Category: Insight

Aided by Gemini and Grok AIs

Accelerating AI From Terrestrial to Orbital

Our November 2025 thesis focused on “The Autonomous Network” as a terrestrial play – Full Self Driving (FSD), Optimus, and the data centers powering them all. However, recent supernova developments suggest the “moat” is moving to Low Earth Orbit (LEO).  The recent SpaceX-xAI merger, Elon Musk’s open discussion of his strategic vision on this combined business, and Tesla suggest we’re on the threshold of an automation acceleration era.

• The SpaceX-xAI Merger: SpaceX’s acquisition of xAI on February 2, 2026 (valuing the combined entity at $1.25 Trillion) creates the world’s first vertically integrated “Orbital Brain.” By combining launch dominance with frontier artificial intelligence (AI), Musk is attempting to solve the two biggest bottlenecks for earthly autonomy: energy and heat.
• The 1 Million Satellite Filing: SpaceX’s Federal Communications Commission (FCC) filing for an “Orbital Data Center” system of up to 1 million satellites (powered by constant solar and cooled by the vacuum of space) signals a paradigm shift in the future cost of compute. This first of its kind filing has already been posted for public comment by the FCC for input by March 6, 2026. The satellites would operate at altitudes between 500 and 2,000 kilometers in sun-synchronous inclinations to achieve near-constant (99%) sunlight for solar power generation. A key feature of the proposed system is reliance on inter-satellite optical links for communications among the satellites, which would then relay data to the ground.  SpaceX Starship launch spacecrafts would bring large satellite payloads into orbit to build the data center constellation.

Musk’s dream is to make space the lowest-cost environment for AI inference, bypassing the Earth’s many power grid constraints. Musk has been imagining this space adventure for a while. Walter Isaacson’s biography “Elon Musk” recounts that Elon was just a 14-year old dreamer when he drew crude diagrams for solar-powered energy satellites.

• Implications for Tesla: Tesla is no longer just a car company or even just an AI company; it is primarily an “edge device” network for Tesla AI robots on wheels and robots in human emulation form. The recent surprise $2B investment by Tesla into xAI (now a stake in the SpaceX-xAI combined entity) confirms that Tesla’s FSD and Optimus robots will be direct beneficiaries of this off-planet computing power.

Below is a summary of Elon’s bold vision from the 3-hour Cheeky Pint Podcast with John Collison and Dwarkesh Patel.  The world’s foremost engineer and entrepreneur discusses the future of solar energy and data centers, terrestrial data center constraints, artificial intelligence, robotics, critical mineral refining, and US solar panel and semiconductor chip manufacturing.

Musk’s Central Claim

“In 36 months, but probably closer to 30 months, the most economically compelling place to put AI will be space.”
“You can mark my words.”

He predicts that within 2.5–3 years (~mid-2028 to early 2029), space will become the cheapest location for running large-scale AI compute — especially inference and eventually training as well. Note that the March 6, 2026, due date for public comment on SpaceX’s FCC filing indicates how rapidly these regulatory and commercial action may move.

Why This Matters So Much for AI

Musk’s reasoning is driven by physics and scaling realities rather than exotic technological breakthroughs:

1. Earth is fast approaching a hard energy wall

• AI compute demand is growing exponentially (chips/Floating-point Operations Per Second (FLOPs) are doubling roughly every 6–12 months).
• Global non-China electricity generation is basically flat.
• Massive terrestrial solar growth would require enormous land, permits, energy storage/batteries required for nighttime and cloudy days, and transmission/grid infrastructure — all of which face years-long backlogs (interconnection queues, gas turbine lead times out to 2030, state and local permitting processes, and tariffs on imported goods).
• Six U.S. states have introduced bills to place a moratorium on data center construction.
• Engineering Conclusion: It will become physically and regulatorily impossible to build sufficient power generation fast enough for the maintenance and accelerated advance of the largest AI models on Earth.

2. Space removes the main constraints

• Solar power is roughly 5 times more productive per panel in space than on earth (no atmosphere, no night, no adverse weather).
• No need for battery storage (constant sunlight).
• No heavy structural support (gravitational impact is limited so weight is a far less important factor).
• Effectively unlimited clean energy once in orbit.
• Cooling is different (radiation only, no air), but Musk argues it’s manageable and still cheaper overall at extreme scale.
• Engineering Conclusion: The cost per watt in space becomes dramatically lower than anything possible on the third rock from the sun.

 

3. The economic tipping point

• Musk believes launch costs (via SpaceX Starships) will fall far enough that launching GPUs and solar panels will become cheaper than building equivalent terrestrial power infrastructure.
• SpaceX is iteratively improving Starship’s rocket reusability. Musk forecasts that SpaceX will achieve full and rapid reusability of the Starship system in 2026, enabling both the Super Heavy booster and the ship to be caught and rapidly reused.
• Energy is only about 15% of a data center’s lifetime cost today versus semiconductor chips representing 70% of the cost, but when energy becomes the binding constraint, the equation flips.
• Engineering Conclusion: Once energy is a binding constraint, orbital compute wins the pure economic battle.

Musk’s Scaling Vision

• Elon is not optimizing his scaling function for one variable. He’s optimizing across energy, compute, manufacturing, launch capacity, intelligence, and robotics. All factors being optimized simultaneously, with each factor unlocking additional scale for the next factor in a recursive manner, creating an interstellar flywheel.
• Within about 5 years (early 2030s), Musk projects that SpaceX will be launching more AI compute per year than the cumulative total of all AI compute ever built on Earth up to that point.
• Target: Hundreds of gigawatts (GW= 1000 Megawatts (MW), 1 MW satisfies the power needs of 164 U.S. homes), eventually terawatts (TW = 1000 GW) per year in orbit.
• Example: 100 GW of orbital compute would require roughly 10,000 Starship launches per year or roughly 1 launch every ~50–60 minutes if spread evenly.
• Orbital Scaling Advantage: Musk says SpaceX is preparing for 10,000–30,000 launches per year, which would make them a “hyper-hyper-scaler” for AI.

Implications for AI Applications

• Unlimited scaling of frontier models — training and inference no longer gated by terrestrial power, politics, or grid limits.
• xAI (and potentially Tesla) gains decisive advantage: while terrestrial competitors fight over energy interconnect queues and permits, xAI and its partners are unconstrained.
• Gigantic scale enables truly massive real-time AI uses (e.g. global inference, orbital coordination of Optimus and Cybercab fleets, digital human emulation at planetary scale).
• Musk frames this as existential for civilization-scale AI progression. Earth-based solutions will hit a ceiling, while space offers infinite scale.

Challenges Raised in the Interview

Dwarkesh pushed back hard:

• Photovoltaic panels and semiconductor chips still dominate cost.  SpaceX will need to acquire sufficient supplies of both before being able to launch them into space.
• Servicing failed GPUs mid-training in orbit sounds very difficult.
• Power is only part of the equation.

Musk’s responses:

The energy bottleneck is so severe that it overrides those concerns once you hit the energy wall. If Earth can’t supply the power, the other costs become secondary. Both SpaceX and Tesla are presently working on manufacturing their own photovoltaic panels.  On the compute side, Tesla is actively designing its own chips in partnership with Samsung Electronics.  GPUs typically fail in their infancy and servers will be rigorously tested on earth prior to launch.

Early Execution Status as of Feb 7, 2026

• Both Tesla and SpaceX have been tasked with ramping US-based manufacturing of solar panels for space.  The design and manufacture of these panels is easier than terrestrial solar in some respects.  For example, you don’t have to design orbital panels to withstand severe weather.
• Hiring is already underway for engineers to work on AI satellite and solar panels.
• Tesla is actively working with Samsung Electronics on its own AI5 chip design which is scheduled for mass production in 2027.
• This interview is the most in-depth public explanation of Musk’s warp speed engineering tactics.

Bottom Line for Servant Financial Clients:

Our “Forge Ahead” strategic sleeve allocation remains well positioned for this acceleration in autonomy. The supply chains for these technologies will demand unprecedented volumes of raw materials in this second race to space – steel, aluminum, lithium, nickel, cobalt, graphite, copper, silver, rare earths, silica sand, and fluorine etching solutions for chips and solar.

As a compliment to the Forge Ahead sleeve, we’ve identified an Exchange Traded Fund (ETF) – Baron First Principal ETF (RONB) that is levered to Musk’s Ad Astra (“to the stars”) AI-driven autonomous future.  The ETF has pre-merger exposure to both SpaceX and xAI private securities and Tesla. We’re treating this as a higher risk, opportunistic strategy and adding it more selectively to more risk tolerant models – Core-Satellite Moderate and Core-Satellite Aggressive and similar bespoke client models.

A famous astronaut’s quote seems an apropos way to close this article on Musk’s “to the stars” strategic play.

 

“That’s one small step for a man, one giant leap for mankind.”

~ Astronaut Neil Armstrong

As 2025 draws to a close, financial markets and the broader economy find themselves at the intersection of several powerful forces: a battle between inflation and interest rates, rapid technological innovation, shifting consumer behavior, and an electrical grid feeling the pressure of rapid automation and digital expansion. What began as a year defined by rate debates has evolved into a broader story about how the United States is absorbing structural change. The themes of the past twelve months tell us as much about the decade ahead as they do about the year behind us.

Interest Rates and a Cooling but Resilient Housing Market

The Federal Reserve’s higher-for-longer posture continued to exert pressure across the economy, from housing affordability to equity valuations. Inflation proved stubbornly sticky, while job growth oscillated between strong and soft patches, complicating the Fed’s interpretation of true economic momentum. The government shut down key data releases, leaving Fed policymakers with an incomplete picture as they weighed interest rate decisions heading into the second half of the year.

Source: St. Louis FRED

In the housing market, the post-pandemic boom has gradually begun to soften. Home prices have remained elevated, particularly in regulatorily supply-constrained cities like New York, Miami, and Dallas, but the rate of appreciation slowed. The S&P CoreLogic Case-Shiller National Home Price Index rose just 1.3% in the twelve months through September 2025, the lowest rate of home appreciation since mid-2023. While affordability challenges have sidelined many potential buyers, further rate cuts in 2026 could rekindle momentum in the year ahead.

Source: St. Louis FRED

The AI Economy: Real Productivity Meets Bubble Anxiety

If 2023 and 2024 were years of artificial intelligence (“AI”) experimentation, 2025 marked the year AI went mainstream. More than one-third of American workers now report using AI tools on the job, and major corporations have integrated automation directly into their operating models. Artificial intelligence was even used in the editing of this article. Companies such as Amazon, UPS, Target, and Klarna announced significant white-collar job reductions as AI systems replaced administrative and managerial functions, a trend some have dubbed the “death of the middle manager.”

Public figures, including Bill Gates and Elon Musk, predicted that professional fields such as teaching, medicine, and corporate strategy may undergo profound transformation within a decade. Yet even as AI adoption accelerates, questions loom about whether AI-focused companies can justify their valuations. Many remain unprofitable, and concerns about frothy investor optimism persist.

OpenAI CEO Sam Altman captured the contradiction succinctly in an August interview: “Are we in a phase where investors as a whole are overexcited about AI? Yes. Is AI the most important thing to happen in a very long time? Also, yes.” Markets, for now, are trying to price both realities at once in this winner-takes-most AI race.

The Strained Electrical Grid and a New Geography of Computing

The explosion of AI models and the ongoing growth of electric vehicles have pulled America’s power grid into the center of macroeconomic discussions. Massive data centers, many clustered in states like New Jersey, have begun to significantly influence both local land markets and force electricity prices higher. Retail power rates in New Jersey climbed 19% this year, compared with a 6% national increase.

The question of where to locate future data centers has become contentious. Tech companies are increasingly competing for rural land, including farmland, as they seek open space and access to low-cost, efficient power generation. Meanwhile, policymakers are wrestling with how to balance innovation with local community needs and the affordability of consumer electricity.

Energy Secretary Chris Wright, however, pushed back against the idea that AI will inevitably raise energy prices. “The way to get electricity prices down,” he argued, “is to produce more electricity.” Companies such as Amazon and NVIDIA appear to agree, committing billions to new infrastructure designed to meet the escalating demand.  Several hyperscale data center operators are taking steps to reinvent electrical grid dynamics with announced projects that include their own “behind-the-grid” power sources.

A Splintered Consumer Base

The strength of the U.S. consumer, a traditional pillar of economic stability, looked increasingly uneven in 2025. High-income households continued to spend robustly, with the top 10% of Americans now responsible for nearly half of all consumer expenditures. Meanwhile, mid-market consumers struggled with rising costs of living, mixed employment markets, and managing their debt burdens in a less favorable interest rate environment.

Delinquencies on credit cards and auto loans have been rising for much of the year. Overall, unemployment has hovered near 4.5%, but younger workers have been facing far steeper challenges: Gen Z’s unemployment rate climbed to 10.4% in September, underscoring the shifting dynamics of the labor market.

Source: St. Louis FRED

Healthcare Reimagined as GLP-1 Adoption Surges

Perhaps no sector experienced as dramatic a transformation as healthcare. GLP-1 drugs, once primarily used to treat diabetes, rapidly entered the mainstream as a legitimate weight-loss treatment. A Gallup survey found that 12.4% of U.S. adults used semaglutide-based medications in 2025, up from 5.8% as recently as February. Insurance plans, employers, food manufacturers, and medical device companies all felt the second-order effects of America’s latest health kick.

Obesity rates, long stubbornly high in the U.S., have begun to decline. Meanwhile, pharmaceutical companies such as Novo Nordisk and Eli Lilly are racing to develop pill-based GLP-1 formulations. If pill-based GLP-1 drugs become widely available, they could lower treatment and distribution costs by eliminating injections and specialty delivery, while expanding access through primary care. Broader, earlier use could shift healthcare spending away from costly downstream conditions, such as diabetes, cardiovascular disease, and orthopedic interventions, toward preventive pharmaceutical management. Over time, this would change insurer, employer, and public health spending patterns by increasing pharmacy costs upfront but reducing long-term medical claims.

Housing Scarcity and the Debate Over a 50-Year Mortgage

Even with cooling prices, housing remained scarce across major metropolitan areas. New policy proposals attempted to bridge the affordability gap, including a controversial 50-year mortgage suggestion aimed at lowering monthly payments. While a longer mortgage term does reduce payment size, the total interest burden balloons dramatically. On a $325,000 home, a 50-year loan would generate more than $833,000 in interest, double that of a 30-year mortgage, and over five times that of a 15-year.

	15 Year	30 Year	50 Year
Home Price	$325,000.00	$ 325,000.00	$325,000.00
Rate	5.60%	6.25%	6.90%
Total Payment	$2,672.80	$2,001.08	$1,930.65
Total Interest Paid	$156,103.79	$395,389.12	$833,388.95

Such a structure might expand the pool of eligible buyers, but likely at the cost of pushing prices even higher, an ironic outcome for a policy intended to ease affordability.  Many experts believe that housing supply in certain regions of the country has been constrained by regulation and that a housing market realignment is possible simply by reducing the red tape and letting homebuilders build.

Market Performance: Strong Gains Amid Uncertainty

Despite recurring volatility, 2025 has proven to be a strong year for equities, led by technology, biotech, real assets, and precious metals as markets reprice the future based on the current path of economic, monetary, and international trade policies. U.S. Large Cap Stocks returned over 17%, the Nasdaq Composite more than 21%, and semiconductor stocks surged nearly 50%, fueled by soaring AI computing demand.

However, real assets and commodities stole the spotlight, with gold and precious metals posting extraordinary gains. Gold has jumped nearly 60% as the flock to real assets persisted.

Financials also outperformed with broad equity benchmarks across the Dow, S&P, and Russell families, delivering double-digit returns.

Looking Ahead

The defining story of 2025 is one of economic realignment. Higher-for-longer rates pressured valuations by raising discount rates, triggering a broad repricing of risk across assets. AI shifted from a speculative idea to a foundational technology. A strained power grid emerged as a national constraint on economic prospects. Healthcare has entered a new era of productivity, while housing scarcity and affordability and socioeconomic inequality remain persistent challenges.

As we look toward 2026, the U.S. economy remains dynamic and resilient, but several increasingly complex economic realignments are at our nation’s doorstep. Volatility will likely persist, but so will abundant opportunities, particularly in real assets and critical minerals, select equities, and sectors positioned to benefit from a decade of reinvestment in U.S. energy infrastructure, manufacturing, production, and refining capacity, and advanced technologies.

Refresh of: “Will 2025 Be the Year of Autonomy?” (Feb 2025)

Author: John Heneghan, with Gemini and Grok AI Assistance

 

When we asked in February if 2025 would be the year of autonomy, the answer proved to be a resounding “yes,” though not in the ways expected.  Developments the past nine months have clarified the autonomy investment thesis: large-scale autonomy is not just about the robots; it’s about an autonomous nervous system.

While individual self-driving cars and humanoid robots remain headline-grabbers, the critical, enabling infrastructure—a global, low-latency “nervous system”—has recently moved to center stage. This shift has been occurring across three key earthly domains: military, commercial, and labor.

1. Military: Strategic Drones

The war in Ukraine has rapidly evolved from remotely piloted drones to a proving ground for AI-driven autonomous systems. We are now seeing:

• Autonomous Targeting: Reconnaissance drones identify a target, “drop a pin,” and an autonomous strike drone is automatically dispatched to the location with minimal human intervention.
• AI-Enabled Munitions: New hardware, like the “AeroVironment Switchblade loitering munitions”, now features onboard AI for autonomous target recognition and route-planning.

The Starlink Connection: This entire “war of autonomy” is enabled by Musk controlled SpaceX’s Starlink Low Earth Orbit (LEO) satellite communication network. Portable Starlink (and secure Starshield for military and intelligence applications) terminals on the front lines provide the high-bandwidth, low-latency connection required for real-time video feeds and beyond-line-of-sight command and control. Starlink dominates mobile frontline bandwidth, but fixed infrastructure and rival LEO constellations (OneWeb, Guowang, Amazon’s Kuiper) are in trials. Ukraine also uses Inmarsat, Iridium, and fiber where available.

2. Commercial: Tesla FSD

Since our article, Tesla has moved from data collection to building tangible features for its robotaxi network. The October 2025 rollout of Full Self-Driving “FSD” (Supervised) v14 is the clearest evidence yet.  Lest we confuse our readers, v14 is not unsupervised robotaxi ready.  v14 Supervised marks the first robotaxi-grade user experience, but full unsupervised operation awaits regulatory approval and v15+.  FSD v14 benefits from over 6 billion miles logged versus Waymo’s ~25M (public 2025 figures).

• “Arrival Options” allow a user to select where the car should stop (e.g., “Curbside,” “Parking Lot”), a vital skill for a commercial ride-hailing service.
• Smarter Navigation now integrates routing with the core neural network, allowing the car to handle real-time detours—a non-negotiable for an autonomous taxi.

The Starlink Connection: While individual Tesla cars don’t require constant satellite internet for driving, a future fleet of millions of Cybercabs and autonomous Tesla Semis will. They will need to download large software update files, upload terabytes of fleet-learning data, and receive real-time fleet management instructions, making a ubiquitous LEO network indispensable.

3. Physical Labor: ‘East vs. West’ Robot Race

In our February article, we highlighted Tesla’s Optimus as the key player in labor autonomy. However, this ‘Western’ narrative is now being directly challenged by an ‘Eastern’ counterpart: China’s XPENG and its ‘IRON’ humanoid robot.  There are other global robot competitors including Figure.ai, already shipping robots for simpler humanoid tasks, and Unitree G1, being used in Chinese factories.

Here is comparative table of the leading robot offerings.

Robot	2026 Target Use-Case	Est. Price	Key Edge
Optimus V3	Tesla Gigafactories (complex tasks)	$20-$30K	6B+ miles of FSD data
IRON	Showrooms + inspection (Baosteel)	~$25K	Speed to market
Figure 02	BMW pilot lines (simple tasks)	$50K+	Safety certifications
Unitree G1	Chinese SMEs (basic labor)	$16K	Lowest Cost

 

As of today, it looks like a full-blown strategic race between Tesla Optimus and XPENG IRON with each pursuing a different playbook.

• The “Western” (Tesla) Strategy: This is a vertically integrated, “all-or-nothing” manufacturing play. The stated 2026 goal for the new Optimus V3 is to deploy it in Tesla’s own factories first, solving its own complex labor needs before selling the robot externally. See this X post on Optimus’ methodic ramp from prototype to production.
• The “Eastern” (XPENG) Strategy: This is a parallel, “boots-on-the-ground” approach. XPENG’s ‘IRON’ (a direct 5’10”, 154-lb competitor) has also been tested on its EV assembly lines. However, at its AI Day on November 5, 2025, the company revealed a more nuanced 2026 commercialization plan:
  • Manufacturing is Hard: The CEO admitted large-scale, complex factory use is likely 3-5 years away.
  • Immediate 2026 Goal: Their 2026 mass-production goal is to first deploy IRON in commercial service roles—as receptionists and guides in their showrooms.
  • Industrial Niche: Simultaneously, they are partnering with industrial giants like Baosteel to use IRON for simpler, high-value inspection tasks.

The Starlink Connection: This ‘East vs. West’ race for labor autonomy only reinforces the network thesis. Like the Cybercab, a global fleet of competing robots—whether Optimus, IRON, or others—will function as “edge devices.” They will all need a robust “nervous system” to connect back to their central AI “brains” for software updates, shared learning, and remote operation. This creates a strategic race not just for the robot, but for the secure, high-bandwidth network.  Starlink/Starshield currently leads in global scale and latency—critical for edge-to-cloud learning.

4. Grand Unifier: The “Golden Dome”

Is tying our autonomy thesis to SpaceX’s Starlink and a new defense initiative a space fantasy?

Based upon 2025 developments, the most logical conclusion is that this is more of a space reality than pure space fantasy.

In May 2025, the U.S. government announced the “Golden Dome,” a proposed space-based missile defense system—a protective layer of satellites to intercept hypersonic threats. Just days ago, reports emerged that SpaceX is a leading contender for up to $2B in funding—alongside Lockheed and Northrop—per recent reports.  See linked article above.

This concept is no longer science fiction precisely because Starlink has proven that a mass-produced, low-latency satellite constellation is viable.

Conclusion: As Above, So Below

The “East vs. West” race for autonomy won’t be a contest for just the factory floor—it will be decided in low-earth orbit. As the ancient hermetic principle states, “As above, so below.”

While competitors like XPENG are formidable, they are focused on the ‘below’—the earthly, physical robot. While the ‘West,’ through the strategic alignment of SpaceX and Tesla, has a profound, asymmetric advantage from ‘above’.   SpaceX is potentially building the global nervous system (Starlink/Starshield) that all “Western” autonomous fleets will depend on.

Note, Starlink’s commercial terms of service prohibit military use; Starshield is the DoD-hardened variant with a separate constellation.  There are also many risks to this thesis, including but not limited to the following bearish cases:

Key Risks to Thesis

• LEO Commoditization: Kuiper live 2026 → pricing pressure
• Regulatory Delay: NHTSA robotaxi approval slips to 2027+
• China Exclusion: Starlink banned in largest EV/humanoid market

The Golden Dome project validates the potential for an artificial autonomous network.

When you view all the pieces as one integrated system—the Golden Dome as the defensive shield, Starlink/Starshield as the nervous system, FSD/Cybercab as the logistics fleet, and Optimus as the labor force—the sheer scale of this economic gambit becomes clear.

Wall Street Consensus (TSLA)

• Rating: Hold (30+ analysts)
• 12-Mo Price Target: $370–$390
• Implied: ~3–8% downside from ~$404
• Bull Case: $600+ (Wedbush) on AI/Optimus
• Bear Case: $120–$200 on margins/regulation

Galactically speaking, Elon announced at Tesla’s recent annual meeting of shareholders that he is exploring ways for Tesla shareholders to invest in SpaceX.

For Tesla and its investors, the Pinky and the Brain answer remains:

‘The same thing we do every day—try to take over the world.’

This time, with satellites.