The Second Space Age: How Markets, Technology, and Power Are Reshaping the Final Frontier
The Second Space Age: How Markets, Technology, and Power Are Reshaping the Final Frontier
A Goldman Sachs Global Institute Report Analysis
The Space Economy Is No Longer Just for Governments
For most of human history, space has been the domain of nations. The Cold War space race between the United States and the Soviet Union was defined by government spending, national prestige, and military competition. NASA’s Apollo Program alone cost $26 billion (approximately $318 billion today) and involved 400,000 people and 20,000 companies.
That era is over.
We are now entering the Second Space Age—a period defined not by government rivalry alone, but by commercial markets, technological innovation, and a new form of geopolitical competition that extends hundreds of miles above Earth.
According to a new report from the Goldman Sachs Global Institute, the global space-based economy is projected to reach $1.8 trillion by 2035. This transformation is being driven by three interconnected forces: plummeting launch costs, the rise of small satellites, and the strategic shift to Low Earth Orbit (LEO).
The Economics of Space Have Fundamentally Changed
Launch Costs Have Collapsed by 25x
The single most significant driver of the new space age has been the dramatic reduction in launch costs. In 1981, sending a kilogram of mass into Low Earth Orbit on the Space Shuttle cost $65,400**. Today, the SpaceX Falcon Heavy has brought that cost down to approximately **$1,500 per kilogram—a reduction of nearly 97%.
This cost collapse was enabled by the advent of partially reusable rocket boosters, transforming rockets from single-use assets into recyclable infrastructure. As more companies seek to replicate and improve upon this innovation, launch costs could continue to decline, democratizing space access even further.
The “SmallSat Revolution”
At the same time, technical innovations and cheaper manufacturing techniques have led to a decline in the size and cost of functional satellites. Until the mid-2000s, the industry was dominated by school-bus-sized satellites in geostationary orbit (GEO) that cost $100 million to $200 million to build.
Today, smaller, cheaper satellites—known as SmallSats—can be manufactured and deployed at a fraction of that cost. This has dramatically reduced the complexity of reaching orbit and opened the door for new entrants.
The Rise of Low Earth Orbit (LEO)
The strategic shift to LEO (approximately 500–1,200 km from Earth) has been equally transformative. LEO offers several advantages:
- Lower latency compared to geostationary satellites
- Lower radiation, making it viable to use commercial-grade electronics
- Less intense receiving infrastructure on Earth
- Reduced costs for user terminals
The LEO revolution has expanded the types of activities that can be conducted in space, from video calls and online gaming to direct-to-cell (DTC) communications and autonomous systems.
Satellite Communications: The Commercial Beachhead
LEO infrastructure represents one of the clearest commercial opportunities in the modern space economy. The report highlights SpaceX’s Starlink as a case study in this transformation.
Starlink’s Remarkable Growth
- Nearly 10,000 satellites in LEO
- More than 10 million customers
- Over $11 billion in revenue generated in 2025
- Thousands more satellites approved for deployment
Amazon is also making significant investments in its LEO satellite network, known as Amazon Leo, including a planned acquisition of Globalstar to secure radio spectrum rights for direct-to-cell communications.
Direct-to-Cell vs. Broadband
The competitive dynamics of these markets differ significantly:
| Market | Customer Switching Costs | Competitive Intensity |
|---|---|---|
| Broadband | High (terminals cost $200-$600) | Advantage to first movers like Starlink |
| Direct-to-Cell | Low (partnerships with existing cell carriers) | Stronger competition expected |
Regardless of how these dynamics resolve, a clear trend line is forming: satellite communications are becoming an embedded feature of the broader digital economy. LEO is making connectivity ambient—available across geographies, modes of transport, and industrial settings where terrestrial networks are intermittent or uneconomic.
Space Infrastructure Is Becoming Essential to Global Industry
The Goldman Sachs report emphasizes that space is no longer a specialized frontier—it is becoming a foundational pillar of the global industrial economy.
Services That Depend on Space Infrastructure
Satellite Communications
- Transmit data from space to Earth, including radio, TV, mobile communications, and internet
- 65% of commercial space revenue comes from satellite communications
Position, Navigation, and Timing (PNT)
- GPS alone has generated $1.4 trillion in economic value since 1980
- Enables everything from ridesharing and aviation to financial transactions
Earth Imaging and Observation
- Satellite images and data support agriculture, logistics, defense, and climate monitoring
- Projected to reach $700 billion in global value by 2030
Space Domain Awareness
- Tracking satellites to avoid collisions and catalogue objects in orbit
- Critical as the number of objects in space has grown from 45 in 1960 to more than 18,000 today
Orbital Congestion: A Growing Challenge
The proliferation of satellites has led to increasing orbital congestion. There are now more than 30,000 pieces of debris, 18,000 payloads, and thousands of rocket bodies orbiting Earth. With US and Chinese companies planning to launch tens of thousands more satellites over the next decade, collision risks are rising.
The Kessler Syndrome — where a single breakup event triggers cascading collisions — is no longer a theoretical concern but a growing practical risk.
The Rise of Astrophitics: Geopolitical Competition in Orbit
As space becomes more economically central, it also becomes more strategically important. The report introduces the concept of astropolitics — the intersection of strategic competition, national security, and commercial interests in space.
Military Dependence on Space
Modern military power runs through orbital infrastructure:
- Communications and command-and-control
- Intelligence and early warning systems
- Precision weapons and navigation
- Surveillance and reconnaissance
Superior capabilities in these areas confer real strategic advantages. During the Ukraine conflict, the Starlink constellation ensured reliable internet connectivity when Russian cyberattacks produced widespread internet blackouts. Conversely, Russia has reportedly shared satellite imagery with Iran to help target US military assets.
Government Spending on Space Defense
Governments are investing heavily in domestic space and defense industries:
| Country/Region | Investment | Key Initiatives |
|---|---|---|
| United States | $57.7B (FY2026), $71B proposed (FY2027) | Golden Dome missile defense umbrella ($175B through 2028) |
| European Union | 31% increase planned over next 3 years | Expanding sovereign space capabilities |
| China | $340M (2015) to $2.9B (2024) | Building full-stack space capabilities |
The US-China Space Rivalry
The report frames the new space race as a contest between the United States and China. While the US maintains a lead in many areas, China has made remarkable progress:
| Capability | United States | China |
|---|---|---|
| Crewed moon landing | ✓ | ✗ |
| Robotic lunar far side landing | ✗ | ✓ |
| Robotic lunar sample return | ✗ | ✓ |
| Superheavy-lift capabilities | ✓ | ✗ |
| Fully reusable rockets | ✗ | ✗ |
| Satellite internet constellation | ✓ | ✓ |
China has also made space a central instrument of economic statecraft, engaging at least 64 countries in various forms of space cooperation. More than 70% of satellites China has launched for foreign customers since 2010 have gone to developing nations, particularly in Africa.
Investment and Capital Markets in the New Space Age
The commercial space sector is attracting significant institutional capital. The financing model has evolved from government appropriations to private investment to public equity markets.
Record Investment Levels
- $55+ billion invested in the space ecosystem in 2025
- $36 billion invested in Q1 2026 alone (a record)
- $89 billion raised through aerospace IPOs since the start of 2025
Major IPOs
| Company | IPO Proceeds | Key Focus |
|---|---|---|
| SpaceX | $86B (largest in history) | Launch, Starlink, space infrastructure |
| Firefly Aerospace | ~$999M | Lunar missions, launch services |
| York Space Systems | ~$629M | National-security space prime |
| HawkEye 360 | ~$478M | Space-based signals intelligence |
These listings represent a broader institutionalization of space as a distinct sector within public equity markets.
Vertical Integration as a Competitive Advantage
Space startups have increasingly pursued vertical integration, controlling more of their supply chains to:
- Speed up innovation cycles
- Insulate themselves from procurement delays
- Capture higher margins
This “full-stack” approach means space companies may increasingly be valued as integrated infrastructure platforms, rather than just providers of space services.
The Governance Challenge
The existing international legal framework for space was negotiated during the Cold War. Five treaties enshrine principles like:
- Prohibition of nuclear weapons in orbit
- Prohibition of national appropriation of celestial bodies
- Obligation of states to authorize and supervise space activities
But private sector growth and the evolution of modern space activities have revealed the shortcomings of this framework.
Key Governance Gaps
- Space Traffic Management – No clear rules for managing orbital congestion or removing debris
- Novel Activities – Lunar resource extraction, in-space manufacturing, and orbital compute operate in legal gray zones
- Licensing – Regulatory processes are spread across multiple agencies (NOAA, FAA, FCC)
- Geopolitical Divisions – The US-led Artemis Accords have been signed by 61 countries, but Russia and China have not joined
US Regulatory Efforts
The Trump administration has focused on:
- Tax incentives to encourage investment in space infrastructure
- Streamlined licensing for commercial launch and reentry
- New authorization processes for novel space activities
Preparing for Orbital Industrialization
The report concludes with a vision of the future where space and terrestrial infrastructure become indistinguishable. The organizations and nations that position themselves early will define the shape of the economy that follows.
Key Takeaways for Corporates
- Space-derived data, connectivity, and timing services will become baseline expectations
- Companies should begin integrating the “space stack” into their operations
- Control over critical chokepoints in the value chain will capture disproportionate value
Key Takeaways for Governments
- Space infrastructure is a foundational layer of national competitiveness and security
- Nations that fail to develop domestic capability risk dependency on actors whose interests may not align
- The US-China rivalry will sharpen strategic choices
Key Takeaways for Investors
- The sector is maturing as an institutional asset class
- Expect increased M&A activity and capital markets intensity
- Companies that pair technical execution with public-market credibility will be best positioned to scale
About the Source
This report is based on the Goldman Sachs Global Institute publication “The Second Space Age: How Markets, Technology, and Power Are Reshaping the Final Frontier“ (August 2026). The Goldman Sachs Global Institute is a research unit that analyzes global economic trends and their implications for markets, business, and policy.
Disclaimer: This material is provided for informational purposes only and does not constitute investment advice. Neither Goldman Sachs nor any of its affiliates make any representations about the accuracy or completeness of the statements contained herein.
