SpaceX and Google Want to Launch Data Centers Into Space -- 2 Things Investors Should Know
Written by Ryan Vanzo for The Motley Fool -> SpaceX is armed with cash following a successful IPO. Google and SpaceX may soon launch data centers into space. The historic SpaceX (NASDAQ: SPCX) IPO is now behind us. The company successfully raised $75 billion from outside inves
The historic SpaceX (NASDAQ: SPCX) IPO is now behind us. The company successfully raised $75 billion from outside investors, a sum that could balloon even higher thanks to underwriter allotments and additional share sales. With its market cap soaring, I wouldn't be surprised to see SpaceX sell even more shares at a richer valuation sooner rather than later.
What will the company do with all this new capital? A quick glance at the company's IPO prospectus reveals the answer. Of the company's claimed $28.5 trillion total addressable market, $26.5 trillion of that is dedicated to a single growth opportunity. It's not rockets or Starlink, but artificial intelligence (AI).
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
Artificial intelligence growth , however, will be greatly limited by data center infrastructure. Without more data centers, SpaceX's AI ambitions will remain capped. Building more data centers as quickly as possible is, therefore, now critical to SpaceX's long-term growth and survival.
There's just one problem: Data centers themselves have several growth constraints.
"The race to scale AI has triggered one of the largest infrastructure build-outs in modern history," observes a recent report from global consultancy McKinsey & Co. "By our estimates, global spending on data centers could reach $7 trillion by 2030. Whether a build-out is successful depends on many nuances, including the availability of capital and energy resources."
SpaceX now has plenty of capital to build massive amounts of data centers. But there is still the issue of energy resources. This challenge is a big reason SpaceX CEO Elon Musk has considered launching data centers into space -- so-called orbital data centers. It's also why other major technology companies like Alphabet , the parent company of Google, are interested in space-based data centers. In space, cooling needs would be significantly reduced, with abundant solar power available for near-constant use.
According to reports, SpaceX and Google may soon be teaming up to make orbital data centers a reality. The potential is huge. But there are two concerns investors should be wary of.
