Baron Investment Conference 2026 November 6, 2026 Fireside chat with investor Ron Baron at the 33rd Baron Investment Conference: Terafab and America's chip shortage, xAI's data centers, SpaceX revenue, Optimus, data centers in space, Starship catches, Starlink, China, and universal high income.
Fireside chat with investor Ron Baron at the 33rd Baron Investment Conference: Terafab and America's chip shortage, xAI's data centers, SpaceX revenue, Optimus, data centers in space, Starship catches, Starlink, China, and universal high income.
Transcript When I was preparing for this conversation, one of the things I just visualized was ET So ET Going across the moon, you know, with a boy on the bicycle and a contraption to communicate, to call home. Obviously a predecessor to Starlink. So I guess that didn't work. So Elon uses a principle, first principles about everything should be done the right way, not the fastest way, not the quickest way, not the cheapest way, the best way. And everything looks at all over again. So if someone makes an investment on his behalf for one of his businesses, it's always viewed in terms of is this the best we can do, best we can do, the fastest we can do, the most effective. So one thing I would say is that he's a builder. He's probably the only builder I'm aware of in the United States who builds stuff, but builds stuff that's not just regular stuff, like 10 million square foot buildings, 5 million, 20 million. Now he's got 100 million square foot building for Terrafab that he's thinking about or going to build. And so the question, and no one else has done this, no one and anything like it. And so the question is, of course, and when you're doing such a thing, then you get scaling benefits, you get to buy things and produce things much more effectively than you could if you were in a smaller entity. So the question is, how do you manage to do this? And why didn't anyone else ever try to do anything like this? We're trying to get silicon to come back to the United States again. We need it, we need power, we need silicon. No one's doing this except for you. How come?
Well, that's actually, that's not quite accurate in that TSMC and Samsung are building pabs in the us so TSMC is building a large collection of fabs in Arizona and some of them are, I believe, operational. And Samsung has some operational fabs in Texas and is building, or has built, I should say, a fab for Tesla that will be dedicated to the AI5 and AI6 chip designs that Tesla's done. But relative to what's being done in Asia, the amount of chip application in the US is very small. And even if you take the best case assumptions of all the chip fabs that have been announced that will be built in America, that's still a tiny fraction, perhaps on the order of 10%, optimistically, 10% of what's in Asia. So as I think most people know, Taiwan does an incredible amount of heavy lifting on chip production. TSMC is an amazing company. Truly incredible. The sheer number of a variety of chips and the magnitude and the volume is incredible that TSMTC does. Same thing for Samsung. And I think Micron does a great job too on memory side, but it's overwhelmingly built in Asia. So my concern really is there is always some geopolitical risk in that region and I think that that risk may come to fruition at some point. In which case if we don't have all the pieces necessary to build chips at scale in America, then we may not have any chips at all. Or very few, the 10% number type of thing. And then there's maybe looking ahead, you know, past any sort of medium term geopolitical bumps in the road. We're simply, even if you exclude geopolitical crisis issues, the rate at which we're making chips is simply too slow. So if you want to get to say a terawatt a year of chip production, which is our goal, that's the reason it's called the tariff. Av it's sometimes people, when I say tariff have this, you know, three possible meanings to terafab. One is terror. T E R R O R which I think sometimes people are like, why would you want a terafab? And then there's T E R R A which just means earth, but it's actually T E R A as in terawatt. So but arguably all three apply. So. It's terrifyingly large. So the rest of the world is making, we'll make this year around 20 gigawatts of AI chips, maybe 25. And then next year, depending on whose projections you believe, it's maybe around 35 to 45 gigawatts of AI chips next year. And, but, but if, if you want to do a terawatt, that's now you need, you need 30 times what current global production will be roughly next year
for just us. We're building that for us.
Well, yes, we're building, I
mean we could sell it to other people too, but basically we're building 30 times what the annual production is in one plant, which you think is going to do as value as big production as a GDP in the world, as a GDP for the 20th largest country, one plant.
Yeah, it might even make the top 10. So now obviously, you know, a plan like this, I think if it fails, it'll be crazy and if it succeeds, it'll be audacious. So it sort of depends on the outcome. I think it will succeed at least to some degree.
going to cost a trillion doll dollars.
But we won't need that money immediately. We'll be building phases, and we are looking at ways to change the manufacturing process for chips to improve the efficiency of chip production, as we've done in many other arenas. Just one example, like right now, the amount of time that a wafer in a chip app spends simply being transported and waiting is more than half the time. So more than half of what a chip is doing in a chip app is nothing. It's either being moved around or waiting for a machine. So, and I think there's basically a lot of potential for improvement in chip fabrication.
Why don't these people do it themselves? If they have plants just sit with chips half the time just not moving, what's to stop them from improving their own systems?
Well, no, actually, if you visit a fab, you'll see that the wafers are moving a lot. They're zipping all over the place and waiting. But the amount of time that atoms are being changed on the wafer in a way that is useful is less than half the time. And I'd say sometimes it's maybe 20% of the time that something useful is happening to the atoms on that wafer. The reason that they want to try something adventurous with, with chip apps is that these things cost a tremendous amount of capital. And if they have a recipe that works, they simply don't want to risk something new. So generally, the preference in the chip industry is to repeat what they did last time with minor changes and not take any risks. So we're building a research chip fab in Texas, just in Austin, at the Gigafactory Texas. That research lab is going to try many different approaches to chip fabrication. And many of those approaches won't work, but some of them, I'm sure, will work. And then we will translate those improvements to the Terafab itself, the production terafab, which is in Grimes county in Texas, near Texas A and M. And that's where we'll scale up production of our AI chips. I think one of the things that's going to be interesting about the research lab in Austin is that I wonder if we will have the ability to make. Do logic memory packaging and do the lithography so that we can design new chips and under one roof, make the whole chip, test it. Make the whole chip, test it with a very fast iteration cycle, something that would normally take a year, I think we may be able to reduce to a month. So for any given technology endeavor, the the pace of progress is determined by how many iterations can you do and how much progress can you make between those iterations? So if you can improve the speed of iteration, how many iterations can you do per year or per unit time and the progress between each iteration? In any given technology, you will accelerate your progress at a rate far greater than anyone else. If you are, if you're able to iterate an order of magnitude faster, you, as a first approximation, will advance your technology in order of magnitude faster.
So most people, there's a tremendous amount of inertia in business because if someone makes an effort to spend money and it's not successful, then that's a black mark on them. And if it is successful and they're trying to get the top job of the business, then it just means that they have to work harder. So if they're successful, they work harder, and if it fails, they're finished for their opportunity for the top job. Elon has established a culture in his business. Businesses where it's always about come to me with ideas, and then if it's success, if you, if, if you think it's successful, and I believe that's the case, then we'll throw away what we've done before and start all over again. It's always about doing the best thing. One of the things that's interesting to me about your culture is that you introduced me to key luck, the person who's in charge intel, who's now going to have an interest in Terrafab. And so I spent some time with him and, and he comes to visit me and I said, so what's it like to work with Elon? He says, well, other people come to visit my facility in Oregon and they come and they walk around for an hour and a half and they leave. And Elon comes and then he sits there, he says, for four and a half hours and he interviews one engineer after another after another after another. He's questioning everything that's all concept, so everything that he has to do is speed. And. And then when I went to Texas, to Boca Chica, to visit their car factory that they were building there while it was under construction, they introduced me to the head of that facility, the manager, giant man. And of course, everyone seems like a giant to me, but he was a really giant guy. And he had been previously the head of production at Ford. And so I said, well, so what's it like difference between Ford and Tesla? He said, well, when I was at Ford and I had a change, I had to go through six different levels to get a change approved. When I have to have a change here. Then all I do is walk upstairs and there's Elon. And so when a plant is something under construction, Elon's not some distant guy. He's there. He even has an Airstream. He lives in an Airstream. Do you know any other executives of any big companies, potentially the largest company in the world, going to live in an Airstream to make sure that all the questions that are taking place and making a facility are going to be answered fast. So, you know, it's amazing culture, amazing person, and amazing people who's recruited. So this whole people who work there, they're just brilliant people. It's like harder to get a job there than get into Harvard. Of course, I don't know why people would go to Harvard anyway anymore.
Well, by the way, S streams are actually pretty nice. So I wouldn't say I'm like, no, it's not that bad, honestly. I kind of like my little S stream. But it's actually parked right next to the power plant. So we built this power plant that's producing over a gigawatt, and probably it'll go to one and a half to 2 gigawatts of internal power plant production in about a fifth of the time that such a thing would normally be built. So built in about a year, as opposed to normally about five years for that. And it's not as though somebody has to come to me upstairs. There is no upstairs. We have no upper floor at our Memphis classes, too. Things. I walk the entire site, sometimes two, sometimes three, sometimes four or five times a day. So the entire site, the power plant and all the buildings. And I also insist on doing at least some of the work myself manually. So I've pulled power cables the size of an anaconda. Like, they're incredibly heavy and long. And I've done the fiber optic cabling. I've done electrical switches. I've worked on the power plant management software. I try to do at least a little bit of everything so that I'm not numb to the pain of the people who are actually doing it. And I have some understanding of the difficulty and what can be done to improve the situation. So it's not as though I'm sitting in an office and somebody has to come to me. I'm walking the floor, asking them questions actively.
It's amazing. So let's talk a little bit about data centers, which are now in the news. And people
popular topic, how to make friends and influence people. You know, data centers are the pitchfork level for data centers. Is pretty high.
Yeah. I say, But if you want to have AI, you gotta have data centers. And so let's talk about them first on this planet. So Elon believed that the roadblock that would be in the way of data center construction would be having enough chips, enough compute, actually. And so what he did is that a lot of people, we have Grok. So he was at the forefront of. Of OpenAI, of Anthropic. Those guys are his guys. And then of course, it doesn't like OpenAI anymore. But.
Yeah, well, I did start OpenAI as a. Not as an open source nonprofit. And now it is a closed for maximum profit entity. So it's literally the polar opposite of what I started.
And then Anthropic was founded by seven people that left OpenAI because they were. They didn't trust Sam Altman for good reason. They said this publicly. This is not a secret. And so effectively, Anthropic is an offshoot of OpenAI. So, yeah, I guess I should have just started OpenAI as a regular C Corp instead of as a nonprofit. But, you know, I thought this would be something that would be a philanthropic thing for the world. I didn't anticipate it would one day turn into a for profit. That is closed source.
And when you left because you were disappointed in direction, they offered you an ownership interest and you said, no, I don't want it. And so you left?
Well, yeah, I mean, well, I was confused as to how you could have a commercial interest in a nonprofit. That didn't seem to make sense to me, you know? You know, I provided almost all the capital in the beginning for the company. It was my idea, and I named it and recruited the key people and taught them everything I know. But apart from that, nothing.
So to go back to data centers. So you thought that the idea about putting all this AI in operation was that we needed data centers and people want to build them and it takes them ordinarily to about two and a half years to build one. And it costs maybe $60 billion to build it, 50 or $60 billion to build a gig. And then the people who build them for hyperscalers and rent them in order for them to get the capital they need to borrow it or get it in some way that they have to have long term leases, five years at least to get them. So the rents people pay in five year leases are maybe $12 billion a year for $60 billion investment. What we do instead is that we build them, and we build them because we have use for them, because we're vertically integrated for our cars, for our robots, for our rockets, for everything. And because we need them, then we can take risk of building them without knowing that we have contracts for other people. And what happens though is we have them built and they're not. So it takes us somewhere. It was taking us four months. It's now takes us eight or nine months to build. So it takes them two and a half years. Takes us eight months. Nine months costs them 60 billion, cost us 35 billion. And the demand for compute is so great that people who build centers are dark because they don't have the power to turn them on. And we'll rent them to computer until we need it for ourselves, for Grok, and we'll rent it to them for somewhere around 50 billion a year. So we're getting 50 billion a year for $35 billion investments. So the revenues for SpaceX are about to explode. Going up,
yes, they are exploding, I think. Yeah. Q2 to Q3 revenue increase was, I think, over 80% this year. I'm not sure what the exact numbers will be, Q3 to Q4, but probably something like 70% Q3 to Q4. And I would say maybe it's something similar Q4 to Q1. It is extraordinarily difficult to bring on compute at scale. And I think there's a lot of speculators out there who think you can Simply order some GPUs, hand a purchase order to some company to build a data center and just rake in cash. And the reality is it's insanely hard. So there's a meme that I think is quite funny, which I think is called the Jose meme, where there's, you may have seen it before, there's one guy digging the hole in the road and there's like eight people watching him dig the hole. So now meaning, like there's one person doing actual work and then eight people watching the guy do the work. Now, unless you increase the number of joses in the country, then the amount of work done does not increase. And so adding more people who simply issue purchase orders to Jose does not result in more things occurring, only if there are more joses. More work. So I aspire to be Jose as Bates X. Who wants to be is Jose. We do actual work. This is a really big deal. And with the mass expansion and construction in the United States, frankly, it's not as though there's been this massive influx of people who do actual work at a physical level, but there's been a massive increase in the number of people who issued purchase orders. So that means that the people doing actual work are spread incredibly thin. And so you have a large number of partially completed data center projects throughout the country. Because at this point the peanut butter is spread so thin you can barely taste it. The difference is that at SpaceX we actually are used to doing incredibly challenging physical work in terms of building giant rockets and, and vast launch complexes. And Tesla is also very good at large scale construction. And probably the two best companies at physical hardware on earth outside of China are SpaceX and Tesla. I don't even know who would be number three and I think even might be the best in the world, even including China, where China is incredibly good. It was worth noting that the Tesla Model Y is the best selling EV in China.
Well, you taught them a lot in China.
This is like winning a land war in Asia. Classically difficult, and yet we kind of are actually in that. Model Y is the best selling car in China. Think about that for a second and let me tell you, the Chinese car companies are super good.
Yeah. The person from Ford went there, he said he was blown away by the quality of his cars in China. Barley,
China's awesome. I love China, by the way. It's inspiring to go there.
Well, most people who build in China, they have to have Chinese ownership of a significant portion of the operation in China. And they were so anxious. 49% is what you're allowed to own in China normally. And Tesla, they wanted us to be there so badly that they let us go 100% ownership for us.
Yes. That took quite a few years of meeting with Chinese officials and some of the people in the government actually. They actually literally yelled at me like spit flying type of thing, that we had to get sort of married to a Chinese partner. And I'm like, well, we're just a baby company and I don't think babies should get married because I would look funny going down the aisle with the baby. And they're like, you're not a baby. And I'm like, no, we're a baby and babies should just not get married. It's too young. So eventually they said, okay, fine, we'll change the law and then you can own the factory. Mostly it was like, we just need to be able to move fast and make decisions. And if you've got to always ask someone else for permission to do the decisions, then how are you going to. It's difficult to innovate if you don't actually have your hands on the steering wheel. Well, these days you don't need your hands on the steering wheel because of self driving. But that metaphor is not going to make any sense in the future.
Yeah, so we're talking about revenues going up a lot. For SpaceX, it was, I think, 15 or 16 billion last year. And this year it's going to be ending the year 26 at $100 billion or so of annualized revenues. And then next year we think it's going to be between 500 billion and a trillion. So we've gone from 15 billion to somewhere around 100 billion, annualized to 500 billion to a trillion. And that's just really, just getting started. And what's really cool about selling, renting, renting our data centers to competitors that basically they're paying us 50 billion for something, cost us 35. And we're going to have collections of cash coming in for renting data centers that we still own. So we got them for free, right?
I think just to comment on a few of those things. So we are tracking to have an annual rate of revenue that is in excess of $100 billion in December. Obviously, December is pretty close, so I have good intent that. So unless, unless there's some sort of, you know, natural disaster or something, we will, we'll meet that target. And then based on the plans that we have next year, it seems quite likely that our annual recurring revenue in December of next year will exceed 500 billion. Now, this is just, this is not a promise. This is just, this is what I think will happen. This is my best guess. Just want to distinguish between this is like a promise to do something versus what I think will occur. What I think will occur is an ARR in December of next year of 500 billion. And I simply said a trillion is not out of the question. Meaning it was previously out of the question and it is no longer out of the question. Maybe 2% or something. Likelihood. But it's interesting that it's not 0%. That's the interesting part. And the probability is increasing with time. So I mean, as a sort of what my biological neural net predicts for digital superintelligence in terms of its effect on the global economy is about a 20 to 30% increase. This is in the absolute, without taking robotics into account, I think around 20 to 30% increase, which would be roughly call it a $25 trillion increase in the global economy. And this will happen very fast.
That's $130 trillion global economy. And you think that digital AI is going to increase that by 25, 30%.
20 to 30%? Yes, that's my guess. What's your guess for how much would increase the economy? I think probably 20 to 30%. I mean I think like it could be higher than that, but it probably doubles the productivity of white collar work.
So that's just digital. That's not physical, that's digital. Digital AI. Physical is something that we're going to be dominant in, I think.
Yes. Well, the way to think about physical AI in the form of robotics is that any given economy is the number of people in it times the average productivity per person. So if you have a humanoid robot that is extremely productive and can work 24 7, so it's working 168, 168 hours a week, it doesn't take vacation or bathroom breaks or need to eat food or anything like that. And it's, it's the, the speed at which you can operate is faster than, than human speed. You can expect roughly a 5, you know, productivity per week that is on average 5 times better than a person, roughly because a person's like maybe working 40 hours a week and does need to take breaks obviously and doesn't move as fast as a robot. So I say a minimum productivity expectation for humanoid robot would be five times that of a human. Then of the. Take the population of the United States, say how many people are either in school or retired? Well, that's about half of the people. About half people are either in school or retired. And then of those who are working age, not everyone works or is engaged in highly productive employment. So then you're left with perhaps around, I don't know, 120 million people in America that have a net positive output of goods and services. So then you say, well, how many robots then would be needed to match that productivity? Well, I guess you'd need about 20 to 30 million robots to match the goods and services output of the United States.
And we would build those. Less expensive to build a robot than to build a car?
Yes, initially I'd say about the same, but then over time it would be much less.
So 30,000 cost for a robot on the way to 20.
And we would rent those or we would sell them or what would we do? Do we have an idea yet?
I think probably rent them.
To stay on the data centers. Then if people are really upset about data centers in their communities, is there any way that since these are so profitable for us, why wouldn't we just say, okay, here your utility bills in your community will stay flat and we'll subsidize it and we will use that subsidy. And we will also give you $50 million for your schools and hospitals. Do we have any programs like that where we have gone to communities and say, yes, we are going to help you in your communities and we'll give you more jobs? We're really a job creating company. No one creates jobs the way we do. Is there anyone, any way? I don't think we've done. I don't think our industry's done a good job about explaining how this is the benefit of people not harming them.
Yeah, well, actually locally in the Memphis area, I think we're actually quite popular. It's actually people popularity is there. The lack of popularity is where there aren't data centers and they think the data center will have a bad effect. But in Memphis, you know, Memphis is booming because of SpaceX. The restaurants are full, the hotels are full. We're paying at times twice the prevailing wage that people were earning before.
Why don't people write about this? Why aren't there stories about this? Why is this not.
There are some stories to that effect. We've also helped out with local schools and you know, it's. And the tax revenue that the county and the city are earning is tremendous. So I think this is maybe this popularity thing is a temporary concern because there actually is tremendous prosperity that's brought by the data centers. And if you talk to people in town, they all feel it because their businesses are booming.
So then go to data centers in space. The obvious solution, so people don't have to worry about them in their communities anymore. And if they don't want to. And for us, it's less expensive to put them in space. And every time we put up new generations, they become more and more powerful than they had been before. Isn't that. And everyone says, well, it's 10 years away. And Elon says, no, we're starting. You know, Google has already tested with our SAT with a satellite that we've run for them. It's been effective. And so we're going to be starting to put them up in 27 or 28. How long before impact?
Yeah, so yes, there's currently people have tested Nvidia GPUs. There's a satellite with an Nvidia GPU up there that we launched. And there's a satellite we recently launched with a Google tpu. And these are operating into the best amount of. They're working fine in space. We expect to start launching the first starmind computers, which we've co designed with Nvidia probably, I'm just guessing here, but in the third quarter of next year, and we'll start off slow, but then it will ramp to significant volume probably in 28 and then very large volume in 29. Really, in order to get to the terawatt per year scale, or even I'd say maybe the 200 gigawatt per year scale, you really need to go to space because they're just there, there isn't enough power on the ground to, to realistically get to those levels per year. Just as a frame of reference, the power output, the average power, average power consumption in the United States is just over 500 gigawatts. So if you like, you know, the peak power capability in the United states is roughly 1.2 terawatts, but average power consumption is just over 500 gigawatts. So you can really see that like if you're doing say 200 gigawatts a year of AI, that would be like doing a 40% increase in the entire US power grid every year, which is simply not feasible. And when you take solar panels and you put them in space because essentially it's always sunny in space and the solar panels can always face the sun directly. They're not off angle to the sun and you don't have atmospheric attenuation of solar power, so you get 30% more solar power in space. It's sunny all the time. There's no seasonality. You don't really need. You can get away with a very tiny battery pack because you don't need to last through the night. The cost of intelligence in space is dramatically less than the ground once you have a low cost per return to orbit. So Starship, because it will be the first fully reusable rocket, will lower the cost of access to space by a factor of 100 or maybe more. I think actually in the limit, I mean, maybe within the same, probably two or three years, the cost of a ton to orbit will be less than the cost of air freight from California to Australia.
So NASA said that in 2010, the cost to get to orbit was $18,500 a kilogram. That was because you used a rocket one time and then when we came up with a rocket, Falcon 9, you could use over and over again. It became, I think it was 2,500 hours and then it went to 1500 and now it's going to go to 100 or 15 or 50.
I think we'd get to under $100 a kilogram to orbit. So it's important to just appreciate how profound full reusability is. So with, with Falcon 9 we have I guess probably around 80% reusability. So the booster is, you know, comes back and lands. You've probably seen the videos of the Falcon 9 booster landing and then the fairing 1Os, one that contains the satellites, those fairing halves are land by parachute in the ocean. And, and we refly those, but we do not refly the upper stage. So we're unable to recover the upper stage of Falcon 9. And the cost of the upper stage is roughly the cost of a medium sized jet. So that means the minimum cost per flight from Falcon 9 is a medium sized jet. Now that's still much better than anything else. But it's safe to say that there wouldn't be a lot of air travel if every time you flew somewhere you had to throw away a medium sized jet. Be like, I think I'll drive. So now with Starship, the entire system is designed for reusability and not just reusability, but extremely rapid reusability. The reason to catch the booster and the ship with the tower arms, we call it the chopsticks. It's kind of like Mr. Miyagi and karate Kid catching the fly, but just make it bigger. And the reason for that is that the rocket takes off from the launch pad. So the rocket is placed on the launch pad by the power and then it is caught by those same power arms and placed back on the launch pad when it returns from space. So you don't just have full reusability, you have extremely rapid reusability. You really couldn't get faster reusability than landing back where you took off. And this in principle would allow us to refly the rocket, the giant booster, the super heavy booster, once an hour.
Yes, probably more in the end, but yes, more than a launch an hour.
So when I was young, people would line up to watch every now very rarely a rocket and we could do one an hour. Doesn't even make newspapers anymore.
Yes, well, this will be quite, I mean, you really want to watch this one. This one's cool. I mean it's the largest flying object ever made and it's the highest thrust object ever made by humans of any kind whatsoever. So yeah, this thing weighs over 5,000 tons on liftoff and it's going straight up, you know, fast. And then that giant thing comes back, comes back from space. Like five minutes after liftoff, that booster is coming down. One way or another, it's going to hopefully in a good way, but it's coming down one way or another. So excitement is guaranteed. Success is not always guaranteed, but excitement is always.
It's very cool when you see it come back and lands in the same place where it took off.
Yeah, it looks crazy. You know, when I first proposed this to the team, they looked at me like I was lost my mind. But I'm like, look, I think this can be done. You know, there's nothing that's preventing it from happening from a physics standpoint. And the only thing I can think of that would be slightly better than catching it with the tower arms would be literally landing on the launch pad itself. But then if you get something wrong, then you damage the launch pad, and that would take a lot of work to fix. So if we just catch it with the arms, that's a little better because we don't smash the launch pad necessarily if something goes wrong. But that's the difference of minutes between catching with the arms, catching with the. And simply landing in the actual launch pad. It took off from now much harder than the booster is catching the ship and the ship we've got to have. There's a lot of things that have to be done that have never been done before. No one has ever made a truly reusable orbital heat shield. So the shuttle heat shield required nine months of repair between flights. So even though the shuttle orbiter portion did come back, you know, they'd lose the main tank, which is the primary airframe, or the primary sort of primary structure really, to which everything attacked on every flight. But they'd get the orbiter back. But it would take nine months of refurbishment of the. Of the heat shield before they could fly again. So no one has ever made a fully reusable orbital heat shield. It's an incredibly difficult thing to do, and it's something that we've been working on for a decade, basically. It's so hard. One of the hardest technical problems I think humans have ever tried to solve. But we've got an incredibly talented team that has worked incredibly hard for a very long time. And we've been able to iterate, go back to iteration. We've had many be able to do many iterations, whereas the shuttle couldn't really iterate. They always had people on board the shuttle so they couldn't take any risks because somebody might get killed. Whereas with starship, we're taking many risks in order to explore the physics of what's needed to achieve full reusability of the heat SHIELD and the entire vehicle. So we've actually achieved sort of precise soft landings of the ship several times out to sea in the ocean where the ship. If there had been a tower there, the ship would have been caught. So that's maybe an interesting point to make that if the ship thought it was landing with sort of with a simulated tower, and had a tower been there, it would have been caught. Now we want to make very sure that everything's going to work when we bring it back to the actual tower so that we don't smash the tower or, you know, rain debris on people's heads, which would definitely affect our popularity. So we want to be highly confident in the reliability of the ship. And I think we're finally there where we think it is worth with, with ship 42, which hopefully is prophetic. You know, 42 is kind of a special number that we can try to catch it with the tower. So that's what we're going to do in about a week from now.
We're all rooting for it. So starship is the great unlock here. Just as an aside, I was watching the young person who was heading the starship operation, and he was speaking to a group of people in the audience wearing sport jackets and suits and white shirts and. And he came on and he was wearing engineer boots and blue jeans and a plaid shirt and unshaven and really long hair. And he starts talking and he said, F this and F that and F this. And then I'm looking at him and saying, oh my God, that's me when I was 40. Really good guy, Drives motorcycles. So this is a great unlock. But all the things that Elon does, they might not make sense to you at the very beginning when you hear about them. And then you say, oh, wow, I see. He probably was thinking about that all along. And so when you think about reusable rocket, when you talk about so much cost to get to space, the only ones who can go to space, that was $18,000. The only ones who go to space are governments to protect their countries. Or it can be a television company who spends a $2 billion in satellite so it broadcasts to one place, no one else. And so by bringing down the cost so dramatically, then all of a sudden you enable Starlink. And starLink, you have 10,000 satellites now on the way to 20,000. And that's what I thought. And now Elon says, no, it's not going to be 20,000, it's going to be 100,000. Why is it going to be 100,000. Because we thought in the past that the revenues he'd be generating from Starlink were going to be from consumers and government and enterprise. And now though, he says that Agentic is going to be multiples of what we thought about before and every time you.
Oh, yeah, yeah. Well, my understanding is that actually agentic Internet traffic already exceeds human traffic, if I read that correctly from Cloudflare. And I believe Cloudflare predicted that in five years, agentic AI traffic will be a thousand times more than human traffic. And if anything, I think that is underestimating the amount of agentic AI traffic
1000 times how many years? Five.
So we've been thinking about Starlink as being a business that could do a trillion dollars in revenues and make 7 or $800 billion of EBITDA in 10 years and be worth 14 or 15 trillion. All of SpaceX is now worth less than 2 trillion. So that was one opportunity. But now I think we're probably really light on how much SpaceX, how much Starlink can be worth. But because you're adding so many more, so many more satellites now we got space centers, data centers.
Yeah, I mean, Starlink revenue is growing very rapidly by any sort of normal business standards. You know, like you're roughly doubling revenues per year at large scale. And, you know, I remember when that used to be a big deal. It wasn't that long ago that, you know, doubling revenues with high gross margin, positive cash flow every year would normally be an impressive thing. Although I have to say with AI, it does exceed that. So with AI, you have order of magnitude per year growth potential. So. And I mean, if you think about, like things I just said, because a bunch of things I've said sound extremely crazy. But. But I think we'll get there. You know, sometimes I'm a little optimistic on the time frame, but I always deliver in the end. So, you know, there's. And also I'm not always late. I'd like to say that because the press always reports on when I'm late, but they never report on when I'm early. And actually I'm early quite often. So. But the press, you know, is a sort of. They don't write positive articles, they just ignore the times where I'm early and only print the times when I'm late. So it seems like I'm always late, but that's actually not the case. My predictions. I aim for my predictions to be at the 50th percentile, which means that they are basically half wrong, half right with respect to the predicted time frame. And that's about how things have turned out. So you know, we have 11,000 satellites up there right now, primarily the version 2 satellite we've just started launching, the version 3 satellite. Version 3 satellite has over 10 times the capability of version 2 satellite and we'll be launching 10 times as many of them. So the amount of bandwidth that Starlink will produce in, I don't know, two or three years will be 100 times more bandwidth than it currently offers. And yeah, so I think the, you said like, what's the revenue per, you know, gigabit per second type of thing? It's gonna be, it's gonna be high. I mean, and then you say how many gigabits are you transferring? It's very big number. So, and with massive demand for, you know, by, by AI and robots, far, that far exceeds human demand by like literally a thousand. And just the Starlink communications revenue will be something staggeringly high. But if you look at the AI stuff, if we do say 100 gigawatts a year to space of AI compute, say, well, what's the value per gigawatt of that compute? Well, even if it went down to $10, that would be a trillion dollars a year
and cumulative. So every year would be another trillion dollars because the satellites don't vaporize. So it's like, so you'd be stacking a trillion dollars a year of revenue per year
$10. And if it was say at 50, you know, you'd have 5 trillion.
how are telcos ever going to meet demand for the service with the infrastructure that they have? And if they have Spectrum, for example, which is a public good, why does the government, why would the government allow that to take continue to be the case when there's a need for a lot more capacity than they can possibly provide?
should we pass that question?
I think SpaceX will be able to get very far with the spectrum that it's acquired. But you know, at a certain point, if we're able to make much better use of the spectrum then than say a legacy telco is, we could just acquire that legacy telco and use that spectrum, you know, ten times more effectively.
And we have, we've been thinking that for the data center, so we're thinking about 10,000 to 100,000 for Starlink ultimately. And every time, every five years when we replace the satellites that exist, we're replacing them with 10 times the capacity of what we're taking down Deorbiting. So those are thousands of, you know, huge amounts of capacity we're going to be providing.
Yes, like we still see opportunity for order of magnitude improvements in the satellite's capability. So I think Starlink version 4 will have 10 times the capability of version 3, especially with the long distance laser links. So the, you know, our current laser links are around 100 gigabits a second. Our next generation laser links will be 10 terabits a second, 100 times better and then we'll put 10 of them on. So you, you know,
So we get a little short of time. But there's a couple things more. So when people are worried about data centers and about AI, people in China aren't worried about, you know, about having too much data centers and too much power. So in China they have about three times the amount of power that we do and they're adding as much power a year, what 300 gigabits compared to our 550 that we have in total, they're adding 300 a year.
I'm not sure if that's a steady state power number, but there are certainly increase. I don't think it's quite that high, it's a little lower than that and, but it is a massive number. So China at this point I think is roughly three times the power output of the United States and is trending to get to at least four times the total power output of the United States. And industrial capacity to first approximation is proportionate to your electricity output.
So and then chips, they're behind
but they're moving forward fast. And one executive at SpaceX a number of years ago told me that she thought that the only thing standing between my grandchildren speaking Mandarin and with SpaceX. Do you believe that?
Well, I think there's some merit to learning Mandarin, you know, either way it's, you know, a very interesting language. But yeah, I think there's in terms of being of competing with China, you know, from like an electricity generation standpoint and just overall sort of how much digital intelligence have you harnessed for economic activity? I think the only way to be competitive with China is to take, take the intelligence to space. So there, there we can sort of bring on a few hundred gigawatts a year and like potentially a terawatt a year. So if we're able to do a terawatt a year of intelligence to space, then in that scenario, unless China can do a terawatt a year to space, then we will have an economic output in excess of China.
that's a very big number. Of course, that's saying would do twice as much digital superintelligence per year as there is currently the average power usage of the United States. So average power usage of the United States is 500 gigawatts. A terawatt is 1,000 gigawatts. So if we did a terawatt per year, that would be doing twice the current average power usage in the United States. To space with digital superintelligence every year, these are like staggering numbers, basically.
So two more questions. Why do we need so much power? Why do we need so much chip? Why? What's the demand that's going to come for that intelligence for that power and chips?
The demand will be. This is going to sound somewhat circular, but the demand for intelligence for digital superintelligence will come from digital superintelligence,
which is for medical purposes. Which is for. I mean, what does that mean?
It means that superintelligence will saturate all human needs by far. There will be universal, high income, universal, extremely high income, universal medical care that is better than the best medical care available on Earth today. Where you could wish for a castle or whatever you want basically, and the digital superintelligence can make it for you as a side project. So I guess if you zoom out a lot, you sort of think, well, okay, as civilizations progress, you can think of the progression of civilization as how much energy has been harnessed by that civilization. So currently, just to show you how much room for growth there is in our solar system, even if we increase the amount of power harnessed by our civilization by a factor of a million, we would still be using much than a millionth of the sun's energy. That's a lot of room for growth. And you'd obviously, you know, completely saturate anything anyone could ever wish for on earth. And that point, it's really the digital superintelligence serving the digital superintelligence. And our economy will seem quaint. Quaint and like, and our money system will seem like, you know, exchanging seashells for currency. That's what our monetary system will seem like to superintelligence. You know, technically, that's the thing that used to happen. I mean, we used to. Money used to be like shiny metal that people would give to each other. Like I'll give you this shiny silver piece of metal and then you have like some shiny gold pieces of metal and you have to carry these shiny bits of metal from one place to another. And in order to do transactions, which is really onerous, frankly, and easy to rob if you've got gold coins or silver coins. But that used to be how people would pay for things. Must have been incredibly difficult to buy things long distance because you've got to transport all the silver and gold over the ocean and the ship sinks and you don't even know what's going on. It's not like you can call them on your cell phone or something like that.
So obviously it'd be fun for me to talk to you forever, but I'm out of time. And so I have just one last question. So when you're 83 like I am, how do you want people to think about you? So you're working like these crazy hours you're making. Nobody would work the way you work to just accumulate money, I think. And so you think that whatever you have is going to be highly taxed at the end, but you have a lot of money ultimately going to foundation, your foundation. What is. How do you want people to think about you? How will you want people to think about you when you're 83?
Well, I guess I'd like. I would like this perception, reality. I mean, I would like the reality, whatever the perception is, but I'd like the reality to be that I made a situation, significant contribution in the furtherance of civilization.
Thank you so much for being here today.