Sky Is Not the Limit, and Neither Is the Ground For Data Centres
Data centres in space moved from slide deck to funded project last week. A satellite in the right orbit can sit in sunlight almost 24 hours a day, because it follows the line between day and night around the Earth. That pushes the capacity factor above 95%, against roughly 24% for the same panel on the ground: more than five times the energy from an identical array. No batteries needed, because the sun barely sets. No water either, because the vacuum of space does the cooling for free. Starcloud, the startup Nvidia backed in a $250m round valuing it at $2.3bn, published economics showing a 40MW orbital cluster costing around $8m to run over ten years, against around $167m on Earth. Almost all of that gap is the electricity bill.
The chips and racks remain the bulk of the cost and are the same whether in Virginia or in low Earth orbit, so free power and cooling trim only the edges. The harder problem is lifting hardware into space, and replacing it as chips age, at a launch rate nobody has achieved. SpaceX's new $100bn Starbase in Louisiana, starting construction in 2027 and targeting flights in 2029, represented the clearest infrastructure commitment yet. Morgan Stanley's models showed orbital compute making up more than 80% of launch forecasts from 2032 onward. Louisiana matters for a specific reason: the orbits that keep a solar array in constant sunlight require launching roughly north to south, and from the Louisiana coast a rocket can fly straight out over the Gulf without crossing populated land, which is what opens up the orbits an orbital data centre needs.
The money arrived before the economics were proven. SpaceX's own IPO filing warned that its orbital-compute plans rely on unproven technology, some of it not yet invented, and may never be commercially viable. Nvidia, which flew the first H100 in orbit on Starcloud-1 in late 2025 and is now building a space-rated module carrying roughly 25 times that chip's compute, sat on both sides of the trade: it sells the hardware whether compute runs on the ground or in orbit.
While orbital data centres remain a long-term bet, the nearer answer for around-the-clock power took a step forward last week. Geothermal, the only renewable that runs 24 hours a day without storage, began making mainstream headlines as crews started testing at Utah FORGE, a federally funded site designed to prove a newer approach to extracting the Earth's heat. Traditional geothermal requires rare natural pockets of hot water, which is why it still supplies under half a percent of US electricity. The newer method makes its own pocket: engineers drill down to hot dry rock, fracture it using the same techniques the oil industry employs, then pump cold water down one well. It heats as it passes through the rock and returns up a second well as steam to spin a turbine, over and over in a closed loop. If it works at scale, you no longer need rare geology, only hot rock a few kilometres down, and that covers much of the American West.
What Drove The Collective Ideas Last Week
Collective Conviction Ideas: +1% WoW
The Conviction ideas express a diverse set of themes: AI infrastructure and its second-order demand pull-through power, grids and industrial capacity; power scarcity and reliability; a turning industrial and capex cycle; real assets and commodity-linked inflation hedges; security and resilience spend; and the institutionalisation of digital assets. Last week, the ideas were mixed. European defence and sovereign-technology themes continued to compound, with the continent's rearmament cycle the clearest multi-year spending story and record order books extending visibility well into the decade. AI infrastructure remained the organising principle, with capex commentary pulling demand through power, industrial capacity and supply chains behind compute. On the downside, physical-AI sensing retraced after a strong run as valuations were flagged as stretched, though the underlying demand trajectory in autonomous systems and smart infrastructure remained intact.
Find out more about Collective ideas on CurationAI
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🎧 Why Markets Are Getting More Competitive
Why Listen? Sir Paul Marshall explores why generating alpha is becoming harder as markets get faster and more sophisticated, and why shorting remains essential to finding mispriced businesses. The conversation also covers how Marshall Wace built its systematic TOPS strategy, offering a useful look inside the investment process of one of Europe's most successful hedge fund managers. Listen here.
Stock Of The Week
A Great Company at a Galactic Price
SpaceX is one of the most impressive industrial businesses of the modern era. It launched 83% of all mass sent into orbit in 2025, while Starlink has built a genuine subscription business with growing revenues and cash flows. The addition of xAI adds another potential growth engine, giving SpaceX exposure across launch, connectivity and AI infrastructure.
The question is how much of that future is already priced in. SpaceX is listed at roughly $1.78tn, around 92x the previous year's revenue, versus a Morningstar valuation of around $780bn. Q2 revenue nearly doubled to $7.8bn and adjusted EBITDA reached $3.5bn, but capex was $18.4bn and first-half free cash flow remained deeply negative as the company funds Starship, AI compute and other infrastructure ambitions.
That makes SpaceX a useful example of the difference between a great company and a great stock. The technological leadership is difficult to dispute, but the current valuation requires several enormous opportunities, from Starship to orbital data centres and AI, to succeed. The upside could be extraordinary, but investors are already paying heavily for it today.
New or Updated Showcases
Mindflair
- Mindflair is an AIM-listed investment company providing public-market exposure to a portfolio of early-stage technology businesses, with a particular focus on AI transforming traditional industries. Through its investments in Sure Valley Ventures funds and selected direct holdings, the company offers exposure to areas including agentic AI, cybersecurity, govtech and AI diagnostics. Read more.
Phoenix Copper
- Phoenix Copper is an AIM-listed mining developer focused on the Empire Mine in Idaho, a brownfield copper, gold and silver project progressing toward development and production. With an updated prefeasibility study and resource estimate underway, the investment case centres on advancing Empire through engineering, permitting and financing. Read more.
QBiotics
- QBiotics is an Australian life-sciences company developing novel medicines derived from its small-molecule discovery platform, with programmes spanning oncology and wound healing. Its lead cancer therapy, tigilanol tiglate, is in Phase II development and recently achieved a 78% response rate in injected tumours in a head-and-neck cancer study. Read more.
Super Group
- Super Group is a global online betting and gaming business behind Betway and the multi-brand Spin casino platform, with leading positions across Africa, Europe and North America. Q2 delivered record revenue and adjusted EBITDA, prompting another guidance upgrade. Read more.
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