SpaceX is preparing to go public at a $1.75 trillion valuation, making Elon Musk potentially the world's first trillionaire, but financial analysts warn that much of this value depends on speculative AI and space-based computing projects that remain largely theoretical. The company plans to issue 555,555,555 shares at $135 each, with Musk retaining about 42 percent ownership after the initial public offering.

The core issue is straightforward: SpaceX's actual space and connectivity business, which generated $15.5 billion in revenue last year, doesn't justify a $1.75 trillion price tag on traditional metrics. The company posted a net loss of nearly five billion dollars in 2025, dragged down by heavy capital investments in its Starship rocket and other projects. To bridge the enormous valuation gap, SpaceX is positioning itself as an artificial intelligence (AI) company, claiming the potential AI market is worth $26.5 trillion, equivalent to more than 80 percent of U.S. gross domestic product.

What Is Grok, and Why Hasn't It Succeeded Yet?

Grok is SpaceX's AI chatbot, acquired when the company absorbed xAI in February 2026. Musk has promoted Grok as a non-"woke" alternative to OpenAI's ChatGPT, Anthropic's Claude, and Google's Gemini. However, despite Musk's marketing efforts, Grok has failed to gain meaningful traction against its competitors.

The financial performance tells the story. During the first quarter of 2026, xAI brought in barely one-fifth of SpaceX's overall revenue and posted an operating loss of close to $2.5 billion. These numbers suggest that Grok remains a money-losing venture with limited market adoption. The chatbot faces entrenched competition from established players that have already built large user bases and refined their models through years of development and user feedback.

How Is SpaceX Planning to Justify Its AI Valuation?

Rather than relying solely on Grok's uncertain future, SpaceX is pursuing two parallel strategies to generate AI revenue:

• Terrestrial Data Centers: SpaceX has built two massive data centers in Memphis, Tennessee, and has reached agreements with Anthropic and Google to rent computing capacity for payments reportedly totaling more than two billion dollars per month combined.
• Orbital AI Compute: The company is proposing to station data centers in orbit around Earth and power them with solar energy, a concept that would theoretically give SpaceX a cost advantage over ground-based operators.
• Starlink Integration: SpaceX's existing Starlink satellite network, which serves more than 12 million subscribers across 164 countries, could potentially support AI infrastructure and connectivity services.

The orbital data center concept has generated significant excitement among Musk's investor base, but it remains largely untested. SpaceX acknowledged in its IPO prospectus that deploying a fleet of data centers in space is "an incredibly difficult challenge" that would require thousands of rocket launches each year to transport payloads weighing approximately one million metric tons in total.

Why Do Financial Experts Think the Valuation Is Too High?

Morningstar, a financial research firm, conducted an independent valuation of SpaceX and reached a starkly different conclusion than the company's IPO pricing. Morningstar estimated the fair value of SpaceX's rocket launch and Starship divisions at $611 billion, placing the company comfortably in the top 25 corporations globally, but nearly a trillion dollars short of the $1.75 trillion IPO target.

Even when Morningstar added a provisional value of $180 billion for SpaceX's AI division, accounting for the potential of orbital computing, the firm's total valuation reached only $780 billion, leaving a $970 billion gap between its assessment and SpaceX's asking price. The research firm expressed particular skepticism about the orbital data center plan, stating: "We are uncertain about the scientific and economic feasibility of such a plan".

"We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO," Morningstar analysts stated in their assessment.

Morningstar Financial Research Firm

To put the valuation in perspective, SpaceX's IPO values the company at more than 90 times its 2025 revenues. When Google went public in 2004, it was valued at roughly 10 times its trailing revenues; Palantir, the data analytics company, was valued at about 20 times revenues when it went public in 2020. Even Tesla, Musk's electric vehicle company, was valued at roughly 15 times prior-year revenues when it first issued shares in June 2010.

What Are the Biggest Risks With Orbital Computing?

The orbital data center concept, while theoretically promising, faces enormous practical obstacles. SpaceX would need to launch thousands of rockets annually to transport the required payloads into orbit, a cadence that would strain even the company's advanced launch capabilities. Beyond the transportation challenge lies an even more fundamental problem: maintaining complex computing infrastructure in the harsh environment of space.

SpaceX's own IPO prospectus acknowledged this reality, noting 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". This admission underscores that the project remains more science experiment than proven business model. The company is essentially asking investors to fund a venture that has never been attempted before, with unknown technical and economic viability.

The underwriters for SpaceX's IPO, led by Goldman Sachs, have reportedly predicted that SpaceX's AI revenues will rise more than a hundredfold over the next five years, a projection that even exceeds Musk's own public statements. This aggressive forecasting raises questions about whether the banks have adequately scrutinized the company's claims or whether AI market enthusiasm has overridden traditional financial due diligence.

For investors considering SpaceX shares, the fundamental question remains: Is the company's proven expertise in space launch and satellite operations enough to justify a valuation that depends primarily on unproven AI ventures and speculative orbital computing infrastructure? The answer may determine whether SpaceX becomes a generational investment or a cautionary tale about AI-driven market excess.