* Quarterly capital spending reaches $18.4 billion,

including $15.8 billion on AI infrastructure

* New compute capital has less than one-year payback, CFO

Johnsen says

* SpaceX signed $6.7 billion in additional cloud contracts

since end of Q2

* Executives expect year-end compute capacity to exceed two

gigawatts

* Shares fall 9% in premarket trading

By Akash Sriram

Aug 5 (Reuters) - SpaceX touted

faster-than-expected returns from its AI spending on its

first-ever earnings call as a public company.

But investors remained concerned about how long its

profitable Starlink business could continue to bankroll costly

investments in data centers and Nvidia ( NVDA ) chips.

The company's shares fell 9% in premarket trading on

Wednesday, dropping well below their $135 IPO price in less than

two months since the company's blockbuster debut.

SpaceX reported AI revenue that more than tripled from a

year earlier and disclosed several new cloud computing

agreements, even as quarterly capital spending on AI climbed to

$15.8 billion.

Chief Financial Officer Bret Johnsen said the economics of

those investments were improving rapidly, but also signaled that

AI spending would remain elevated.

"The current economics have translated into a less than

one-year payback on our new capital deployments for compute,"

Johnsen said, adding that SpaceX had signed another $6.7 billion

in cloud computing contracts since the end of the second quarter

and was on track to reach a $100 billion annualized revenue run

rate by the end of the year.

That stands in contrast to traditional data center

investments, which typically take years to recover their upfront

costs.

"Elon has continued to surprise investors on what innovation

and technology can do, but there has always been a mismatch in

terms of the time frame of when that execution is going to

occur," David Wagner, portfolio manager at Aptus Capital

Advisors, said, referring to Musk's often-rosy outlook at his EV

company Tesla that he has regularly missed.

"I believe the numbers. I would say that yes, those numbers

are aggressive, but it's not a fantasy. The pieces exist, they

just require flawless execution."

THE AI PAYBACK BET

The comments at the post-earnings call marked a shift in the

investment debate surrounding SpaceX.

Before the earnings release, investors largely viewed

Starlink's growing cash flows as the primary source of funding

for the company's AI ambitions. Management is now arguing that

AI infrastructure itself is beginning to generate enough revenue

to finance further expansion.

To be sure, the company spent about $18.4 billion on capital

expenditures during the quarter, roughly a fifth of the $85.7

billion it raised in its June IPO, and remained deeply free cash

flow negative as it continued investing heavily in AI

infrastructure.

SpaceX's AI business generated $2.6 billion in

second-quarter revenue, up more than three-fold from a year

earlier although it remained loss-making on an operating basis.

Even so, the company is not easing off its spending. Johnsen

said capital expenditures over the next two quarters would

likely remain at levels similar to the second quarter as SpaceX

continues expanding AI compute capacity, Starship production and

next-generation Starlink satellites.

"New compute capital monetizes so fast it behaves more like

cost of goods than capex," said Michael Monaghan, portfolio

manager of the Founders 100 ETF, which holds SpaceX shares.

SpaceX executives said demand for AI computing continues to

outstrip supply and that they expect to end the year with more

than two gigawatts of compute capacity. If demand remains strong

enough to keep that infrastructure fully utilized, AI could

increasingly fund its own growth rather than relying on

Starlink's cash generation.

"The relationship between capex and revenue is

unsustainable, so capex has to fall or revenue has to grow

tremendously, and that is where faith in Musk's vision,

engineering leadership and execution track record separates the

bulls from the bears," said Drew Cupps, portfolio manager at

Polen Capital, which holds a position in SpaceX.

(Reporting by Akash Sriram in Bengaluru; Editing by Sweta Singh

and Saumyadeb Chakrabarty)