SpaceX’s $26.5 Trillion AI Ambition Drives $1.77 Trillion IPO Valuation]

Key Points

With SpaceX’s initial public offering imminent, investors are scrutinizing the company’s IPO prospectus for critical insights. Among the most significant figures is SpaceX’s claimed total addressable market (TAM), which the company estimates at $28.5 trillion.

“We believe we have identified the largest TAM in human history,” the company states in its filing.

Surprisingly, only 1% of this market—approximately $370 billion—relates to rocket launches. Less than 6% involves Starlink internet services, currently SpaceX’s sole profitable division.

Instead, $26.5 trillion of SpaceX’s total $28.5 trillion TAM centers on a single “early stage” business segment that the company identifies as its primary growth driver.

Image source: Getty Images.

The AI Opportunity Behind SpaceX’s Valuation

SpaceX CEO Elon Musk’s business model mirrors his approach at Tesla, which transcends its automotive roots to encompass AI and energy storage. Similarly, SpaceX operates diverse ventures including the world’s largest satellite constellation, lunar ambitions, and semiconductor manufacturing plans.

The focal point is artificial intelligence. SpaceX’s IPO prospectus reveals: “We believe our next trillion-dollar market is AI compute,” valuing this opportunity at $26.5 trillion across segments including $2.4 trillion for AI infrastructure, $760 billion for consumer subscriptions, $600 billion for digital advertising, and $22.7 trillion for enterprise applications.

However, SpaceX’s AI division generated only $3.2 billion in revenue last year with negative profits. The company acknowledges: “Our AI business is in a relatively early stage,” despite it representing the majority of projected growth driving the $1.77 trillion valuation. Capital expenditures increasingly support AI development, including a $60 billion acquisition offer for Cursor and $10 billion compute commitments regardless of acquisition outcome.

Basing a $1.77 trillion valuation on a money-losing AI business with $3.2 billion in annual revenue raises significant investor skepticism. Nonetheless, Morgan Stanley projects SpaceX revenues reaching $3.4 trillion by 2040, while Goldman Sachs anticipates AI revenue of $322 billion by 2030. Both firms serve as IPO underwriters and could earn substantial fees, warranting consideration of potential conflicts of interest.

AI’s role in SpaceX’s IPO narrative remains undeniable. Investors cannot rely solely on rockets or Starlink to justify the company’s ambitious valuation target.

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