Did you know the U.S. is planning a trip to an asteroid that contains enough metal to make everyone on Earth a billionaire?
Psyche 16 is in the asteroid belt between the orbits of Mars and Jupiter, and is made pretty much of solid metal. One scientist estimates it contains 10 thousand quadrillion dollars' worth of iron alone. NASA's unmanned mission is planning to reach Psyche by 2026 and, unfortunately, it's a research trip only and it will not be bringing back all that metal for us.
While we won't all become billionaires from Psyche 16, the resources contained in that single asteroid do point out all the benefits and riches that could await us in space, including as close our very own moon. It also helps explains why forward-thinking companies and billionaires the world over are already joined up in what I call the "New Space race."
Image source: Getty Images.
What the billionaires know
The billionaires you keep seeing in the news -- Elon Musk, Jeff Bezos, and Richard Branson -- are fired up about the promise of New Space.
I think former Defense Department official Bryan Del Monte summed it up best when he told Observer that Jeff Bezos, especially, "believes that space is the railroads and highways of the future. That's why he wants the control so badly."
This New Space race is also much closer to home than interplanetary destinations such as distant moons and asteroids.
Dassault Systèmes (DASTY 0.07%) estimates there will be thousands of satellite launches per year throughout the 2020s. Over the next 30 years the number of operational satellites in orbit could grow from about 5,000 now to the tens of thousands.
These new satellites will have big implications for earthly issues like communications, climate change, maritime operations, energy, and even world hunger.
As the local neighborhood in outer space becomes more crowded, new services such as the maintenance of all these satellites and space stations will become vital. And how about space cleanup? There are currently over 28,000 pieces of "space debris" in orbit that are just getting in the way.
Gen. John W. "Jay" Raymond is the Chief of Space Operations for the United States Space Force. He told a recent conference that we're seeing "a second golden age of space."
As investors, we want to be ready.
Getting your portfolio in the race
Finding quality, publicly traded companies with a very direct connection to New Space is not easy. Several have gone public through special purpose acquisition company (SPAC) deals, with one of the most famous being Branson's Virgin Galactic Holdings. It's competing with Bezos' Blue Origin, Musk's SpaceX, and a few other companies in space tourism.
While interesting, I wanted to look at some less obvious and less direct connections in this article. These are also companies that are more stable, and won't have their very existence riding on the results of a few launch attempts.
Dassault Systèmes
Dassault is a large French software firm that was spun off from Dassault Aviation in 1981 and specializes in 3D product design, simulation, and manufacturing. Dassault doesn't manufacture things, but instead enables its clients to save money by helping them with design, testing, and simulation before these clients do any building, hiring, or changing design and manufacturing.
This means Dassault can be involved in most any aspect of the New Space race. For instance:
- Rocketry and satellite design and manufacturing.
- Reusable launch systems.
- Active space-debris removal.
- Analysis of data collected from space.
It even envisions an in-orbit "roadside" assistance service to help fix and service active satellites.
In the realm of New Space, Dassault's cloud-enabled 3DEXPERIENCE platform allows companies to speed up their ability to design and manufacture products. Of course, getting things right the first time also means lower costs.
It's a competitive edge for Dassault that bodes well for the long term.
Nvidia
Nvidia (NVDA 3.65%) has positioned itself smack-dab in the middle of several lucrative tech trends thanks to its leadership in the design of graphics processing units (GPUs). For years, the company has stayed on the leading, bleeding, cutting edge of this space. As a result, high-end players in gaming, artificial intelligence (AI), and machine learning, robotics, and self-driving cars consistently turn to Nvidia for solutions.
Its connection to New Space is providing software and hardware that enable NASA and others to plan with accuracy and efficiency.
NASA greatly values Nvidia because of this ability to provide platforms for intense computational power, and in 2015 the two partnered with the SETI Institute and Autodesk to establish the Frontier Development Laboratory (FDL). The FDL uses AI technologies to solve problems related to space exploration, space weather, climate change, and "all humankind." NASA is also using Nvidia GPU-powered simulations to plan the landing for its first manned mission to Mars. The current Mars Rover upgrades include two separate Nvidia processor boards used for system functions, motion planning, control software, and vision processing. Elsewhere, researchers are using Nvidia's advanced data center GPU to make sense of the enormous amount of data collected from NASA's Cassini spacecraft before it plunged into Saturn's atmosphere in 2017. This deep-learning technology also enables planetary scientists to zero in on promising areas rather than searching blindly.
There are plenty more high-profile examples of Nvidia's AI and machine-learning technology helping NASA and others accomplish things that were only dreamed of just a few years ago.
As I gaze skyward and try to comprehend all the New Space exploration and research we might see over the next few decades (and centuries), I love to see Nvidia once again positioned to supply the high-end, high-margin side of the trend.
Nvidia's revenue from New Space exploration and research is not yet meaningful to its overall business. But this is an extraordinarily strong and relevant company in many other important areas of our world, and we should continue to see great growth over the long term.
Amazon
Yep, everyone knows that Amazon (AMZN 1.30%) is the online retail goliath. But fewer realize that the company draws a meaningful portion of revenue from its cloud business, which provides AI and machine learning products to a wide variety of customers.
Amazon Web Services officially unveiled a new aerospace and satellite solutions business segment in 2020. AWS can analyze huge amounts of data collected from space to help customers make important and actionable decisions. For example:
- AWS Ground Station provides satellite owners and operators global access to their space workloads so they can downlink data and provide satellite commands across multiple regions. The upshot is that satellite operators don't have to own and manage duplicative ground station infrastructure.
- AWS Ground Station is already being used by NASA's Jet Propulsion Lab and many other customers. The Mars Perseverance rover is sending back mission-critical and scientific data that is being processed and hosted in AWS.
I'll also note -- just in case you prefer one giant company over another -- that Alphabet (GOOGL 1.27%) (GOOG 1.25%) provides similar services with Google Cloud. This includes helping NASA's Frontier Development Lab with artificial intelligence and analytics to accelerate existing research to find life on other planets by using "Bayesian" neural networks. In addition:
- The Google Cloud platform allows satellite operators such as Airbus Defence and Space to access petabytes of satellite imagery in real time. Airbus operates a constellation of radar and optical satellites for more than 1,000 customers.
- Google Cloud is helping SpaceX by providing data and cloud services to deliver internet service through SpaceX's Starlink satellites. Under the deal, SpaceX will actually locate Starlink ground stations within Google data centers.
Foolish bottom line
If you're considering investing in the New Space race, I recommend an even longer-term perspective than usual. The companies in this article will take some time to develop space-related revenue into a meaningful part of their business. However, they all have enormous resources and talent, and even without the space business they are among the world's most relevant companies.
