Will Data Centers Orbit In Space?, & More

This week’s newsletter covers orbital AI data centers, AI revenue, and Tesla's AI5 inference chip and FSD.

1. Will Data Centers Orbit In Space?

By: Daniel Maguire, ACA | Research Analyst

Last week, Alphabet announced Project Suncatcher, an initiative to explore orbital AI data centers,[1] on the heels of SpaceX’s announced plans to deploy data centers in space using its Starlink V3 satellites[2] and NVIDIA’s partnership with Starcloud to send computing infrastructure into orbit.[3] Power has become a major bottleneck to scaling AI infrastructure. Satya Nadella noted that some of Microsoft’s GPUs are idle because of limited electricity.[4] Now that the backlog in gas turbines is roughly seven years while nuclear also is a long-term solution,[5] hyperscalers are turning to space for always-on power to sustain AI growth.

Sun-synchronous satellites should be able to draw on near-continuous solar power and link via lasers, creating a global, distributed, always-on compute layer. Historically, launch costs have been prohibitively high, but in 2026, Starship should change the game. Musk has suggested that Starship could deliver 100 GW per year to high earth orbit within five years,[6] once it overcomes challenges like heat dissipation and radiation.

Starship is critical to ARK’s open-source model, which has not incorporated the upside from orbital AI data centers, yet.[7]

2. AI Leaders Increase Revenue Forecasts As Elon Dreams About Chips

By: Frank Downing | Director of Research, AI & Cloud

Last week, leading independent AI Labs suggested that AI revenue is scaling more rapidly than expected, to some extent reassuring investors about the sustainability of the major AI investment programs to which major tech companies have committed. Calling out errant commentary about a potential government backstop for OpenAI, Sam Altman also shared new details about the company’s progress.[8]

OpenAI is on track to deliver “much more” than its $13 billion revenue target for 2025 and is likely to end the year at an annualized run rate of more than $20 billion. By 2030, Altman believes the company will generate “hundreds of billions” in revenue, justifying the $1.4 trillion in infrastructure investments to which OpenAI has committed. In a recent podcast, Altman said OpenAI could hit $100 billion in revenue in 2027, though it was unclear whether he was referring to annual revenue or run-rate revenue by 2027.[9]

According to a Reuters report in October,[10] one of OpenAI’s closest competitors, Anthropic, also is upsizing its revenue estimates. After finishing 2024 at a relatively modest $1 billion annual revenue run rate, Anthropic expects to exit this year at a $9 billion annualized rate. Last week, a TipRanks article noted that Anthropic is projecting $70 billion in revenue in 2028.[11]

Meanwhile, during Tesla’s annual shareholder meeting, Elon Musk touted the specs of the company’s AI5 inference chip, which would match Nvidia’s Blackwell performance for robotaxis but consume only one-third the power at one-tenth the cost.[12] If that forecast becomes reality, Tesla’s vertical integration strategy will prove wise. Elon noted he is so focused on driving continued improvements in Tesla’s AI compute that he literally is dreaming about chips.

A clear leader in physical AI deployment, Musk believes that robotaxis, humanoid robots, and possibly space data centers will demand more chips than Taiwan Semiconductor Manufacturing, Samsung, and Intel will be able to satisfy. To alleviate the bottleneck, Tesla might integrate vertically into chip manufacturing and create a “TeraFab” to meet its chip needs. Elon could be signaling this surge in chip demand to incentivize other companies to invest in the supply chain, as he did with lithium. Alternatively, he could have in mind other undisclosed plans that will require that much compute. While we would not bet against Elon, Intel’s attempt to build a leading edge fab during the last five years highlights the degree of difficulty involved.

3. Elon Musk Dreams About Chips And The Driverless Future

By: Tasha Keeney, CFA | Director of Investment Analysis & Institutional Strategies

While the most notable announcement at its shareholder meeting was Tesla’s new chip fab initiative, investors also received meaningful updates on its autonomous mobility strategy. Elon Musk said Full Self-Driving (FSD) is just “a month or two” away from allowing owners to text while driving, signaling the near-term rollout of unsupervised, fully autonomous features. He added that Tesla expects China to approve FSD by February or March and encouraged customers and investors to advocate for FSD approval in Europe.

Tesla also released updated safety data showing a vehicle using FSD is roughly five times safer than a human-driven Tesla without active safety features—aligning with ARK’s decade-long projection that autonomy could cut the number of accidents by more than 80%.[13] The company estimates its technology has prevented 35,000 deaths so far, a strong message to regulators holding off the approval of full self-driving technology.

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[1] Pichai, S. 2025. “Our TPUs are headed to space!...” X.

[2] Musk, E. 2025. “Simply scaling up Starlink V3 satellites…” X.

[3] Nvidia. 2025. “Space isn’t just for stars anymore…” X.

[4] Boloor, S. 2025. “:MSFT CEO Satya just made one of the most revealing…” X.

[5] Anderson, J. 2025. “US gas-fired turbine wait times as much as seven years; costs up sharply.” S&P Global.

[6] Musk, E. 2025. “Starship could deliver 100GW/year to high Earth orbit…” X.

[7] Maguire, D. et al. 2025. “ARK’s Expected Value For SpaceX In 2030: ~$2.5 Trillion Enterprise Value.” ARK Investment Management LLC.

[8] Altman, S. 2025. “I would like to clarify a few things…” X.

[9] Bg2 P{od. 2025. “All things AI w @altcap @sama & @satyanadella. A Halloween Special. BG2 w/ Brad Gerstner.” YouTube.

[10] Hu, K. and D. Seetharaman. 2025. “Exclusive: Anthropic aims to nearly triple annualized revenue in 2026, sources say.” Reuters.

[11] Melamed, R. 2025. “Anthropic Eyes $70 Billion in Revenue by 2028 as AI Demand Soars.”

[12] Tesla. 2025. 2025 annual Shareholder meeting. YouTube.

[13] Ibid. See also Keeney, T. 2015. “Autonomous Vehicles Will Reduce the Chances of Dying in an Auto Accident by over 80%.” ARK Investment Management LLC.