SAN FRANCISCO, Feb 4, 2026, 11:17 PST
- AWS chief Matt Garman dismissed orbiting data centers as uneconomical given current rocket and launch expenses.
- Elon Musk declared that “space-based AI is obviously the only way to scale” following the merger of SpaceX with his AI startup xAI. Reuters
- Bezos-backed Blue Origin and Alphabet’s Google are both diving into space-based computing concepts, with Google working on Project Suncatcher.
Amazon Web Services CEO Matt Garman dismissed the concept of orbital data centers—essentially server farms in space—as “pretty far” from being feasible. He highlighted the high costs tied to rocket payload limits and launch expenses, calling the idea “just not economical.” Reuters
The surge in AI is ramping up demand for computing power and cooling, putting pressure on land-based data centers and the power grids that support them. This strain is driving cloud companies and startups to explore alternatives, such as deploying hardware in orbit, where issues like land scarcity and heat dissipation might be less problematic.
The buzz around shifting heavy computing off Earth intensified this week following Musk’s SpaceX-xAI collaboration, reigniting interest in solar-powered “orbital data centers.” SpaceX has asked to launch as many as 1 million solar-powered satellites designed to serve as these data hubs. Musk leans on the physics—namely, the nonstop sunlight up there—even as experts warn of tough challenges like radiation, space debris, heat management, latency, and sheer cost. “Compute in space isn’t sci-fi anymore,” said David Ariosto from space intelligence firm The Space Agency. Dawn
On Monday, Musk announced that SpaceX has acquired xAI, merging the rocket and satellite giant with the creator of the Grok chatbot in what Reuters calls a record-setting deal. A source familiar with the matter told Reuters the combined valuation puts SpaceX at $1 trillion and xAI at $250 billion. This move tightens Musk’s control as SpaceX considers an IPO.
SpaceX is aiming big with its latest pitch to regulators: a massive constellation potentially reaching 1 million satellites. These would connect in orbit and mesh with the current Starlink setup, all built to handle AI workloads. The filing highlights “inference,” which means running AI models post-training, among other tasks. The satellites would link using optical connections—laser-based data transfers between the spacecraft. Light Reading
Even enthusiasts admit the paperwork lacks clear timing. Via Satellite noted the filing doesn’t include a solid schedule, while analyst Tim Farrar from TMF Associates described the orbital data-center concept as a “Rorschach test” for investors trying to figure out what they’re actually buying into. Via Satellite
Others are tackling this challenge from various perspectives. Data Center Dynamics reported Bezos saying data centers will eventually move to space within the “next couple decades,” but emphasized the tough lift ahead: reusable rockets must fly frequently and at low cost, or it simply won’t add up. Data Center Dynamics
The immediate risk is clear: if rocket costs don’t drop quickly enough and hardware glitches pile up, the plan falters. Garman emphasized timing as crucial, pointing out that server racks are bulky and “latency”—the delay in data transmission—grows more problematic when your machines orbit hundreds of miles above Earth. Constellationr
Garman, at the helm of AWS since June 2024, shared his thoughts during Cisco’s AI Summit, appearing alongside top tech and AI infrastructure leaders. He stopped short of pitching orbital data centers as the next AWS region—for now.
