By Jamie Chisholm
The investing edge is spotting where capital for orbital AI goes first, says Matthew Tuttle
Jeff Bezos-owned Blue Origin's New Glenn rocket may be used to build AI infrastructure in orbit
It was not so long ago that news of any OpenAI-related deal would spark a big bump in a tech company's stock. It's fair to say that the vibe has changed, and investors now appear much more wary of AI promises.
And to make it all the more worrisome the sector now faces the 'front cover curse' after Time Magazine named a group of AI proponents as its Persons of the Year. Indeed, Nvidia chief executive Jensen Huang, who is one of Time's chosen, must be particularly worried, because he's also just been picked as person of the year at the Financial Times.
What the AI narrative needs, therefore, is a sexy reboot. How about space?
The Wall Street Journal this week reported that Jeff Bezos and Elon Musk are looking into establishing orbital data centers that could service Earth's artificial intelligence needs.
How might investors position for this new AI frontier? Well, in a new blog post Matthew Tuttle, chief executive and chief investment officer of Tuttle Capital, offers some suggestions.
Tuttle notes that a big constraint for AI expansion is not access to enough chips, but a relative dearth of power.  &#34;Data centers and AI are projected to drive a big step-up in electricity demand this decade, which is exactly why 'grid tech' has become a real market theme,&#34; he says.
Data centers in space are better-able to harness the Sun's energy. &#34;That's where 'compute in orbit' becomes a thought experiment worth taking seriously-because the economics of AI are unusually high revenue per kW, and solar in space is always 'on/ relative to many terrestrial constraints,&#34; Tuttle adds.
Of course, Tuttle acknowledges that scaling up orbital computing and its transfer back to Earth is the big difficulty, but he writes that &#34;the investing edge is spotting where capex goes first (edge inference + space infrastructure) versus what stays a long-dated sci-fi call option (full gigawatt beamed power).&#34;
Tuttle suggests an investable roadmap in three phases. The first is occurring now and includes the technology currently used for Earth observation, maritime tracking, missile warning, weather and communications.
&#34;If you do inference onboard (classify, compress, decide), you downlink answers, not terabytes. That's a real economic driver: less bandwidth, faster action, fewer ground stations. This is where the 'sky-brains' concept fits today,&#34; he says.
The second phase is coming next, purpose-built AI satellites as compute add-ons, where &#34;you're not just processing your own sensor stream-you're renting compute.&#34; The constraints to this include radiation tolerance/bit-flip risk, launch cadence, and networking. &#34;This can work in niche workloads where latency, sovereignty, or resilience beats pure cost,&#34; Tuttle adds.
The third phase, coming later, is the goal of space-based solar power beaming to Earth. It's the hardest to achieve in terms of engineering, requiring colossal lightweight structures, conversion losses, beam safety/regulation, and grid integration on the ground, according to Tuttle.
Companies that may be winners in the space infrastructure buildout of the first two phases are Redwire (RDW), Rocket Lab (RKLB), L3Harris Technologies (LHX), RTX (RTX), Northrop Grumman (NOC), and Lockheed Martin (LMT), he says.
&#34;These benefit if any version of orbital compute/space power ramps-because they sell the bus, payload integration, comms, and space-qualified components,&#34; says Tuttle.
If orbital inference is real, radiation-tolerant compute will be required, not just datacenter GPUs, Tuttle reckons, and so he suggests watching Microchip Technology (MCHP) as &#34;a direct way to play space-grade/radiation-tolerant silicon and control electronics.&#34;
Finally, even if compute does move to orbit Tuttle thinks for the near term AI is still mostly on Earth, and so: &#34;The grid buildout (transformers, switchgear, cooling, power distribution) remains the dominant spend path.&#34; For this he suggests Eaton (ETN),  Hubbell (HUBB), Quanta Services (PWR), and  Vertiv (VRT).
MarketWatch asked Tuttle - who over recent years has set up a plethora of esoteric exchange traded funds - whether there are any ETFs that would represent a play into this theme. &#34;Not until I launch it,&#34; was his tongue-in-cheek response.
The markets
U.S. stock-index futures (ES00) (YM00) (NQ00) are mixed as benchmark Treasury yields BX:TMUBMUSD10Y rise. The dollar index DXY is up, while oil prices (CL.1) dip and gold futures (GC00) are trading around $4,366 an ounce. Silver futures (SI00) have hit a new record above $64 an ounce.
The buzz
Federal Reserve officials speaking on Friday include Philadelphia Fed President Anna Paulson at 8:00 a.m. Eastern; Cleveland Fed President Beth Hammack at 8:30 a.m.; and Chicago Fed President Austan Goolsbee at 10:35 a.m.
Broadcom shares (AVGO) are sliding after the chipmaker's upbeat earnings could not support a stock that's risen 75% this year.
Lululemon athletica shares (LULU) are bouncing after revealing better-than-expected quarterly earnings and announcing the departure of CEO Calvin McDonald.
U.S. president Donald Trump signed an executive order Thursday that aims to override state laws on artificial intelligence.
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-Jamie Chisholm
This content was created by MarketWatch, which is operated by Dow Jones &amp; Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
12-12-25 0626ET

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<p>Jeff Bezos and Elon Musk are exploring orbital data centers for AI, potentially benefiting stocks like Redwire, Rocket Lab, and Lockheed Martin. Matthew Tuttle suggests investing in space infrastructure and grid tech due to increased electricity demand. He outlines three phases of investment: current Earth observation tech, AI satellites, and future space-based solar power. Companies like Microchip Technology and Eaton may also benefit from these developments.</p>

Bezos and Musk target AI through space. These Earthly stocks could benefit.