For 2025, the market has been led by the AI trade that has experienced some jitters of late, but the majority of Wall Street analysts that cover the sector are advising to stay long the AI leaders. Capex spending on AI will accelerate in 2026 as impatient investors look for evidence that the spending wave will start to show significant returns on investment. For some companies, they are already realizing substantial productivity gains, and the fourth quarter should reveal further evidence of the virtues of AI.
From I/O Fund analysis: “Since the beginning of the year, Big Tech Capex estimates have increased from $280 billion to $405 billion, an impressive 31% positive revision. Alphabet witnessed the highest positive revision of 47%. Goldman Sachs sees hyperscaler capex increasing sharply through 2027. Capex is projected to be $1.15 trillion from 2025 through 2027, more than double the $477 billion spent from 2022 through 2024.”
“McKinsey is predicting 3.5X growth in gigawatts for AI data centers between 2025-2030. The costs associated with AI data centers range from $3 trillion to $8 trillion, or about $5.5 trillion at the midpoint. This correlates to about 3X growth if we assume the current run rate to 2030 is $1.8 trillion at the current capex of $405 billion.” Based on these numbers, it would seem the AI trade has more upside left for 2026.
The year-end always brings about the notion of what investment themes will be popular with fund managers, pensions, endowments, hedge funds, sovereign wealth funds and retail investors. One theme that is getting a lot of fresh attention is that of the global space race. The biggest players in the aerospace defense industry and the world’s richest people, such as Elon Musk and Jeff Bezos, are charging into space to conquer the final frontier.
The major investment themes in the modern space race include satellite technology, space infrastructure, in-space manufacturing, defense and dual-use tech and climate-focused applications. These themes are driven by both commercial innovation and geopolitical competition. Here are the primary drivers to this investment theme:
Satellite ecosystems and connectively involve massive demand for broadband and 5G backhaul via low-Earth orbit (LEO) constellations (e.g., Starlink, OneWeb).
Earth observation & remote sensing utilize satellites that provide critical data for agriculture, logistics, insurance and ESG monitoring.
Navigation and geolocation deploy GPS and GNSS systems that are foundational to global commerce and defense.
Reusable rockets from companies like SpaceX and Rocket Lab are reducing launch costs, enabling more frequent missions. Blue Origin’s New Glenn launch last week (November 13, 2025) at Cape Canaveral is headed to Mars. The rocket is lifting off with NASA’s twin ESCAPADE Mars probes. The boosters will make a dramatic return and land on the offshore barge Jacklyn.
Other pursuits include spaceports and logistics that incorporate ground infrastructure and orbital transfer services are emerging to unlock supply bottlenecks.
SAM (In-Space Servicing, Assembly and Manufacturing): A high-growth niche enabling satellite repair, refueling and orbital construction.
Surveillance and reconnaissance utilize satellites that are critical for national security, with 64% of U.S. government space spending going to defense.
Cybersecurity and space domain awareness operate to protect assets from jamming, spoofing and kinetic threats.
Geopolitical competition is huge. The U.S. versus China dynamics are accelerating investment in sovereign capabilities and alliances.
Environmental intelligence deploys satellites that track emissions, deforestation and climate risk, which is vital for ESG investing.
Disaster response incorporates space-based data that enhances early warning systems for floods, fires and hurricanes.
Capital formation in the space sector is growing rapidly through SPACS, which backs start-ups to access public markets. Public-Private Partnerships involving NASDA and DoD are leveraging commercial innovation through contracts and co-investment. And the globalization of space is expanding, with Europe, India and Japan building strategic autonomy and creating new investment frontiers.
The global space economy reached $613 billion, a 7.8% increase from the previous total. Commercial activity accounts for 78% of this total, suggesting strong market maturity. Huge growth areas are commercial human spaceflight (+611%), ISAM (In-Space Servicing, Assembly and Manufacturing) (+168%) and Space situational awareness (+200% over three years).
Space Situational Awareness (SSA) refers to the ability to detect, track, understand and predict the location and behavior of objects and conditions in space, especially in Earth’s orbit, to ensure safe and sustainable operations.
Over 2,500 private companies and more than 70 national space agencies (public sector) are actively pursuing space activities worldwide as of 2025. The commercial space sector generates ~$160 billion annually, with satellites and broadband services leading revenue. Major agencies include NASA (US), ESA (Europe), CNSA (China), ISRO (India), JAXA (Japan) and Roscosmos (Russia).
The United States Space Force was officially created on December 20, 2019. The National Defense Authorization Act (NDAA) for Fiscal Year 2020 was signed into law on December 20, 2019, establishing the Space Force as the sixth branch of the U.S. Armed Forces. It was the first new military branch in 73 years since the creation of the U.S. Air Force in 1947. The Space Force was formed by re‑designating the Air Force Space Command into a separate service, under the Department of the Air Force.
The space industry employs 250,000+ people worldwide, with thousands of satellites already in orbit. The global space economy was valued at $423 billion in 2022 and is projected to triple to $1.8 trillion by 2035. There are roughly 15–20 publicly traded pure‑play space stocks worldwide as of late 2025. The large-cap blue-chip aerospace companies are major players in the space race and partner heavily with the newly created Space Force.
The investment and trading opportunities within the space sector are hugely attractive, and the sector is volatile, making for a healthy trading environment. AI has been and still is the leading theme, and the space race sector only adds more high-tech powder to invest in and trade heading into 2026.
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