading public investors on the timeline for space-based data centers.
• SpaceX's plan to run AI computing tasks from satellites in orbit is a major factor behind the company's roughly two-trillion-dollar valuation.
• Engineers, rival space start-up founders, and Google's own orbital compute team all say the economics do not work yet.
• SpaceX conceded during its IPO road show that its Starship rocket may not be fully reusable in the near term.
• Experts place viable, large-scale orbital computing in the 2030s at the earliest.

Sam Altman, the chief executive of OpenAI, and Elon Musk spent part of last weekend trading insults on social media. The exchange was petty, but one line from Altman carried real weight. Responding to Musk calling him a scammer, Altman wrote that Musk was "selling public market investors on short-term space datacenters."

Strip out the tone, and Altman was saying something that a broad group of engineers and entrepreneurs have quietly concluded for months.

Space data centers are not coming soon.

The idea is straightforward: put powerful computing hardware on satellites, and use it to run AI inference tasks (the step where a trained AI model actually answers your question or generates an image) from orbit. SpaceX has made this a centrepiece of its pitch to investors. Bullish analysts point to the potential for SpaceX to run its own SpaceXAI models from orbit, or rent that computing capacity to outside companies the way Amazon and Microsoft rent out cloud servers today. Those projections are a significant part of the reasoning behind SpaceX's roughly two-trillion-dollar valuation.

The problem is the numbers.

TechCrunch AI reported that when journalists spoke to the entrepreneurs behind competing space data center start-ups, the team at Google working on its own orbital compute project, and independent engineers who had run the calculations themselves, they all landed in the same place. Making this work at scale requires two things that do not yet exist: rockets cheap enough to launch hardware in bulk, and high-powered satellites that can be manufactured quickly and affordably.

SpaceX's answer to both problems is Starship, its enormous next-generation rocket. Starship is scheduled for its thirteenth test flight as soon as July 16, 2026. If the company can recover both the booster and the upper stage, the cost picture begins to improve.

But SpaceX itself told investors during its IPO road show that Starship may not achieve full reusability in the near term. That means throwing away the upper stage on many launches, which makes cheap, mass-market orbital computing effectively impossible.

Musk responded to the criticism by saying SpaceX would "start flying them next year." Launching one demonstration satellite equipped for data processing next year is plausible. Launching and manufacturing them at the scale needed to matter commercially is a different question entirely, and the honest answer points to the 2030s.

Should investors be worried?

Anyone holding SpaceX shares through secondary markets should understand that a large slice of the company's current valuation rests on a business that most technical experts think is still a decade away from maturity. That does not mean SpaceX fails. Its Starlink broadband satellite network already generates real revenue, and NASA launch contracts provide a steady floor. But the orbital cloud computing story that justifies a two-trillion-dollar price tag is, for now, more aspiration than timetable.