Episode summary
How Falling Launch Costs and AI Are Driving the Space Economy
Exchanges (Goldman Sachs)
· · Guests: Michael Tarulli, Erik Sparks
Summary
The discussion argues that the space economy is moving from a government-led niche to a commercial industry because launch costs have collapsed. The guests say the cost to launch a kilogram into space has fallen from about $55,000 during the space shuttle era to about $3,000 today, driven mainly by rocket reusability and other innovations. They see that decline as the key force “democratizing” access to space and attracting more capital, new companies, and new use cases.
They describe the market as extending well beyond launches into telecommunications, satellite internet, earth observation, autonomous operations, and eventually space stations, lunar infrastructure, and even Mars. The guests say the space economy is already about $625 billion and could reach $1 trillion in the mid-2030s or 2040s, depending largely on whether launch costs keep falling. They also emphasize that AI is becoming central to autonomous flight, navigation, and onboard data analysis.
At the same time, they stress the sector’s risks: early-stage business models, hard-to-judge technology, crowded orbits, regulatory gaps, and geopolitical conflict. Investment decisions, they say, depend on backlog quality, customer quality, and revenue visibility more than current profitability.
Key takeaways
- Launch costs have fallen from about $55,000 per kilogram in the space shuttle era to about $3,000 today, and the guests say that has democratized access to space.
- The guests say rocket reusability cut launch costs by 95% and could eventually bring prices toward $1,000 or even $100 per kilogram.
- They estimate the space economy is about $625 billion now and could reach $1 trillion in the mid-2030s or 2040s if access to space keeps improving.
- The guests say investors focus on backlog, customer quality, manifest quality, and revenue growth because many space companies are still early stage and unprofitable.
- They argue space is now a war-fighting domain, with collision risk, regulation, and geopolitical competition becoming major sector constraints.
Notable quotes
“The single most important factor is the cost to launch a kilogram into space”
“That innovation, in and of itself, has brought down cost by 95%”
“About 80% today is driven by commercial companies. A generation ago, it was 80% government”
“I think right now it's about $625 billion. I think the market view, the consensus view is that we'll probably hit a trillion in the mid-2030s or 2040s or so”
“Space is a critical war fighting domain today. Full stop”
How the episode opens
The space industry sits at the center of technological innovation, economic growth, and national security. But as activity in orbit continues to expand, so do the opportunities and the challenges facing the sector. So, are we still in the early innings of a new space age?
Or are expectations running ahead of reality? I'm Allison Nathan and this is Goldman Sachs Exchanges. Joining me today to help unpack all of this are Erik Sparks and Michael Tarulli from Goldman Sachs' Global Banking & Markets group.
Erik is our head of global resilience leading our coverage of space technology, satellite communications, and national security infrastructure. And Michael is our global head of aerospace and defense, bringing deep, corporate expertise and relationships with the world's largest companies in the sector. Michael, Erik, welcome to the program.
Thank you for having us. Thank you. Michael, let's just start first with the big picture here.
We're obviously seeing tremendous growth in the global space economy right now. So, talk to us about what's really driving that interest and that momentum. The single most important factor is the cost to launch a kilogram into space.
That cost during the height of the space shuttle era was about $55,000 per kilogram. That's down to $3,000 per kilogram today. So, it's really democratized space.
It's given access to space to almost anyone that has a desire to be in space today. So, it's no longer the domain of the richest countries and the largest companies. It's really opened up access.
And what that's done is promote a significant amount of development, of investment, and innovation that's just driving a lot of activity and further interest in space. And it's been that innovation that has driven that sharp reduction in cost. Talk to us about what are some of the major innovations we've seen.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- falling launch costs
- ai in space
- satellites
- space economy growth
- investor risks and opportunities
Companies and tickers mentioned
- GS
- Goldman Sachs
Watch the episode
Watch “How Falling Launch Costs and AI Are Driving the Space Economy” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Exchanges (Goldman Sachs)
-
Playing for Scale: The Future of Sports Investing -
John Waldron on GDP Growth, AI, and the M&A Outlook -
Brookfield’s Connor Teskey on the Real Bottleneck in the AI Buildout -
Goldman Sachs Chairman and CEO David Solomon on AI: Implementation, Accountability, and Jobs -
Why Oil Prices Are Surging Despite Recovering Supply -
Where Chinese Exports Are Gaining the Most Market Share
Exchanges (Goldman Sachs), this episode and its artwork belong to Goldman Sachs. Octagon is not affiliated with the show; this page is an independent summary.
