Nicolas Owens

The AI, we think there's a lot of riding on some unproven outcomes.

And I'm not really talking about

the science or engineering behind data centers in space, though there's some debate about that.

It's really the financial benefit of having a data center in space.

Is there some kind of operating cost advantage versus a terrestrial data center?

We modeled this business primarily as an infrastructure play, so renting out computing capacity the way they've started to do with Anthropic and Google.

You know, if Grok,

takes off, then we would say that we're sort of indifferent between them renting out the capacity and using it for lots of grok jobs and then monetizing that some other way.

We would assume there's some market rate for that, and that's how we modeled it.

And so the difference between our valuation and the market price really has to do with how probable do you believe that

It is going to be that both the Starship rocket is highly reusable, like in hours or days, and that data centers in space will be, call it a compelling bargain in terms of their operating costs versus terrestrial.

Both of those might be true, but we think there's only about a 7% probability that they will both be true at the same time, and that results in a much higher valuation that's closer to the market price here.

And so I think that the market investors are essentially saying they believe these will both be true for sure, but we don't.

I'm really glad to have the moat methodology behind me, so to speak.

At Morningstar, we had quite a good discussion about this a couple weeks ago.

And I will say this.

The SpaceX business that I, as the aerospace and defense analyst, was planning to cover until February...

has almost all of the characteristics of a wide business.

A very, very prodigious cost advantage, both through the R&D and how they do it, and the economies of scale.

They've just done it more than anyone else.