Satellites, AI, and the New Gold Rush

The first half of 2024 witnessed over 120 rocket launches - more than one every other day. SpaceX, a name that's become synonymous with this new space race, has accounted for 82 of these launches, the vast majority taking satellites up into orbit. To put this in perspective,

From 1950 to 2020, humanity launched 2,500 satellites. In the last four years, that number has ballooned to about 12,000.

Yet, despite this frenetic activity, the wait to get a satellite on a SpaceX rocket stretches out nearly two years. What is driving this unprecedented demand for access to the cosmos?

In a word—actually two—the answer is Artificial Intelligence, which has found an unexpected bedfellow in space technology. The particular flavor of AI that has come of age—pattern recognition—proves to be the perfect tool for interpreting the vast troves of data beamed down from orbit. It excels at making sense of high-resolution imagery.

Consider the insurance industry, which has traditionally been reliant on boots-on-the-ground assessments in the wake of natural disasters. Now, in the aftermath of a hurricane, AI systems can process high-res satellite images and assess wind damage to each property in near real-time, making the traditional door-to-door inspection obsolete. The AI not only outpaces its human counterparts in speed but brings to bear an unimaginable breadth of experience, with the accumulated wisdom of all past hurricanes on which it is trained.

Even more interesting from an investment perspective is that this technology is becoming democratized.

As costs decrease and accessibility increases, we're likely to see an explosion of innovation

akin to what we witnessed with the rise of smartphone apps or cloud computing.

As AI-interpreted satellite data becomes more accessible, we can expect a similar wave of innovation. Small-scale farmers might optimize crop yields with data previously available only to large agribusinesses. Environmental groups could monitor deforestation with unprecedented accuracy. Startups might offer hyper-local weather prediction or real-time supply chain optimization based on global production and transportation data.

For us as investors, the challenge - and the opportunity - lies in identifying the platforms that will enable this democratization, as well as the novel applications that will arise from it. It's about looking beyond the obvious players to find the companies that are building the infrastructure of this new data economy or leveraging it in innovative ways.

The greatest returns often come not from betting on a single technology, but from identifying the confluence of innovations that create entirely new possibilities. The convergence of AI and satellite technology represents just such an inflection point.