Space Stocks Crashed in July. Their Businesses Didn’t.

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July was a brutal month for space stocks. 

BlackSky (BKSY) was down almost 20%. Rocket Lab (RKLB), AST SpaceMobile (ASTS), and Planet Labs (PL) shed more than 30%. Even SpaceX (SPCX) – fresh off the largest IPO in history – slid over 50% from its June 16 record close.

But here’s what makes this moment so interesting: while the stocks were selling off, the businesses were doing the exact opposite.

BlackSky just reported 50% year-over-year revenue growth and swung to positive adjusted EBITDA. Redwire (RDW) posted record revenue – up nearly 90% year-over-year – with gross margins flipping from deeply negative to nearly 28%, and a record $542 million backlog. And SpaceX’s first-ever public earnings report showed revenue up 92%, with its AI segment growing 247%.

That’s a dislocation. Prices went one way while fundamentals went the other. And now, these beaten-down names are showing early signs of reversal.

We think they’ve still got miles of orbital runway left.

Why? Because the space economy is finally getting real. It’s no longer some far-off “Jetsons” fantasy.

Defense Spending Is Becoming a Growth Engine for Space Stocks

We’ll start with the national security angle first.

Governments are waking up to the uncomfortable fact that space is the new strategic battleground.

Satellites can now provide real-time battlefield intelligence, secure military communications, early warning missile detection, navigation and targeting systems, and surveillance on rival (and even friendly) nations.

Just look to Ukraine – its military would likely have been wiped off the map without Starlink – or China, which now considers satellite dominance a national priority.

Even the Pentagon has created a $30-plus billion annual budget line called the U.S. Space Force.

This is a long-term arms race – one that favors nimble, responsive space companies with launch capacity, satellite imaging capabilities, and hardware manufacturing.

The usual suspects benefit here:

• BlackSky, which provides real-time Earth intelligence for military and defense
• Planet Labs, operator of the largest constellation of Earth observation satellites
• Rocket Lab, launch provider for government payloads, hypersonic testing
• Palantir (PLTR), which offers analytics for satellite data

The bottom line? We estimate national defense TAM in space is about $30- to $40 billion today. But as intelligence demand and geopolitical tensions escalate, it could easily double over the next decade.

And it’s just one vertical of the multi-faceted Space Economy…

Satellite Internet Is Expanding the Space Economy

Another big vertical here is space-based communications because the entire communications industry is being rewritten from orbit.

The world is moving toward a space-powered internet: a global, always-accessible broadband network delivered from thousands of small satellites in low Earth orbit (LEO).

This is more than a theoretical future. It’s already in action:

• Starlink now has over 10,000 satellites in orbit and serves 12 million users worldwide.
• Amazon Leo (formerly dubbed Project Kuiper) continues building out its constellation to support AWS and global internet.
• AST SpaceMobile is going one step further, building the first cell tower in the sky that connects directly to your smartphone without dishes or terminals.

That’s a major step up, especially considering that 2.2 billion people worldwide still lack reliable internet access, and billions more suffer from poor mobile coverage.

Not to mention, we still don’t have cell coverage on airplanes. And natural disasters like earthquakes, fires, and tsunamis often knock out cell coverage when we need it most.

That’s why we think the total addressable market here is huge. We see it climbing toward $150 billion by 2035 – possibly much more if these constellations become the backbone for rural broadband, global telecom, and even cloud connectivity.

Who benefits?

• ASTS – offers direct satellite-to-phone coverage in partnership with AT&T, Vodafone, and Telefonica
• RKLB – launching communications satellites for multiple players
• PL & BKSY – may support telecom mapping, planning, and routing
• SpaceX – now public after the largest IPO in financial history, giving retail investors direct access to the most dominant player in the space economy for the first time

Between national defense and communications, we’re already staring at a $50- to $65 billion market in space today.

And it’s still very early days.

Orbital Data Centers Could Become the Space Economy’s Biggest New Market

Here’s the vertical that didn’t exist when we first started writing about the space economy – and it may end up being the biggest of them all.

AI’s growth is running into hard physical limits on Earth. Data centers need enormous amounts of land, power, and water – and communities increasingly don’t want them nearby. Lawmakers in at least 14 states have introduced legislation to restrict new data center construction.

Space solves all three problems at once. Orbital data centers harvest uninterrupted solar power around the clock, require zero land, and radiate waste heat directly into the vacuum of space – no water needed.

The ‘land grab’ has already begun. SpaceX has filed with the FCC to launch up to one million orbital data centers. Google has entered talks with SpaceX to expand its own space-based compute efforts. Anthropic has expressed interest in partnering on orbital AI capacity. And Jeff Bezos’ Blue Origin just asked the government for permission to launch more than 50,000 orbital data centers of its own.

Every one of those satellites needs launch capacity, solar arrays, specialized hardware, and in-orbit servicing. The companies supplying those pieces sit directly in the path of what could become a multi-trillion-dollar buildout.