Why does Elon Musk want to put AI data centers in space?

SpaceX is the most successful rocket-maker in history and has successfully launched thousands of satellites into orbit as part of its Starlink internet service. If space-based AI computing is the future, SpaceX is the most ideally placed to operate AI-ready satellite clusters or facilitate the setting up of on-orbit computing. 

"It's a no-brainer building solar-power data centers in space ... the lowest-cost place to put AI will be space, and that will be true within two years, three at the latest," Musk said at the World Economic Forum in Davos earlier this month.

SpaceX is considering an initial public offering this year that could value the rocket and satellite company at over $1 trillion, Reuters has reported. Part of the proceeds would go to funding the development of AI data center satellites, sources say.

China plans to launch space‑based artificial intelligence data centres over the next five years, state media reported on Thursday, a challenge to Elon Musk’s plan to deploy SpaceX data centres to the heavens.

China's main space contractor, China Aerospace Science and Technology Corporation (CASC), vowed to "construct gigawatt-class space digital-intelligence infrastructure," according to a five-year development plan that was cited by state broadcaster CCTV.

WHAT ARE SPACE-BASED AI DATA CENTERS?

Space‑based data centers - still an early‑stage concept - would likely rely on hundreds of solar‑powered satellites networked in orbit to handle the enormous computing demands of AI systems like xAI’s Grok or OpenAI’s ChatGPT, at a time when energy‑hungry Earth‑based facilities are becoming increasingly costly to run. Advocates say operating above the atmosphere offers nearly constant solar power and eliminates the cooling burdens that dominate ground‑based data‑center costs, potentially making AI processing far more efficient.

But engineers and space specialists caution that commercial viability remains years away, citing major risks from space debris, defending hardware against cosmic radiation, limited options for in-person maintenance, and launch costs. Deutsche Bank expects the first small‑scale orbital data‑center deployments in 2027–28 to test both the technology and the economics, with wider constellations — potentially scaling into the hundreds or thousands— emerging only in the 2030s if those early missions work. 

Google is pushing the space-based data center idea with Project Suncatcher, a research effort to network solar-powered satellites equipped with its Tensor Processing Units into an orbital AI cloud. The company plans an initial prototype launch with partner Planet Labs around 2027.