SpaceX is set to debut on the market this Friday, generating palpable excitement among investors. The highly anticipated $75 billion stock offering is reportedly significantly oversubscribed, with certain institutional investors committing substantial capital, including blocks of up to $10 billion, to Elon Musk’s expanding enterprise.
Despite numerous potential grounds for investment skepticism—such as the historical tendency of major IPOs to underperform, the company's current unprofitability, and Musk's often unpredictable online conduct, which would be alarming from any other tech CEO—these concerns appear to have little impact. Technology investors have developed a strong inclination to back Elon Musk, often overriding conventional business logic.
Nevertheless, a objective examination of SpaceX’s financial blueprints offers considerable insight into the core of its investment proposition: a business strategy centered on orbital data centers. This vision has solidified over the past eighteen months, as Musk sought a unifying direction for his diverse conglomerate in anticipation of its public offering.
True to Musk’s characteristic ambition, this is a daring undertaking, necessitating at least three near-impossible engineering breakthroughs: the development of a fully reusable rocket, the establishment of a cutting-edge American chip foundry, and an unprecedented acceleration in satellite manufacturing.
Such an intricate business plan presents significant valuation challenges. This week, two prominent analyses provided a more measured assessment of SpaceX’s strategy: one from Morningstar, the financial research firm, and another from Aswath Damodaran, a New York University finance professor renowned for his expertise in corporate valuation. Both evaluations concluded that SpaceX is worth considerably less than the nearly $1.8 trillion valuation proposed by the company’s bankers. Morningstar estimated the company’s value at approximately $825 billion, while Damodaran suggested a valuation of $1.2 trillion.
This notable disparity largely stems from integrating a world-leading space monopoly with a far riskier artificial intelligence venture. Morningstar’s analyst metaphorically describes the $72 per share difference between their fair value assessment of $63 and SpaceX’s offering price of $135 as a call option on the company’s capacity to deliver orbital data centers at the ambitious scale and capability envisioned by Musk.
Across both independent analyses, the high-margin potential of SpaceX’s space launch operations and its satellite internet network emerged as the company’s most compelling assets, while its AI business was identified as the segment with the highest degree of uncertainty.
A central question revolves around the precise nature of SpaceX’s AI business. In its S-1 market analysis, the company positions its greatest opportunity in enterprise AI, projecting that its models will power coding tools developed by the team acquired from Cursor, or contribute to its "Macrohard" project, designed to empower digital agents to perform white-collar tasks. SpaceX’s own assessment pegs the total market for this enterprise AI segment at an astounding $22.7 trillion, dwarfing its projections of $2.4 trillion for AI infrastructure and just under $2 trillion for its space endeavors.
However, this strategic framing appears to conflict with the company’s recent agreements to supply substantial computing power to Anthropic and Google, both of which are ostensibly competitors in the model development space. While not entirely uncharacteristic for a Musk-led company—SpaceX frequently launches satellites for competitors to its Starlink network—such moves are typically made from a position of market dominance, not while playing catch-up.
Operating as a "neocloud" provider might yield short-term financial benefits, but it provokes a fundamental question regarding where true value will ultimately accrue within the AI technology stack: is it more advantageous to be a compute provider or a model builder, if one cannot effectively be both?
The prevailing scaling logic within the AI industry dictates that leading frontier labs must continuously train new and increasingly powerful models—or, as Musk acknowledged in his recent lawsuit against Sam Altman, by extracting capabilities from other companies' models. Any competitor failing to advance rapidly risks falling behind, though the growing capabilities of more accessible open-source models could potentially disrupt this dynamic.
Orbital data centers present a potential solution to this dilemma, offering such immense computing capacity that SpaceX could theoretically excel in both compute provision and model building.
In a video interview released by SpaceX this week, Musk articulated his rationale for why SpaceX is uniquely positioned to deliver on the promise of orbital data centers. His central argument posits that SpaceX is the only entity capable of economically transporting significant mass into orbit, coupled with its ability to manufacture vast quantities of solar panels and chips. While industry experts generally anticipate large-scale space data centers to be about a decade away, Musk, with several qualifications, contended that their realization is much closer.
“This is not a promise of what we’ll do,” Musk stated in the video. “This is what we are going to try to do, and think we probably can do, which is to get to roughly an annualized rate of a gigawatt per year by the end of next year, in terms of space AI compute.”
Based on his projected maximum power delivery of 150kW per satellite, this target implies an annual production rate of 6,666 satellites, or approximately 556 per month. This figure is roughly double the reported current production rate of Starlink satellites, which stands at just 70 per week. Although Musk suggests that the AI satellites feature a simpler architecture, achieving this rate presents a formidable challenge for a production facility that has yet to be fully constructed. The company is also still in the process of building out its solar panel manufacturing capabilities.
This challenge precedes the complexities of Terafab, the company’s much-discussed chip foundry, which Musk envisions as integral to the later stages of this product as SpaceX aims to scale up to a terawatt of annual compute production. Chip fabrication plants are among the most intricate modern industrial undertakings, typically demanding billions of dollars in investment and often requiring up to a decade to complete.
Then there is the most critical question: what role will Starship play, as it is key to SpaceX’s ability to economically place all these chips into orbit?
A recent test flight yielded adequate results, but it did not conclusively demonstrate that rapid reusability is imminent. SpaceX might initially resort to reusing only the booster stage, which would inevitably increase the overall costs associated with the orbital data center deployment. Currently, the company is undergoing a mishap investigation by the FAA to ascertain the reasons behind the booster stage’s failure to execute a controlled reentry as planned. SpaceX has not yet provided a timeline for the vehicle's next flight, though it has indicated expectations to commence launching Starlink satellites with Starship by the end of this year.
However, this expectation should be viewed with caution: consider that NASA, which holds a nearly $4 billion contract with SpaceX for Starship to serve as a Moon lander, has not yet committed to a test mission with the vehicle, despite one being tentatively scheduled for late 2027.
As public investors acquire SpaceX shares, they will find themselves owning a near-monopoly on space access within the US and Europe, a global communications network, and a substantial wager on what could be the most ambitious infrastructure project of the AI era.
These ambitious projects hinge on SpaceX achieving something unprecedented: a fully reusable rocket. The company must also establish a high-rate production facility for AI satellites, completing this task within eighteen months, a stark contrast to the decade it took to develop its Starlink manufacturing capabilities. Furthermore, it will need to construct a chip foundry in the US, an endeavor that even specialized silicon firms are often reluctant to undertake. While Musk is correct that SpaceX is uniquely positioned to build any of this in the near future, this observation speaks as much to the sheer magnitude of the challenge as it does to the company's likelihood of success.
Musk once stated he would not take SpaceX public until humanity reached Mars, fearing that fickle investors might lose conviction along the way. While those specific plans may be on hold, the ambitious vision he has now presented ahead of the company’s IPO could prove to be equally challenging.
The Editorial Staff at AIChief is a team of professional content writers with extensive experience in AI and marketing. Founded in 2025, AIChief has quickly grown into the largest free AI resource hub in the industry.