Weapons in space are now a reality.
"The U.S. has confirmed it deployed a space weapon in Earth's orbit, the first time it has acknowledged such offensive capabilities," the BBC reports. "U.S. Secretary of the Air Force Troy Meink said the 'on orbit' weapon was necessary to safeguard U.S. forces against hostile enemy action."
Additional reporting suggests that the space weapons are designed to counter moves by Chinese and Russian forces that may seek to disrupt U.S. satellite networks during a future conflict.
What kind of weapons have actually been deployed? Specifics have yet to be disclosed. A military expert told the BBC that "precious little" is known, but that there could be a "whole range of different weapons systems" currently active in Earth's orbit. Another expert guessed that there could be "some kind of electronic warfare or radio jamming platform" or perhaps "a kinetic kill vehicle of some sort -- so a vehicle that would release a projectile of some sort that would ram into a satellite and destroy it."
Image source: Getty Images.
Regardless of the specifics, spending on space-based defense is on the rise.
President Donald Trump, for example, issued an executive order at the start of his term to build a "Golden Dome" defense system that would use space-based infrastructure to detect and intercept adversary missiles. That system, according to new estimates, could cost upward of $1.2 trillion.
The White House, meanwhile, wants to allocate $71.3 billion for the U.S. Space Force next year, up from roughly $40 billion this year. More than $20 billion of that sum would be specifically allocated for "space control" systems. The anti-satellite weapons market alone could potentially be worth $90 billion by 2035.
Numerous defense stocks should benefit from increased spending on space-based weapons. But what about a space stock such as Space Exploration Technologies (SPCX -0.22%), which hasn't talked much about opportunities in the military sector? The answer might surprise you.
NASDAQ: SPCX
Key Data Points
SpaceX is already profiting from military spending in space
Last year, SpaceX derived roughly 20% of its total revenue from U.S. federal agencies. These agencies include NASA, the Department of Defense, various intelligence agencies, and the General Services Administration. So, although it's not possible to determine an exact percentage of revenue tied to military spending, SpaceX is already exposed to the space arms race.
According to SpaceX, those contracts "focus mainly on launch services, satellite deployment, and AI products." Given that these three categories comprise the vast majority of SpaceX's current revenue streams, the buckets are important to note, but not especially revealing.
Last quarter, however, the company announced $6 billion in revenue "primarily from U.S. Space Force programs for LEO-based communications and sensing." That relates to SpaceX's Starshield initiative, a secure, military-grade satellite network supporting national security and defense efforts for the U.S. and allied governments.
The U.S. Space Force has also announced nearly $6 billion in contracts for SpaceX's launch services, while a Bloomberg analysis estimated that about 43% of SpaceX's federal revenue in recent years came from military-focused contracts. In short, SpaceX is already benefiting directly from space-based military spending.
Where might military revenue head in the future? SpaceX's management team is optimistic. "I'm quite bullish on enterprise, very bullish on government," SpaceX President Gwynne Shotwell stressed during the company's second-quarter earnings call. Shotwell said there will be "even more room for growth in this sector" during the next 12 months, with government contracts driving growth in its Connectivity segment, which primarily includes revenue from its satellite networks.
Quilty Space, a space economy research firm, estimates $3.2 billion in Starshield-related revenue in 2026. The firm forecasts Connectivity revenue at about $20 billion. So Starshield alone is already a meaningful contributor to this segment. "Starshield is definitely coming off the bench and putting up numbers now," one of the firm's analysts concluded. Bank of America actually sees Starshield as one of SpaceX's core four businesses for the long term.
Although the U.S. only recently confirmed that it has weapons in space, SpaceX's historical revenue suggests the company has already benefited from the military's increased focus on space. And judging by independent forecasts and management commentary, military spending should continue to be an important value driver for SpaceX in the long term.
