Starlink makes money, AI burns money. Should you buy SpaceX at a $1.7 trillion valuation?

TL;DR

• SpaceX plans to issue shares at $135 per share, raising approximately $75 billion, corresponding to a valuation of about $1.75 trillion. The controversy lies not in whether the company has technical strength, but in that this valuation has already priced in AI, orbital data centers, and its Mars vision ahead of time.
• The market's FUD primarily stems from three points: the valuation far exceeds current revenue scale, Starlink profits are subsidizing the capital-intensive AI business, and related financing along with internal acquisitions are gradually concentrating risk onto the same balance sheet.
• Related entity: SPCX (planned for listing)

SpaceX is preparing for an IPO that could rewrite capital market records.

The company plans to issue approximately 556 million shares at $135 per share, raising about $75 billion, with a corresponding overall valuation of roughly $1.75 trillion. If the listing proceeds smoothly, it would become one of the largest IPOs in history and would place SpaceX directly among the most valuable companies in the U.S. on its first day of trading.

Given SpaceX's achievements over the past two decades, this level of market attention is not hard to understand.

The company has significantly reduced commercial launch costs through reusable rockets, built the world's largest satellite internet network, and turned Starlink from a technical experiment into a genuine source of revenue and profit. In the global commercial aerospace field, SpaceX has virtually no true comparable company.

However, the closer this IPO gets to execution, the more dense the market skepticism becomes.

This skepticism does not mean investors deny SpaceX's technical capabilities, nor does it mean the market believes Starlink has no value. What truly triggers the FUD is that the company wants the public market to accept an extremely aggressive pricing logic all at once:

Today's investors are not only required to pay for rockets and satellite networks but also need to pay a premium upfront for AI infrastructure, orbital data centers, the next-generation Starship, and the longer-term space economy.

The market's fear is not that SpaceX has no future, but that the future has already been priced in too much, too early.

The $1.75 Trillion Valuation Can No Longer Be Explained by Starlink Alone

The most direct controversy surrounding SpaceX's IPO stems from its valuation.

In 2025, the company's revenue was approximately $18.67 billion, a 33% year-over-year increase, but its net loss still reached about $4.94 billion. Based on a $1.75 trillion valuation, SpaceX's market cap would be nearly 94 times its previous year's revenue.

This multiple does not necessarily mean the company is overvalued. SpaceX possesses highly scarce infrastructure, and its business structure is difficult to simply compare with traditional aerospace, communications, or technology companies.

The problem is that when the valuation reaches $1.75 trillion, it becomes difficult to fully justify the market pricing based on existing businesses alone.

If investors only view SpaceX as a rocket launch and satellite internet company, the current valuation appears extremely aggressive; this pricing logic can only hold if the market simultaneously believes that AI, orbital data centers, next-generation satellite networks, and longer-term space infrastructure can become real revenue sources.

This is also why the grand vision in SpaceX's prospectus has become the starting point for market controversy.

When a company's valuation relies on businesses that have yet to form a mature commercial model to justify it, the market will naturally increase the risk discount.

Starlink is Profitable, AI is the Cash Burner

Setting aside Mars, orbital data centers, and deep space transport for a moment, SpaceX's current financial structure is actually quite clear.

In the first quarter of 2026, the company generated revenue of approximately $4.69 billion but reported an operating loss of about $1.94 billion. Among its three major business segments, only the connectivity services division, centered around Starlink, turned a profit, with a quarterly operating profit of roughly $1.19 billion. The AI division generated revenue of about $818 million but suffered an operating loss of approximately $2.47 billion.

At the same time, SpaceX's capital expenditure is accelerating markedly. The company's capital spending in the first quarter was approximately $10.1 billion, with 76% flowing into AI-related businesses.

This means that SpaceX's most stable source of profit remains Starlink, while the company's most aggressive capital allocation is currently directed towards AI.

This model is not without rationale. The AI infrastructure industry itself requires substantial upfront capital investment, and data centers, electricity, chips, and network equipment cannot be recouped in a short timeframe.

But what the market truly fears is:

Are Starlink's profits being poured into a new business that requires continuous heavy spending but has an unclear return cycle?

If AI can gradually generate stable revenue and profits, these investments would be seen as strategic positioning.

Conversely, if the AI business remains stuck in a heavy-asset computing power rental stage for the long term, SpaceX's valuation logic would face pressure. Ultimately, the market needs to see not just revenue growth, but whether profits can keep pace with the speed of capital investment.

After Acquiring xAI, SpaceX Also Inherited the Risks of AI Expansion

SpaceX's AI investment is not merely a matter of increased capital expenditure.

In February 2026, SpaceX acquired xAI in an all-stock transaction. The deal valued SpaceX at approximately $1 trillion and xAI at about $250 billion, resulting in a combined entity valuation of roughly $1.25 trillion.

Strategically, this transaction is not difficult to understand. SpaceX possesses rockets, satellite networks, and potential orbital infrastructure, while xAI brings Grok, large data centers, and its AI business. Combining them provides a more complete framework for the orbital data center and space computing narrative.

But from a financial perspective, what SpaceX took on was not only AI's growth potential but also the capital pressure behind AI's expansion.

The prospectus disclosed that xAI's affiliates entered into over $20 billion in AI infrastructure lease agreements with entities related to Valor Equity Partners, involving GPUs and data center hardware. Valor founder Antonio Gracias is also a SpaceX board member and a long-time partner of Elon Musk.

Among these, some transactions failed to meet the accounting recognition criteria for a normal sale-leaseback and were classified as "failed sale-leasebacks." This means the corresponding obligations need to be recorded as debt on SpaceX's balance sheet, rather than being treated simply as lease expenses.

Using lease and financing arrangements to reduce the upfront cash pressure of data center construction is not unusual in itself. What truly raises market concern is that the financing party is not a fully independent third party, and both the buyer and seller of the xAI acquisition are controlled by Musk.

This makes two questions unavoidable:

Is the $250 billion valuation for xAI reasonable?

Are the terms of the related-party financing transactions sufficiently transparent?

The market's fear is not that SpaceX has started investing in AI, but that the AI business's debt, financing arrangements, and execution risks are entering the listed company's balance sheet through internal acquisitions and related-party transactions.

Texas corporate law further amplifies this concern. SpaceX is incorporated in Texas, and relevant laws allow public companies to raise the shareholding threshold for shareholder derivative lawsuits and restrict shareholders' access to certain emails, text messages, and electronic communication records. For SpaceX, with a proposed valuation of about $1.75 trillion, a 3% stake equates to over $50 billion.

This does not mean ordinary shareholders can never sue the company under any circumstances.

But it means that if investors believe related-party transactions have harmed the company's interests and wish to challenge directors or officers on the company's behalf, the actual hurdles are very high.

When corporate boundaries become increasingly blurred, the public market is not just bearing business risk but also the capital allocation risk of Musk's entire business empire.

Investors Can Buy into Growth but Have Little Influence over Decisions

Governance issues are crucial because SpaceX is about to become a publicly traded company, yet the influence ordinary investors can exert is very limited.

SpaceX will adopt a dual-class share structure. Musk will maintain absolute control through high-voting-power shares. Even if the company faces future disputes over capital allocation, related-party transactions, or strategic direction, ordinary shareholders will have little ability to change outcomes through voting mechanisms.

This structure is not uncommon. Many tech companies use dual-class designs to prevent founders from losing control after going public.

But what makes SpaceX unique is that the company will still need to make numerous high-risk, long-cycle, and capital-intensive decisions in the future. What investors must accept is not just lower voting power, but a more extreme governance premise:

The company can continue to pour massive resources into Starship, AI, and orbital infrastructure, and even if these projects fail to generate profits in the short term, ordinary shareholders will find it difficult to alter the strategic direction.

For investors who are long-term believers in Musk, this structure may not be an issue. SpaceX's past successes were themselves built on the founder's exceptional personal decision-making ability and risk appetite.

But for investors who place greater emphasis on governance transparency, this means something else:

Investors must bear long-term execution risk but find it very difficult to truly hold management accountable.

Starship is a Technical Project and a Valuation Variable

Market concerns about SpaceX are not limited to AI and governance structure.

Whether it's next-generation Starlink satellites, orbital data centers, or Mars transportation, they all ultimately depend heavily on the same infrastructure: Starship.

The significance of Starship is not just building a larger rocket. It needs to significantly reduce the cost per launch, increase the payload capacity per mission, and ultimately achieve high-frequency, reusable commercial launches.

Only when Starship truly enters the operational scaling phase can SpaceX deploy its next-generation satellite network at a lower cost, send larger equipment into orbit, and create realistic conditions for orbital computing infrastructure.

This is why every test of Starship is not just aerospace news but also influences how the market understands SpaceX's long-term valuation.

SpaceX's valuation does not depend solely on whether Starship can fly, but on whether it can fly as stably, cost-effectively, and frequently as a piece of infrastructure tool.

What is the Market's FUD Really Afraid Of?

Looking at the data sets together provides a more complete framework than the simple question "Is SpaceX overvalued?": Starlink has proven its commercial value, reusable rockets have created a clear competitive moat, and AI and orbital data centers offer new growth avenues for the company.

But at the same time, the company's valuation has reached $1.75 trillion, the AI division is still generating substantial losses, capital expenditure continues to expand, related-party financing and internal acquisitions blur the business boundaries, and the governance constraints available to ordinary shareholders are very limited.

These facts can all be true simultaneously and are not mutually contradictory.

Because the FUD surrounding SpaceX is not a denial of the company's past achievements.

Rather, it is:

When Musk bundles Starlink, rockets, AI, and future orbital infrastructure into a single valuation model, which possibilities is the public market willing to pay a premium for, and for which uncertainties should it retain a discount?