Space-based data centers have seen a week of high-profile denouncements this week from some high-profile names.

Sam Altman, analytics firm Gartner, and short seller Jim Chanos have each declared orbital data centers to be madness this week.

OpenAI CEO Altman used the term ‘ridiculous … with the current landscape’, Chanos chose ‘AI Snake Oil’, and Gartner VP analyst Bill Ray picked the phrase ‘peak insanity’.

“Companies are wasting money by pouring funds into the orbital datacenter ‘bubble’ because the economics do not work,” Ray wrote in a Gartner report published this week entitled Orbital Datacenters Won’t Serve Terrestrial Needs, so Focus on Earth. “This is due to the prohibitive costs of launching hardware and the immense technical challenges of cooling these orbital data centers in the vacuum that is space.”

Gartner noted a number of flies in the ointment, such as space-grade solar panels costing 1,000 times that of terrestrial models, the ammonia piping cooling methods used on the International Space Station, and orbital temperatures ranging from 100-400 degrees kelvin, significantly above and below the most extreme temperatures ever recorded on Earth (184k-329k). The report speculates that underwater data centers, or those based in the Arctic or Earth’s deserts, would encounter more hospitable environments.

Ray noted part of the logistical shift to facilitating a solution like this would involve sending engineers to space, and presumably back again, and goes on to discuss the limits to downstreaming data from orbit via laser, given pervasive cloud cover, meaning space data processing is best deployed for applications based in space, such as they are.

“The technology will ultimately evolve to support only data produced in space for consumption in space, such as processing satellite imagery to remove cloud cover before transmission or managing complex mesh routing for communications,” Ray wrote.

Why are we talking about this anyway?

Though many firms have been eyeing orbital compute for a number of years, enthusiasm for the idea gained momentum last year after Jeff Bezos discussed the notion at Italian Tech Week in Turin last October during a fireside discussion. "[Data centers] will be better built in space, because we have solar power there, 24/7," he remarked. In the ensuing months, the idea gained popularity among the investment community and the more excitable space startups, leading to Elon Musk advocating for the concept as an ambition of the merged SpaceX/xAI company.

In November 2025, Google unveiled Project Suncatcher, which CEO Sundar Pichai claimed would see Google place data centers in space as early as 2027.

Jim Chanos quoted a SpaceX video detailing the idea, writing: "This is more AI Snake Oil from the Silicon Valley promoter class," he argued, stating the immutable fact that space launch, insurance, redundancy, and the costs of cosmic radiation vastly outweigh the cost of terrestrial electricity. The short seller warned against falling for the hype, asking stakeholders to look at the actual costs.

Speaking with local media in New Delhi, Altman drew laughter from a crowd unpacking space-based data centers, explaining, "I honestly think the idea with the current landscape of putting data centers in space is ridiculous. … There will come a time. Space is great for a lot of things. Orbital data centers are not something that's going to matter at scale this decade.”

If not now, when?

Back at Italian Tech Week, Bezos tempered his own expectations, suggesting orbital data centers would become reality in “not more than 20 years,” a generous span compared to many such predictions which tend to favor three to five year lead times.

Delivery on these objectives has avoided the tremendous engineering challenge of credibly producing a piece of space technology that can be called a data center, and focused more on convincingly marketing a satellite or constellation using onboard processing as resembling the same sort of thing. Discourse on actual technology concepts that make an orbital datacenter possible has been sparse.

Chanos offered no silver lining or optimism about space datacenters, emphasizing instead an urgent return to reality.

Elon Musk's SpaceX has proposed launching one million data center satellites. Others looking to follow suit include Blue Origin, Google through Project Suncatcher, and Axiom Space, NTT, Ramon.Space, and Sophia Space, to name but a few.