SpaceX-Ties Nvidia Deal Sparks Fresh Concerns Over Undervaluation
Nvidia and SpaceX have deepened their compute alliance with a new agreement that exclusively uses Nvidia's hardware. This partnership is significant, especially considering xAI, a subsidiary of SpaceX, relies heavily on computing power for its operations.
SpaceX CEO Elon Musk praised Nvidia's architecture, saying 'We think the Vera Rubin architecture is the best architecture. We think it's the best AI computer, and we greatly value our close cooperation and partnership on many levels with NVIDIA.' This statement highlights the importance of Nvidia's technology in this segment.
Nvidia's revenue has skyrocketed, increasing 106% year over year to $96.2 billion in Q2. The company is also more profitable than SpaceX, converting $63.7 billion of its revenue into operating income. In contrast, SpaceX posted a loss of about $143 million from operations.
Nvidia's valuation is significantly lower than expected given its performance. Analysts estimate Nvidia will generate $108 billion in revenue next year, pricing the stock at 8.1 times sales. Meanwhile, SpaceX is valued at around $2 trillion and trades at 18.5 times sales.