[barredo]

>> SpaceX told investors during the IPO process that it sees an addressable market for AI products worth $26 trillion, roughly equivalent to U.S. GDP.

I very much can imagine a future documentary in a few years. With the host asking the audience: "Where were the signs?"

[swalsh]

Imagine the East India Trading company advertising the TAM of the new emerging markets in the early 1600's. I bet the numbers compared to the old world would be enormous, and equally unbelievable.

IF, and yeah it's a gigantic really big IF... the future plays out the way people are envisioning it. It's future shock. Astroid mining, gigafabs, star ships launching hourly making space exploration cheap, satellite intelligence, physical AI. The world is going to be a completely different place IF SpaceX and the AI labs are successful. That TAM might be real. It's a literal moonshot, the stuff they're talking about sounds SciFi, but that's why the valuations sound SciFi.

That said, I would not invest anything into SpaceX that I wouldn't be willing to lose, and i personally would not invest until the lockups are free. Moonshots aren't in my risk profile.

[IndeanCondor]

This is such terrible history. Please Google things before making analogies.

The East India Companies (Dutch and English) didn't invent or discover the spice trade. They were created to leverage private capital to wrest control of the trade from the Iberian Union, an entity both Company's sovereigns were at war with.

The "TAM of the emerging markets" had already emerged both because of the Silk Route from Pax Mongolica and in the 1500s from the Portuguese Empire's Cartaz trade license monopolies enforced by their naval posts (feitorias) throughout Asia.

The TAM was incredibly apparent, Anglo-Dutch privateering during the war had seized multiple cargo laden ships along with trade route information.

[burnerRhodov3]

I feel like you are intentially misrepresenting his comment to flex your history knowledge. English privateers captured the Madre de Deus. When they brought it to port, the cargo was worth roughly half the entire national treasury of England at the time. I think that is pretty equivelent to space mining, no?

We've been mining platnium and aluminum for all of humanity, so we know they exist, "The TAM was incredibly apparent". We know there are astroids worth 1 quadrillion dollars. So, if SpaceX has a 1% chance to capture that, thus the valuation.

[IndeanCondor]

Good lord.

a) If a single Portuguese treasure ship was laden with cargo of such magnitude, exactly how do you propose this is characterized as a TAM "discovered" by the East India companies?

b) Forget the asteroid, undersea mineral nodes are a total of 250 trillion tons worldwide, with an expected value of 233T USD. This is right here on Earth. Yet no country or company considers these minerals as a TAM, because the P/NAV makes this a net negative. This is the same reason any capex for Texas Shale oil will dry up if WTI falls below 60 for a period of time. No matter how many quintillions worth of oil are left in the shale reserves, if it costs more to extract than it will return, it isn't done. Arbitrary valuations mean nothing if they aren't economically viable.

c) Back to history. "Half the English crown treasury" sounds impressive, but the actual value was an estimated 500k pound sterling, upper bound 200M GBP in today's money. Quite a bit far away from 1 quadrillion. The English Treasury famously passed on a debt of 400k pound sterling to James 1 after the Spanish war, a contributing factor to a crisis between Crown and Parliament relations that eventually helped lead to the English Civil War. Suffice to say, a wartime treasury isn't very large.

Humour me for a bit. Let's assume we need to Hohmann transfer 1 quadrillion worth of minerals (30M metric tons) from a location in the asteroid belt to Earth. The DV necessary is 5000m/s, leading to a total energy calculation of 7.5 x 1e16 J. This is 78M tons of hydrolox fuel. 780k launches assuming 100 tons per launch (Starship). Are you honestly telling me that SpaceX is justified in adding asteroid mining returns to its TAM (1 quadrillion) because you believe it's economically viable to make 780,000 (lower bound) separate launches of fuel payloads from Earth to this asteroid? If ISRU is your claimed solution, then where is the Madre De Deus of this ISRU demonstration?

[burnerRhodov3]

The most valuable substance in space rn is water. strip hydrogen and oxygen using solar power and place it in orbit. Instead of launching a Mars-bound rocket with 90% of its weight tied up in fuel, you launch it nearly empty, fly to an orbital fuel depot, fill up on asteroid-mined propellant, and go. Big business.

Or maybe you process insitu, nstead of a 30-million-ton rock, you return a compact, high-density capsule of pure platinum. A few tons of pure platinum group metals dropped into a stable Earth trajectory fits comfortably within existing down-mass logistics and could be worth billions.

Thirdly, (prolly the worst of all the options), you place metal slag in orbit and you drop it on peoples heads. Now you've got rods of god that any military will pay billions for.

Edit: Lastly, once you control a vast amount of stratigically important material they would instantly become a sovereign-level geopolitical superpower. The moment a private entity controls a constellation capable of dropping kinetic rods anywhere on Earth within 15 minutes, every terrestrial military becomes fucked overnight. The line between industrial infrastructure and planetary hegemony completely disappears. ya gotta price that in somehow. Then... we really have realised the vision laid out in the book "the soverign individual"

Edit 2: >where is the Madre De Deus of this ISRU demonstration

If everyone could do it, they would have done it. The Madre De Deus was an absolute marvel of engineering at the time. the english knew the portuguese were selling all the stuff from the colonies, but they didn't really know how freakin' profitable it actually was. The Dues was freakin' massive. AKA Starship.

[JohnMakin]

Let’s do a thought experiment. let’s say you find and can mine an asteroid full of rare earth minerals worth a quadrillion dollars, and you then flood the market with your yield. is this asteroid’s yield still worth a quadrillion dollars?

[burnerRhodov3]

yeah, you hoard it like debiers and use it to build the city of elon, mega factories, or a giant platnium statue of trump to gain politcal favor. You def don't dump it on the market.

But, here's what you'd really do: https://news.ycombinator.com/item?id=48572319

[SecretDreams]

How dare you ~ the OP just now reading your thought experiment.

[cma]

> We know there are astroids worth 1 quadrillion dollars.

> So, if SpaceX has a 1% chance to capture that, thus the valuation.

Surely 100% chance at capturing 1% of the Veblen Good asteroid is worth incredibly way more than 1% chance at capturing 100% of it.

[icfly2]

The TAM that spacex quotes has nothing to do with Space. It is all AI. As in grok. This is a joke, and people that believe it are just providing exit liquidity.

[panick21_]

Its not grok at all, their business is renting compute ie. infrastructure. If they have any hope of success its renting out space base compute.

[danpalmer]

AI hype is full of bad total addressable market hypotheses. There just isn't $26T of money to buy this stuff.

Patrick Mackenzie, at the time at Stripe, about 10 years ago, talked about how Stripe's growth depended on growing the actual internet. Not just growing their market share within it.

Google, Meta, etc, have projects dedicated to getting more people online, because when you have 2bn users, you kinda have to make more users.

[slashdev]

If that were to become reality, and I won’t guess at the odds of that, is because it grew the world economic pie. Thinking about it in terms of the size of the pie today is treating it like a zero sum game. It’s a different game.

[Ray20]

> There just isn't $26T of money to buy this stuff.

But there is. Like, it is less then GDP of US only

[jojobas]

What do you mean, of course everyone in the first world, including babies and the elderly, is eager to pay Elon some $20k/year.

[Rapzid]

The valuation bubble on AI is threatening the entire global economy at this point.

[sneak]

The GDP of the entire world is $126T. Each and every year. And, thanks to USD inflation, that figure is increasing rapidly.

[pseudosavant]

Based on the disclosed financials by SpaceX, they have made $48B in revenue since 2023 with a cumulative loss of -$41.3B.

And yet, based on stock price and market cap, they are worth about as much as Microsoft. Microsoft generated $80B of revenue and $31B in profits...per quarter last year. SpaceX will never, ever, generate $124B+ in annual profits.

[kridsdale1]

What all the SpaceX naysayers don’t understand is that they effectively have a monopoly on selling drugs to aliens. Think about it, man.

[panick21_]

Until the alians realize this and throw the drugs in the harbor, leading the a US vs alians war to open them up for free markets access. Not sure this can actually realize their ambition.

[burnerRhodov3]

What about the compute deals? $3.1B a month for half their compute? Elon built $6B of rev in 122 days. What can he do now that he's got a $85B war chest of cash?

[panick21_]

Buying NVidia gear early and renting it out isn't exactly business model. Like what is their moat? While literally everybody is bidding up hardware?

The only way you can see this continue as a model if space based data-centers actually can beat everything land based. And that is very questionable.

> What can he do now that he's got a $85B war chest of cash?

Increase the profit of Micron and NVidia?

[burnerRhodov3]

>Buying NVidia gear early

xAI was retardedly late to the party. When Elon Musk founded xAI in July 2023, competitors had already spent years buying up massive silicon footprints and locking down cloud partnerships.

OpenAI had a 3 year lead, anthropic 2.5 years, and google was building TPU's since 2015... what are you talking about?

[panick21_]

First, many more people then just them buy these things and have ramped up their spending over the last 2 years.

And others if they were earlier, the explosion and demand of investment increased exponentially over the last 2 years, as we can see in the profit margins of the memory companies for example.

My claim was not that they were the first ever, but that Musk mobilized a huge amount of resources fairly quickly in a time where prices were exploding and before many others.

Early enough that compared to now he got a ok price and he can rent it more expensive then he bought it.

[burnerRhodov3]

He can do things and a scale and timeline that is impossible for other to achieve and why he can make so much money? I agree.

[sublimefire]

They have quite short cancellation notices and there is a question why do you need to rent it if you are an ai company? How is it grok not running the world using that compute.. And possible cancellation will erase a large income stream, think when gpus get old or sooner when Google does not need it anymore.

[burnerRhodov3]

>there is a question why do you need to rent it if you are an ai company

Uhhh... $3.1B a month for $20b in capex sound like the best investment ever?

[pm90]

The compute deals are going to go the same way as all those data centers that openai said they would need to build.

[y2244]

The compute deal is for their depreciating hardware.

Matter of time before its no longer considered good enough by the main players.

Anthropic are building their own Datacenters so it's a stop gap

[burnerRhodov3]

an RTX 3090 or older Quadro/Tesla enterprise cards are still selling/ renting... 5 year depreciation is only for tax purposes.

Anthropic is not building their own datacenters... They are mainly giving equity for colocation with AWS. I cant find one example of them ground breaking on anything... Can you give me a source?

[y2244]

They are building one in uk

https://www.themorningintelligence.uk/anthropic-lines-up-tee...

[burnerRhodov3]

yeah, and power is not availabe at capacity until late 2029? They haven't even signed anything, the 'deal' is in principle and BP has been actively trying to challenge it because they want the same power for a hydrogen facility.

So, to circle back to my original point, Anthropic has not broken ground on actively building any datacenters.

[fred_is_fred]

Maybe they can monetize and trade AI tokens like Enron was going to trade bandwidth?

[Joel_Mckay]

Enron was never audacious enough betting every US man, woman, and child will spend $28k/year on their generally nonprofitable business with one exception -- Starlink.

Patrick Boyle covered the SPCX trajectory fairly well... =3

https://www.youtube.com/watch?v=wKXgeNwNRJ4

[fred_is_fred]

This feels very 1999.

[dgellow]

Market maker for AI tokens. Now that’s an original idea!

[supertroop]

Well the TAM can match GDP if GDP evaporates!

[thisisit]

That's the number AI boosters are spreading too "The TAM for AI is all of humanity - this includes every person and every company. So, imagine this huge pile of future revenue." I agree that TAM is likely huge but is SpaceX most suitable to capture that TAM? Unlikely. But for now everyone wants in on the AI hype train and FOMO of losing out one any company in the AI space.

In the long term most markets are duopoly with small competitors. And personally I see OpenAI and Anthropic duking it out rather than SpaceX.

[javier2]

I know this is just nonsense wish thinking, but apparently the investors disagree and I have zero clue when they will also stop giving Musk their money.

[caconym_]

I think the bump since IPO can be explained at least partially by low float not meeting demand. I've seen a lot of accounts from retail investors who entered the lotteries saying they only got a small fraction of what they wanted, hence demand is kept artificially high. Probably intentionally, since it essentially allows the optimists to dictate the price.

(edit: This is not at all unique to spacex, of course, but given the nature of Musk's companies and their "fans" it's logical that they would employ this strategy. They are also doing a staggered unlock to avoid upsetting the market when insiders start dumping their shares.)

[javier2]

yeah, the float is very low, even if tech IPOs sometimes feature fairly low floats. But the cash sum raised is still ludicrous for a money furnace.

[danpalmer]

"investors" really over-sells who these people are. They're people with gambling apps on their phones who think SpaceX is great because of Musk's politics.

[csours]

Signal and noise. Lots of noise. SO much noise.

To be clear, I don't know which part is signal and which part is noise any better than anyone else.