The 'space economy' is booming. Here's where most of the money is going.

By William Gavin

Expect a further rush of spending beyond last year's record levels, as investors chase the promise of space-based data centers and look to piggyback on a potential SpaceX IPO

SpaceX's potential initial public offering could trigger a wave of listings from smaller space companies.

Enthusiasm for the so-called space economy is at an all-time high, and driving record levels of private investment.

Around $55.3 billion was poured into 431 companies that operate in the space sector last year, a 65% increase compared to 2024, according to the latest quarterly report from Space Capital, a venture-capital firm that focuses on early-stage investments.

Some $17 billion was invested in 135 firms across the last three months of 2025 alone. That's a roughly 79% increase compared to the $9.5 billion doled out to 99 companies a year earlier, Space Capital said.

"What changed in 2025 wasn't just the amount of capital flowing into space, but why it was flowing," Space Capital CEO Chad Anderson said in emailed comments. "Investors stopped underwriting possibility and started underwriting systems that actually do work, such as sensing, communications, navigation and defense resilience."

Space Capital considers three types of companies when it compiles its report: firms developing infrastructure like spacecraft, distributors that manage data and companies that apply space-derived data.

The last 12 months marked a turning point for the space business, according to Space Capital report, which pointed to growing competition for SpaceX and a surge of investment in the "applications" basket of companies. Innovation has also blossomed with investor support as public and private entities have ramped up launch efforts, thus bringing down costs.

Chris Quilty, the co-CEO of research firm Quilty Space, told MarketWatch last month that the "things you can do in orbit are literally exploding" as launches get cheaper. He pointed to companies working on orbit fuel depots, building private space stations and planning to mine the moon for resources.

"It's opening up an entirely new space economy," Quilty added of lower launch costs.

This year could add to that growth. Space Capital sees three trends emerging that could be catalysts for the space sector.

Chief among them is the possibility that Elon Musk's SpaceX announces an initial public offering, an event that Space Capital compared to the public debut of Netscape in 1995, which kicked off the dot-com boom. SpaceX's potential debut would likely trigger a rush of smaller IPOs and drive interest in the space sector, according to experts.

Flashback: Opinion: 20 years after Netscape's IPO, we still live in the world it created

"Public investors will finally have a true reference point for scale, margins and growth in space-based businesses, and that kind of price discovery tends to ripple quickly through both public and private markets," said Anderson.

SpaceX, which is worth $800 billion, is eyeing an IPO that could come as soon as mid-2026 and reportedly plans to raise more than $30 billion at a valuation of as much as $1.5 trillion. That's many times more valuable than Rocket Lab (RKLB), which is the second-most prolific launch company in the U.S., behind SpaceX.

Space Capital also expects "massive hype" over an idea that's picked up steam as a way to solve a looming energy crisis: orbital-based data centers. Alphabet (GOOGL), SpaceX and several smaller startups like Starcloud and Aetherflux, have expressed interest in the idea of space-based compute.

"We will be able to beat the cost of terrestrial data centers in space in the next couple of decades," Amazon (AMZN) and Blue Origin founder Jeff Bezos said at a conference last fall. "Space will end up being one of the places that keeps making Earth better."

However, Space Capital warns that investors need to learn how to distinguish between sky-high promises and "thermodynamic reality." Experts say it'll take years for the economics of developing orbital data centers to make sense, plus there are plenty of technological issues that will need to be ironed out.

The space sector will also likely benefit from increased defense spending as the U.S. pursues a $175 billion missile-defense system called the Golden Dome. President Donald Trump has said he would seek a $1.5 trillion defense budget for fiscal year 2027, more than the $962 billion he requested for fiscal 2026.

Read: These two space stocks could rise 70% as government work heats up, analyst says

Congress also released a budget plan that would give NASA $24.4 billion in fiscal 2026, more funds than the White House had allocated in its budget request last year. NASA Administrator Jared Isaacman has supported encouraging competition and accelerating U.S. efforts to beat China to the moon.

"National security demand has effectively reset the risk profile for the space economy," Anderson said, adding that interest in missile defense and other programs has "created a durable baseline of demand that didn't exist five years ago."

-William Gavin

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