Al Root

Elon Musk's SpaceX has some -- very expensive -- new competition.

"Project Kuiper is taking off," wrote BofA Securities analyst Justin Post on Thursday.

Project Kuiper is Amazon.com's space-based Wi-Fi service that, by the end of the decade, if all goes to plan, will have more than 3,000 satellites offering data services to Amazon Web Services clients and others. Satellite deployment started in the second quarter, and services could start before the end of the year.

"Project Kuiper has remained a top management-growth initiative despite Amazon's cost-focused agenda," added Post in his report. The cost caveat is necessary because Kuiper will be expensive to build out. He estimates $23 billion over time, with peak quarterly spending at about $1.1 billion in the fourth quarter of 2025. Launch makes up the bulk of the costs, eating up about $15 billion of the budget.

The payoff is a communications business with $7.2 billion in annual revenue by 2032. That's based on roughly seven million subscribers paying $80 a month for internet service. That's Post's initial projection, anyway.

It's a game of catch-up for Amazon. SpaceX has launched more than 9,000 satellites, and its Starlink space-based Wi-Fi service is profitable and includes some six million subscribers, according to the company.

Launch capacity and low costs have been the proverbial ace up SpaceX's sleeve.

Through early July, SpaceX had launched its Falcon 9 rocket 83 times in 2025, accounting for 54% of total global space launches, and more than 90% of American launches.

SpaceX came to dominate launch services by pioneering reusable rockets. SpaceX plans to cut costs further, using a fully reusable, larger rocket-launch system called Starship. (Only the booster stage of Falcon rockets is reused today.) SpaceX is still working out the kinks with Starship. It's tested the system nine times. In June, however, a test ship exploded on the ground.

SpaceX, of course, also has the benefit of vertical integration. Amazon has to pay commercial prices for launch services. Amazon founder and Executive Chair Jeff Bezos' Blue Origin is working on reusable rockets, too, but it isn't part of Amazon, and Blue Origin's New Glenn rocket has only reached orbit in a test flight once.

SpaceX proved what was possible for a space-based communications service. Now Amazon wants its piece of the pie. It has the capital, but taking share from SpaceX still won't be easy.

SpaceX is privately held, and was recently valued at $400 billion. Post rates Amazon stock Buy with a price target of $248, which values Amazon at about $2.6 trillion.

Amazon stock was down 0.5% in midday trading at $221.45, while the S&P 500 and Dow Jones Industrial Average 0.2% and 0.6%, respectively.

Write to Al Root at allen.root@dowjones.com

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July 10, 2025 13:10 ET (17:10 GMT)

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