Investment is going extraterrestrial as orbital technology advances
Writing Terence Tse
On June 12 2026, SpaceX completed the largest Initial Public Offering (IPO) in history, almost overtaking Amazon among the world’s most valuable public companies. The ripple effects reached well beyond one company: the debut reframed the entire space sector as an investable theme, and a cohort of space shares rallied in its wake. Some commentators considered it an inflection point for the space industry. For many investors, it was their first real exposure to the space economy after years that have been focused on all things AI. But what exactly is the space sector and why are investors now paying attention?
Beyond rockets and billionaires
Many associate space with astronauts, rocket launches, billionaire tourism or settlements on Mars. Yet today’s space industry extends far beyond these activities and is considerably more relevant to our daily lives. Note some of the technologies that have already emerged from space research, such as smartphone cameras, insulation and memory foam. In fact, the true value of the space economy lies in addressing our global challenges here on Earth. Satellite networks monitor deforestation and track illegal fishing with unprecedented accuracy, transforming resource management and maritime security; satellite data also enables early warnings about environmental changes. For nations facing severe climate threats, space capability is essential for survival.
Another emerging area is pharmaceutical R&D in low Earth orbit, where microgravity – that is, near-zero gravity – allows more precise studies of biological molecules and processes. This can accelerate drug discovery beyond what is possible in terrestrial laboratories. Currently, at least 10 companies are engaged in microgravity pharmaceutical R&D. Leaps are being made forward on autonomous manufacturing of medicines in space, too: weightlessness can enable certain production methods impossible under normal gravity.
A range of other products has also been produced in microgravity environments, including artificial retinas, high-performance optical fiber, high-purity crystals, and industrial and aerospace materials. These are not speculative enterprises – they are functioning businesses with demonstrated outcomes.
In many cases, the modern space economy is powered by AI. Satellite imagery analysis, supporting applications from precision agriculture to insurance underwriting, relies on machine learning algorithms to process petabytes of Earth observation data. Performing inferences in orbital data centers means much lower latency than sending satellite data to earth stations. Companies developing AI tools for space data are building advantages that pure AI firms cannot easily replicate.
Capital in the space century
Understanding where AI and space sit on their respective maturity curves is crucial for investment timing. AI is likely near its peak: while some companies will undoubtedly deliver transformative returns, history suggests that periods of extreme optimism often precede significant corrections.
The space sector, on the other hand, has already gone through its correction. The Special Purpose Acquisition Company (SPAC) boom of 2020-2021 brought many space companies, such as Rocket Lab and Planet Labs, to public markets at high valuations. Many subsequently dropped – some by 70% or more. Undoubtedly, many space economy companies are still on the upward slope heading to the peak of inflated expectations of the Gartner hype cycle. Yet these business are often far more robustly grounded in real science than the many AI companies that offer only vague applications.
As a result, new forms of capital have been steadily flowing into the sector. Historically, space exploration was the exclusive preserve of government agencies supported by vast public funding. That model still prevails in many countries, but in others budgetary restraint and emerging commercial opportunities have seen private investment take the lead. Elon Musk and Jeff Bezos opened private funding pathways that reshaped the landscape. Now, venture capital is accelerating innovation. For example, Seraphim VC, a leading investor in the field, grew its assets under management by about 23% from 2024-2025. Export credit agencies are also now involved in the market, covering political and sovereign risks with government guarantees and direct loans, allowing banks to participate in orbital infrastructure projects that they would otherwise deem too risky.
Intriguingly, the new space economy may be relatively insulated from broader economic cycles. One recent study found the space sector is uncorrelated with major market indices; another identified a marginally negative correlation with broader equity markets. Low correlation in a portfolio means that assets don’t move in tandem: when one declines, others may hold steady or rise, off-setting losses. These studies suggest the space sector will prove particularly attractive for investors seeking diversification to balance high concentrations in technology stocks.
Looking ahead, looking up
One of the most useful ways to think about space investment is as infrastructure. In the 19th century, railways created enormous wealth for early investors and transformed global business. In the 20th century it was telecommunications. Today, Starlink and its competitors are building orbital broadband networks that will connect billions of people currently underserved by terrestrial infrastructure. Earth observation satellites are becoming the backbone of vital monitoring systems. In future, we might find that space data centers, leveraging the natural cooling of space and proximity to solar power, represent a new infrastructure category. As with previous infrastructure revolutions, the firms that build and operate these networks may generate returns for decades.
The space economy promises a combination of enhanced opportunities and strong social benefits. Space has evolved from a speculative frontier into critical infrastructure. As orbital capabilities become foundational to global commerce, security and climate resilience, early positioning in this sector may offer asymmetric upside. The space economy is on its way to becoming mainstream, and many investors are finding it is a good time to look to the skies.
Terence Tse is professor of finance at Hult International Business School, and co-founder of the AI Native Foundation
