When Data Centers in Space Stop Sounding Impossible

Investors and founders weigh in on the growing case for data centers in space.

For years, the idea of putting data centers in orbit lived on the fringe—an ambitious concept more likely to invite skepticism than serious investment. That perception is beginning to change.

When Elon Musk announced the merger of SpaceX and xAI, he framed the move not as spectacle, but as necessity. Today’s AI systems depend on massive terrestrial data centers that require extraordinary amounts of power, cooling, and land—resources that are becoming increasingly difficult to scale. Space, with its continuous solar energy and physical abundance, is starting to look less like science fiction and more like a systems-level alternative.

For investors who once backed orbital data infrastructure only to be dismissed as unrealistic, that reframing matters.

“When we made this investment in 2023, we were laughed off Twitter,” said Scott Hartley, co-founder and GP at Everywhere Ventures, an early backer of Starcloud. “Now you’re hearing Jensen Huang, Elon, and Jeff Bezos talk about not just the cost-benefit, but the Earth benefit of putting data centers in space. It moves this from audacious to potentially feasible.”

That shift is beginning to show up in the data. Venture investment in space technology has rebounded over the past year, with PitchBook reporting a sharp increase in deal value even as other venture categories have consolidated. What was once a niche bet is starting to look like a category in formation.

Starcloud isn’t alone. Axiom Space is developing a commercial space station that includes data infrastructure. Lonestar is exploring data storage systems on the Moon. Sophia Space is advancing aerospace data center concepts at the pre-seed stage. Together, these efforts suggest growing conviction that the constraints facing Earth-based infrastructure may eventually require off-planet solutions.

There are also early technical signals. In October, Starcloud launched a satellite equipped with an Nvidia H100 GPU and successfully trained and queried Gemma, an open-source large language model from Google, directly in orbit. It was a modest deployment, but an important proof point.

Significant challenges remain. Launch costs are high, scaling is complex, and many investors caution that meaningful impact is still years away. But for backers, the precise timeline matters less than the direction of travel.

Data centers in space may still be out of reach today. Increasingly, however, they no longer sound out of place in the future investors are underwriting.

And that alone marks a meaningful shift.

Read more from PitchBook:

Data centers in space might not be a pie-in-the-sky idea—but out of reach right now