In this article, Lizelle van Rooyen, Equity Analyst at Denker Capital, explores how space is shifting from science fiction to economic infrastructure and what that means for investors.
This article first appeared in Glacier’s Funds on Friday newsletter.
In 1998, Iridium launched a constellation of 66 satellites to deliver global mobile coverage. It was a marvel of engineering and yet, nine months after launching services, Iridium was bankrupt. The economics simply did not work at the launch costs of the day.
A quarter-century later, almost every assumption that underpinned Iridium’s failure has been rewritten. Today there are thousands of satellites in orbit, serving millions of broadband subscribers globally. The cost of launching a kilogram into low Earth orbit has fallen by more than 95%, and companies such as SpaceX are still driving costs lower. Another tenfold decline is possible by the mid-2030s. Investors now face a different question: not whether space is reachable, but which space businesses will prove durable.
That shift from cost-prohibitive to cost-competitive is the kind of inflection that, in other industries, has marked the start of multi-decade infrastructure buildouts. Railways and telecoms followed that trajectory, beginning as curiosities and novelties, then quietly settling in as the everyday backbone of the economy. Space is following the same script, and the listed equity universe is only barely beginning to reflect it.
Two forces are driving the renaissance
The acceleration in space activity is not accidental; it is being propelled by two powerful, converging forces:
1. A revolutionary collapse in launch costs, driven by reusability
At the height of the space shuttle era, launching a kilogram into low Earth orbit cost roughly $54,500/kg. SpaceX’s Falcon 9 has brought that down to around $2,700/kg, and Falcon Heavy to $1,400/kg. 1Starship, SpaceX’s next-generation reusable vehicle, targets below $200/kg. If achieved, that would be a 200-fold reduction in six decades, with most of the decline concentrated in the past ten years.
At $54,500/kg, space is a government programme. At a few hundred dollars per kilogram, it’s a logistics network embedded in everyday economic activity. Almost every commercial space opportunity that exists today either did not exist or was not economically viable before this cost collapse. Launching heavy equipment into orbit accounts for roughly 70% of total mission cost, so further reductions there would unlock many more opportunities.
2. A looming crisis in the infrastructure on Earth required for AI
There is no AI without electricity, and AI’s appetite for electricity has become structural. The International Energy Agency expects global data-centre electricity consumption to roughly double by 2030, while Morgan Stanley estimates that US data-centre consumption could rise from about 6% of total power use in 2024 to close to 20% by the mid-2030s. Local grids are already under strain. A single 1 GW campus consumes as much power as roughly 20% of New York City2. Elon Musk has spoken of hundreds of GW of new data-centre capacity per year3. Most analysts treat that figure with scepticism, but even a fraction of it implies a power problem Earth cannot solve alone.
This is why putting compute in orbit no longer looks far-fetched. In the right orbit, a satellite’s solar panels receive near-continuous sunshine, yielding up to eight times the annual energy of equivalent panels on Earth and largely eliminating the need for battery storage4. Cooling, the perennial headache of every terrestrial data-centre, is also easier in space. On Earth, data-centres consume rivers of water to dissipate heat. In orbit, large radiators can do the same job by shedding heat directly into the cold vacuum. Space-based facilities can also be deployed faster, bypassing the multi-year permitting, grid-connection and environmental approvals on Earth.
Early trials are already underway, with companies like Google (Project Suncatcher), SpaceX and the start-up Starcloud, supported by NVIDIA and Crusoe, testing AI computing in orbit. For now, the investment case still has its feet firmly on the ground. Realistically, orbital data-centres are a 2030s story, requiring launch costs to fall further before the economics work and launch capacity to increase. The upfront capital expenditure will be far higher than for terrestrial equivalents, but lifetime operating costs could be materially lower. That is the bet serious capital is already making.
The opportunity set is broader than the AI angle
Space is more than an AI trade as it offers a wide range of opportunities:
- Defence and national security. Satellites are now central to modern warfare and defence: communications, navigation, intelligence gathering and increasingly offensive capabilities. The war in Ukraine underscored how strategic this infrastructure has become, and JP Morgan expects the defence layer alone to more than double by 2035. The Pentagon’s ‘Golden Dome’ missile-defence concept requires thousands of new satellites to function – and that is one programme, in one country.
- Earth observation. Satellite imagery has quietly become an input to industries from agriculture (predicting yields and optimising fertiliser) to insurance (data-driven underwriting and disaster monitoring) to shipping (real-time vessel and container tracking). It is, in effect, a data business operating from a very particular vantage point. Anyone using Google Maps or tracking shipping flows on Bloomberg is, in effect, interacting with the space economy.
- Satellite broadband. Perhaps the most visible commercial success. Constellations like Starlink and Amazon’s Project Kuiper aim to provide high-speed internet to the two billion people globally who lack reliable access. The economic value unlocked by connecting them is difficult to quantify, but almost certainly enormous.
- Frontier markets. Emerging but high-potential areas include in-space manufacturing, space mining, resource extraction and even space tourism. While they may offer long-term potential, they have not yet been proven commercially.
Today, the global space economy is around $615 billion and growing at roughly 8% a year, with the commercial sector accounting for 78% of the total5. The drivers above could push it toward $1 trillion within a decade.
What this means for investors
The honest takeaway for investors: the opportunity is real, structural and early. But it is also imperfect.
Much of the most compelling value sits in private markets, and SpaceX is the standout example.
Founded by Elon Musk in 2002, SpaceX has rewritten the economics of spaceflight through two design choices: reusability and vertical integration. Falcon 9 boosters, once treated as disposable, now routinely return, land, and re-fly, with individual boosters having flown more than 20 missions. Furthermore, by building most components in-house, SpaceX has sidestepped the cost-plus contracting model that has historically inflated aerospace pricing.
These advantages are now evident in SpaceX’s operating footprint. Its Falcon 9 and Falcon Heavy rockets dominate global launches, accounting for roughly 80% of mass put into orbit in 2025. Starship, its next-generation rocket, is targeting a dramatic drop in launch costs to levels where orbital data-centres make economic sense. Starlink, its satellite network, has grown to over 9,600 satellites and 10.3 million subscribers, generating $11.4 billion in revenue in 2025, representing a growth rate of 50% y/y. Starshield is its dedicated military business. Lastly, they run a vertically integrated AI platform spanning compute infrastructure, the Grok model, AI solutions, and the X platform.
The prospect of a SpaceX initial public offering (IPO) has attracted enormous attention, along with valuation expectations that should give investors pause. Recent press reports suggest a listing valuation approaching $1.75 trillion, which would be the largest in history and is likely to draw even greater attention to the whole sector. Until then, public-market exposure to SpaceX remains limited. EchoStar is one of the few proxies. As part of a spectrum deal, it is set to receive SpaceX shares.
SpaceX’s achievements to date are real, but investors should not overlook the risks. The valuation already assumes years of strong future growth. Key-person dependency is unusually high, with Musk’s attention divided across multiple companies. A dual-class share structure will leave minority investors with limited governance influence, while a meaningful share of revenue still depends on US government and defence contracts, bringing political exposure with it.
The listed opportunity set spans the full value chain.
The value chain runs from materials and space-grade semiconductor suppliers to spacecraft builders and satellite operators, with a wide range of space enablers in between.
The listed pure-play space companies carry high risks. Names like Rocket Lab, Planet Labs, AST SpaceMobile, Iridium, Viasat, Redwire, MDA Space and newer listed players like Intuitive Machines and Firefly Aerospace, are mostly not yet profitable and are burning cash. The first generation of satellite broadband companies went bankrupt, despite genuine technological achievement, because costs were too high. Investors who lived through telecoms in 1999 will recognise the pattern: the technology and the demand are real, but separating winners from cautionary tales requires patience and selectivity.
For most investors, indirect exposure through diversified companies may be the more practical option. Large technology companies like Amazon, Alphabet, and Microsoft all have meaningful and growing space programmes from satellite broadband to orbital infrastructure investments. Picks-and-shovels suppliers offer exposure to the build-out itself. Defence primes like Lockheed Martin, Northrop Grumman and L3Harris supply satellites and launch systems to commercial and government customers; BAE Systems and Microchip make the radiation-hardened semiconductors that survive orbit; and Airbus and Thales Alenia Space6 specialise in thermal management and satellite systems.
It is, in fact, rocket science.
Commercialising space carries unique risks. Beyond intense capital burn and regulatory hurdles, hardware must survive radiation and thermal cycling, and on-orbit repair is essentially impossible. When a satellite fails, the usual answer is to write it off and launch a replacement. Space is also becoming crowded enough that a single collision could, in the worst case, trigger a chain reaction severe enough to render an entire orbit commercially unusable for years. This is a tail risk known as Kessler syndrome.
The closing thought
Twenty years ago, this was science fiction. Today, it is just science and edging into infrastructure. For the thesis to hold, a few things need to go right:
- launch costs must continue to fall and launch cadence must continue to rise,
- orbital congestion must remain manageable, and
- demand for space-based services must prove durable.
None of these are guaranteed, and the path will almost certainly be uneven.
What is available in listed markets today is, for now, imperfect. Much of the cleanest value is held privately, by backers willing to operate on timescales that conventional funds often do not. The most attractive long-term opportunities are likely not the rocket builders themselves, but the picks-and-shovels plays and, over time, the software and service businesses that the space ecosystem will enable. Good businesses do not always make good investments, and patience is part of the cost of admission.
However, investors do not need perfect foresight on timing or outcomes. What matters is recognising the direction of travel. A new layer of infrastructure is taking shape, incrementally, expensively, and largely out of sight, but with the potential to become as embedded and indispensable as the networks that came before it. The opportunity today is not to make concentrated bets on uncertain end-states, but to begin making sense of a world in which space is no longer a frontier market, but part of the global economic backbone.
The sky, as it turns out, was never really the limit.
Note: SpaceX plans to IPO on 12 June 2026. For more information, please refer to their prospectus.
1 https://ntrs.nasa.gov/api/citations/20200001093/downloads/2020 0001093.pdf; Aerospace Security, https://www.sec.gov/Archives/edgar/data/1181412/000162828026036936/spaceexplorationtechnologi.htm
2 Mirion fourth quarter and full year 2025 earnings presentation (slide11)
3 https://www.dwarkesh.com/p/elon-musk
4 Google Research, Towards a future space-based, highly scalable AI infrastructure system design (2025).
5 Bernstein, Space Opportunities (March 2026), citing The Space Foundation.
6 Not listed separately but owned by Thales Group and Leonardo that are both listed
