The satellites rolling off the line in Redmond, Wash., are paying for Elon Musk’s AI ambitions — and he says the company’s satellite internet business is only getting started.

SpaceX’s Starlink connectivity division posted $1.7 billion in operating income for the second quarter, maintaining its status as the company’s only profitable business, according to numbers released Tuesday afternoon as part of its inaugural earnings report as a public company.

The AI division, built around the Grok model and the X social media and technology platform, lost $1.3 billion while spending $15.8 billion on capital projects. That capital spending amounted to more than three times Starlink’s quarterly revenue of $4.3 billion (up 66%).

Musk, the company’s founder and CEO, used the first SpaceX earnings call to make the case that investors are badly underestimating Starlink.

He said a new generation of satellites could increase Starlink revenue tenfold, and the network could deliver “a majority of the world’s internet” in less than 10 years. Musk said AI and robots will drive demand for bandwidth far beyond anything people generate on their own.

“I think Starlink is the only thing that can actually service that bandwidth,” he said.

Amazon is getting in the race, building its own satellite internet network at a factory in nearby Kirkland, Wash. Its Leo constellation has “close to 400 satellites in orbit, enough to begin initial satellite internet service this year,” CEO Andy Jassy told analysts last week.

Overall, SpaceX topped Wall Street expectations with revenue of $7.8 billion for the quarter, up 92% from $4.1 billion a year earlier. It also narrowed its net loss to $541 million from $1 billion.

SpaceX shares closed at $125.33, up 9.4% on the day, then fell nearly 5% in after-hours trading following the report, apparently on concerns about the company’s capital spending.

SpaceX builds its Starlink satellites at a Seattle-area factory that produced about 70 a week from December 2025 to April 2026, according to the company’s IPO filing. The output has put roughly 9,600 Starlink satellites in orbit, about 75% of all active maneuverable satellites circling the planet.

For the second quarter, SpaceX reported 12 million Starlink subscribers, double the number a year earlier and an increase of 1.7 million from the first quarter. The revenue increase in the Starlink division (officially known as “Connectivity”) was driven by a 108% jump in enterprise and government business, which now accounts for more than 40% of the segment’s sales.

The subscriber total was just under the 12.19 million Wall Street had projected, but the segment’s revenue exceeded expectations by about $460 million, more than any other part of the company.

Starlink now brings in $66 a month per subscriber, down from $85 a year ago as it expands overseas and adds cheaper plans. The good news for SpaceX: the figure stopped falling, holding flat from the first quarter, despite the company’s warning to IPO investors that it would keep sliding.

Amazon Leo has asked the Federal Communications Commission to approve its plan to launch up to 5,105 satellites capable of providing space-based connectivity for mobile devices.

“Our plan is to start deploying in 2028, and we’re excited to work with partners to make it happen,” Chris Weber, vice president of business and product for Amazon Leo, said on X.

The direct-to-device network, Amazon Leo D2D, would complement Amazon’s satellite network for high-speed internet service via fixed antennas. It would also leverage the existing direct-to-device network operated by Globalstar, which is in the midst of a merger with Amazon.

So far, more than 390 Amazon Leo satellites have been launched into low Earth orbit, and Amazon says it plans to start rolling out commercial service later this year. The company plans to have 3,232 first-generation satellites in orbit by mid-2029, and the FCC has already given the go-ahead for more than 4,500 second-generation satellites that would give an extra boost to network coverage.

This latest move, which was expected ever since the plans for acquiring Globalstar were announced in April, aims to capitalize on the growing interest in direct-to-device connectivity.

“In the large parts of the world where mobile phones serve as the primary means of internet connection, the Leo D2D System will give customers greater speed and throughput to expand what they can accomplish today,” Amazon said in a news release. “The system is designed to reach any compatible mobile device — including any of the growing number of smartphones from major manufacturers that have satellite-capable chipsets built in.”

In addition to services for individual users, direct-to-device service can provide uninterrupted communications for disaster response, global fleet management, remote operations across worksites and supply chains, and connectivity for remote sensors, Amazon said.

Globalstar’s network already supports emergency SOS, dead-zone texting and roadside assistance for compatible iPhones and Apple Watch models, and Amazon said it would collaborate with Apple on future satellite services using the expanded network.

The FCC application calls for deploying satellites in five orbital shells, ranging in altitude from 510 to 580 kilometers (317 to 360 miles). The satellites would communicate with each other via optical laser links, with mobile devices using L-band and S-band radio frequencies, and with Amazon ground stations via Ka-band and V-band frequencies.

Amazon Leo has already announced partnerships with telecom operators including Vodafone, DirecTV, Herotel and Australia’s National Broadband Network. Amazon said its D2D service would help those partners fill in their coverage gaps.

Direct-to-device is an emerging frontier in connectivity, but that frontier is already starting to get crowded. SpaceX’s Starlink Mobile network is currently leading the pack, in partnership with T-Mobile and other telecom operators around the world. Other players include AST SpaceMobile, Orbcomm, Viasat, Lynk Global and Iridium.

In its application, Amazon pledged that its network would be structured to minimize interference with other networks.