SpaceX is preparing to go public at a valuation that's nearly a trillion dollars higher than what financial analysts believe the company is actually worth. The space company plans to issue 555 million shares at $135 each, valuing it at approximately $1.75 trillion. However, independent research firm Morningstar estimates SpaceX's fair value at just $780 billion, a gap that hinges almost entirely on whether the company can pull off an ambitious and largely untested plan to build artificial intelligence data centers in space.

The valuation gap reveals a fundamental tension in how investors are pricing SpaceX. The company's core business, which includes rocket launches and its Starlink satellite internet service, generated $15.5 billion in revenue last year. Yet SpaceX is pitching itself to investors as an AI company, estimating the potential AI market at $26.5 trillion, equivalent to more than eighty percent of U.S. GDP. This reframing is crucial because SpaceX's actual AI division, which includes the Grok chatbot and data center operations, is currently unprofitable.

Why Is SpaceX Suddenly an AI Company?

SpaceX acquired xAI, another Musk company, in February 2026. xAI owns X (formerly Twitter) and develops Grok, an AI chatbot positioned as an alternative to OpenAI's ChatGPT and Anthropic's Claude. During the first quarter of this year, the xAI business brought in barely one-fifth of SpaceX's overall revenue while operating at a loss of close to $2.5 billion.

Despite these forbidding financials, Musk saw an opportunity. Both Anthropic and OpenAI are laying groundwork for their own IPOs, and Musk moved to go first by rebranding SpaceX as an AI company. The strategy appears designed to capitalize on investor enthusiasm for artificial intelligence, even though Grok has yet to achieve the success of its rivals.

SpaceX's AI business extends beyond Grok. The company has built two massive data centers in Memphis, Tennessee, and recently reached agreements with Anthropic and Google to rent computing capacity for payments reportedly totaling more than $2 billion per month combined. These deals provide immediate revenue, but they pale in comparison to the company's most ambitious AI vision.

What Is Orbital AI Compute, and Can It Actually Work?

The development generating the most excitement among Musk's investor base is the concept of operating data centers in space. SpaceX claims it is the only organization with the launch capacity and expertise to make "orbital-compute capacity" a near-term engineering program rather than a research concept. The idea involves stationing data centers in orbit and powering them with solar energy.

In theory, this could offer a cost advantage over terrestrial data centers. In practice, it remains largely speculative. SpaceX's own IPO prospectus acknowledges that setting up a fleet of orbital data centers is "an incredibly difficult challenge" requiring thousands of rocket launches annually to transport payloads weighing approximately one million metric tons in total. The company also admitted that "no one else has previously operated or attempted to operate orbital AI compute, and the conditions of space on such AI infrastructure have not been tested".

Morningstar analysts expressed skepticism about the feasibility of the plan. While they acknowledged that solar power in space could theoretically provide cost advantages, they noted uncertainty about both the scientific and economic viability of such an operation. The firm provisionally valued SpaceX's AI division at $180 billion, which still leaves a massive gap between the IPO target and what independent analysts believe the company is worth.

How Does SpaceX's Valuation Compare to Other Tech Companies?

The IPO values SpaceX at more than ninety times its 2025 revenues. This multiple far exceeds historical precedents for major tech IPOs. When Google went public in 2004, it was valued at roughly ten times its trailing revenues. Palantir, the data-analytics company, went public at about twenty times revenues. Even Tesla, Musk's electric vehicle company, was valued at roughly fifteen times prior-year revenues when it first issued shares in June 2010.

Tesla's stock price has since risen more than three-hundredfold, an ascent that explains some investor enthusiasm for Musk's ventures. However, Tesla's extraordinary gains do not necessarily predict SpaceX's trajectory, particularly given the unproven nature of its orbital AI ambitions.

What Are the Key Risks Investors Should Consider?

• Unproven Technology: Orbital data centers have never been built or operated at scale, and the technical challenges of maintaining infrastructure in the harsh space environment remain largely unknown.
• Massive Capital Requirements: Deploying orbital compute capacity would require thousands of additional rocket launches annually, representing an enormous capital commitment with uncertain returns.
• Grok's Competitive Position: The Grok chatbot has failed to gain significant market share against established competitors like ChatGPT, Claude, and Gemini, raising questions about SpaceX's ability to compete in AI software.
• Valuation Gap: Independent analysts estimate SpaceX is worth roughly $780 billion, nearly a trillion dollars less than the IPO target, suggesting significant downside risk for investors buying at the offering price.

SpaceX's core business remains impressive. The company has displaced Boeing as the largest supplier of launches to the Pentagon and NASA, carried out five missions to the International Space Station last year, and participated in the first-ever medical evacuation of an astronaut in January 2026. Starlink provides internet access to more than twelve million subscribers across 164 countries and has proven critical during the war in Ukraine and natural disasters.

Yet the company's valuation rests heavily on speculative AI ventures rather than proven revenue streams. Goldman Sachs, the lead underwriter for the IPO, reportedly predicted that SpaceX's AI revenues would rise more than one-hundredfold over the next five years, a projection that even Musk has not publicly endorsed. In a less exuberant investment climate, such aggressive forecasting might face greater scrutiny from underwriters who theoretically have a reputational stake in not overselling.

The gap between SpaceX's $1.75 trillion IPO valuation and Morningstar's $780 billion estimate represents one of the largest disconnects between market enthusiasm and fundamental analysis in recent tech history. Investors will ultimately decide whether Musk's vision of orbital AI compute justifies the premium, or whether they will wait for more attractive entry points after the IPO closes.

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