Industry invests heavily in orbital data centers while Pentagon shows little interest

Venture capital poured $541 million into orbital data center projects between January and April 2026, compared with $197 million for all of 2025. The largest single round was Starcloud’s $170 million Series A in March. Industry executives say the satellites could supply the massive computing power required by artificial intelligence systems without drawing on terrestrial electricity or water supplies.

Pentagon and intelligence community officials have expressed little concrete interest in orbital data centers, according to interviews with a dozen government and industry sources. NASA is the only agency identified as providing funding, tied to future lunar operations.

Brett Scott, head of the National Reconnaissance Office’s Geospatial Intelligence Systems Acquisition directorate, told Breaking Defense on May 5 that it remains “very early days” for assessing the concept. A senior Space Force officer described the enabling technology as still “embryonic” and said the service is monitoring commercial developments.

Cooling systems, power generation, radiation hardening and launch costs are listed among the main obstacles. Analysts estimate current launch prices range from $4,200 to $7,000 per kilogram, far above the $200 per kilogram threshold some companies say is needed for cost parity with ground facilities.

Michael Pierce, a principal analyst at Technology Strategy Partners, told a Space News webinar on April 30 that orbital data centers are roughly five times more expensive than terrestrial centers over a 20-year period. Lori Gordon of the Aerospace Corporation noted that processing data near collection points in space could reduce latency for time-sensitive missions such as missile warning.

8 billion by 2029 and $39 billion by 2035. SpaceX, Google and Meta are among the companies planning large constellations. Kevin Hell, CEO of mPower Technology, said interest shifted rapidly from “yeah, interesting” to “everybody’s got to have it” between December and May.

Dave Gauthier, former head of commercial operations at the National Geospatial-Intelligence Agency, described the current period as the “height of the hype cycle.