Will the next generation of data centers be in space? On Monday, following SpaceX’s acquisition of xAI in a $1.25 trillion merger, Elon Musk published a memo asserting that the attractive economics of space-based data centers were a significant driver of the agreement. As Elon put it, “In the long term, space-based AI is obviously the only way to scale… My estimate is that within 2 to 3 years, the lowest cost way to generate A.I. compute will be in space.”
This isn’t the first time Elon Musk has mentioned this; in October 2025, he tweeted that SpaceX planned to build data centers in space by “simply scaling up Starlink V3 satellites.” This week, following the xAI acquisition, he stated on a podcast that “in 36 months, but probably closer to 30 months, the most economically compelling place to put AI will be space.”
However, how these data centers could be operational within 36 months and why they’ll be cheaper than on-the-ground facilities remain unanswered questions. Despite SpaceX’s recent filing with US regulators to launch one million satellites to support an orbital data center, skepticism remains. For example, AWS CEO Matt Garman said this week that “There are not enough rockets to launch a million satellites yet, so we’re, like, pretty far from that…. If you think about the cost of getting a payload in space today, it’s massive.”
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