Sequoia Partner: People Don't Understand SpaceX

Sequoia Capital partner Shaun Maguire stated that SpaceX is on the brink of a revenue explosion comparable to Nvidia's three-year surge, while the market severely underestimates this moment.

Written by: Zhao Ying, Wall Street Journal

Recently, Sequoia Capital partner Shaun Maguire posted on X that SpaceX is at the dawn of a revenue explosion akin to Nvidia's growth over the past three years, and most investors are seriously underestimating this.

Maguire publicly released a bottom-up financial model after SpaceX's earnings call, claiming that the numbers presented in the model are "breathtaking." He noted that the market is panicking due to geopolitical uncertainties, inflation pressures, and a series of macro factors, and he chose to speak out against the tide at this moment, releasing what he believes is a prediction that "over 90% of investors would find crazy."

Maguire specifically pointed out that the density of top talent, SpaceX's position as a low-cost supplier in AI computing infrastructure, the historical moat built by Starship, and the unit economics of Starlink are the three most undervalued core logics in the current market. He expects that the revenue scale of the Direct to Cell business will surpass Starlink in almost any scenario by 2029 to 2030.

Density of Top Talent: SpaceX's Hidden Barrier

Maguire characterized SpaceX's team as "the most elite team on Earth" and distinctly separated its culture of intensity from other tech companies in Silicon Valley.

He believes that what makes SpaceX unique is its combination of extreme work intensity with an ultimate objective assessment mechanism—rockets either fly or explode, leaving no political space for maneuvering. This hard feedback mechanism at the physical level prevents mediocrity from surviving internally, resulting in a very high density of talent accumulated over 25 years.

In the wave of large-scale AI computing construction, Maguire believes this point is decisive. Amazon, Google, and various cloud service providers have some excellent talent, but at SpaceX, "everyone is excellent." Faced with the challenges of building a gigawatt-level AI data center—he believes this is one to two orders of magnitude more difficult than the previous megawatt-level CPU data centers—SpaceX's ability to handle "atomic-level" complex problems puts it far ahead of other competitors. Issues like turbine shortages, interstate power transmission, and large equipment transportation across countries... these challenges, in his view, all have solutions for the SpaceX team.

Starship: The Largest Technological Moat in Human History

Maguire extensively argues that Starship is the most complex system ever built by humanity, surpassing recognized technological peaks such as advanced chip manufacturing, ASML's EUV lithography machines, and international thermonuclear fusion experimental reactors.

His evaluation framework is: if a group of top talents were to chase a certain technological frontier with unlimited resources, how long would it take? In the face of Starship, he believes the answer far exceeds any other technological field.

Maguire cites the global competitive landscape as evidence: SpaceX completed its first booster recovery in 2015, while competitors took about ten years to achieve the same milestone. He believes that as Starship continues to advance, this gap is still widening—rather than narrowing.

He emphasized that Starship's supply chain is highly vertically integrated within SpaceX, making the depth of the moat "inconceivably large."

Low-Cost Supplier Position: Structural Advantage in the Computing Market

Maguire believes that becoming a low-cost supplier in the commodity market is a position of great strategic value. He likens the pricing dynamics of AI computing to oil production, rather than the broadband of the internet bubble era—because the entry barriers for gigawatt-level AI computing are much higher than the latter, with a tighter supply chain and longer construction cycles.

His judgment is that even if computing costs drop to about $10 billion per gigawatt, SpaceX, as the low-cost and most flexible participant, will still have a competitive advantage. He expects that in the next four years, computing costs are unlikely to fall below $20 billion per gigawatt, and at this price range, he believes SpaceX's unit capital expenditures will further decrease as competition reduces.

He established a company-wide forecasting model covering up to 2028 and pointed out that revenue per gigawatt and capital expenditure per gigawatt are a pair of "coupling constants"—if the former declines, the latter will also decrease proportionally, while the total gigawatts deployed by SpaceX will increase, partially offsetting revenue losses.

Starlink Unit Economics: Leveraging Billions in Revenue from a Single Launch

Maguire disclosed a set of core data to illustrate Starlink's capital efficiency. The current annual revenue of the Starlink constellation is about $20 billion, built from approximately 400 Falcon 9 launches.

Since a single Starship launch has a capacity equivalent to about 20 Falcon 9 launches, theoretically, only about 20 Starship launches are needed to support $20 billion in annual revenue, meaning each launch corresponds to about $1 billion in annual revenue, which translates to $5 billion in lifetime revenue per launch over a five-year lifecycle.

He stated that as Starship enters commercial operation, the costs of Starlink, Direct to Cell, and orbital computing will significantly decrease, and the reachable market size will expand accordingly. In his scenario prediction, the revenue scale of Direct to Cell will surpass Starlink's main business by 2029 to 2030.

Maguire also pointed out that the orbital computing business will significantly reflect in the financial model starting in 2029, and he expects that within the next decade, SpaceX's vertical integration in the chip field will be comparable to its current position in the rocket field.