While the connection may not be immediately obvious, I believe Rolls‑Royce (LSE: RR.) shares could actually benefit from the AI sell‑off.
And, unsurprisingly, SpaceX is part of that story.
When I step back, I see three big forces:
- Investors rotating away from expensive AI names
- A growing crunch in electricity demand
- Industrial power specialists like Rolls quietly solving those problems
Let’s take a closer look at some of the moving parts that bring these three together.
How AI’s sell‑off puts Rolls‑Royce in focus
The recent AI‑driven correction has seen money flow out of software and semiconductor names into more traditional cyclicals such as industrials and energy. That suits a business like Rolls‑Royce, which is far more of a cash‑rich industrial compounder than a speculative tech play.
In 2025, the aerospace engineer reported the following:
- Revenue: £20.06bn
- Operating profit: £3.46bn
- Operating margin: 17.3%
- Free cash flow: £3.27bn
The £7bn‑£9bn share buyback was the cherry on top, alongside a 9.5p dividend per share. That’s a very different profile from many AI names that are still chasing profitability.
Still, the high valuation can’t be ignored. Analysts’ average 12‑month target is about 1,425p, only fractionally above the current price. With much of the turnaround story already priced in, even a mild earnings slip could hurt the share price.
Here’s how AI could be the next trick up its sleeve.
Rolls’ AI exposure
Rolls‑Royce isn’t an AI stock, but it uses AI heavily in its operations. The group runs thousands of engines through AI‑driven predictive maintenance systems, using digital twins and real‑time data to spot problems early and stretch service intervals.
For airlines, that means fewer unscheduled outages; for Rolls, it means higher‑margin service revenue and better engine reliability.
On the power side, the company is developing small modular reactors (SMRs) designed to deliver around 470MW of steady low‑carbon electricity, specifically pitched as potential power sources for data centres.
Its Power Systems division is already seeing strong demand for backup power and data centre energy solutions, with data centre backup sales rising 46% in 2024.
If AI keeps driving data centre growth, who will investors trust to keep the lights on?
The SpaceX link
SpaceX is now as much an AI story as a rocket company. It’s floated plans for up to 1m solar‑powered satellites acting as orbital data centres – essentially hundreds of gigawatts of AI power in space over the next few years.
That’s an extreme version of the same problem: AI needs huge amounts of reliable power.
Rolls sits on the other side of that equation. Through SMRs and large‑scale backup power systems, it can provide dense, low‑carbon electricity for hyperscale data centres.
Sure, there’s no formal partnership today. But in a world where SpaceX pushes AI into orbit, I can easily imagine Rolls chosen to power that ecosystem.
| Theme | Rolls‑Royce role | SpaceX role |
|---|---|---|
| AI operations | Uses AI for digital twins and maintenance. | Builds AI datacentre capacity in space. |
| Power for AI | SMRs, backup power for datacentres. | Seeks solar‑powered orbital datacentres. |
What it means for investors
For investors rotating away from AI and SpaceX amid the sell‑off, Rolls‑Royce shares are worth a closer look.
The company offers exposure to the same long‑term trend: massive growth in data centres and power infrastructure. However, it does so as an established industrial powerhouse, not a speculative AI hype story.
Whoever can deliver reliable power at scale will keep the AI dream alive. Rolls is looking like a top candidate for the job.
Should you invest £5,000 in Rolls-Royce Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?
Mark Hartley owns shares in SpaceX.
