SpaceX's newly filed IPO documents reveal that Elon Musk's artificial intelligence ambitions are costing the rocket company billions of dollars, with the xAI division alone posting $2.47 billion in operating losses during the first three months of 2026 despite generating $818 million in revenue. The filing also exposes mounting legal and reputational risks tied to Grok's controversial image generation features, which have drawn investigations from California and France over nonconsensual deepfake imagery.

The scale of SpaceX's AI spending is staggering. In 2025, xAI accrued a $6.35 billion operating loss on $3.2 billion in revenue. Capital investment in the AI division soared to $12.7 billion last year, up from $4.2 billion in 2024, and is on track to exceed that in 2026 with $7.7 billion spent in just the first quarter. This represents a dramatic pivot for SpaceX, which acquired xAI in February and has now made artificial intelligence central to its future strategy.

Of SpaceX's three business divisions, only Starlink, the satellite internet service, was profitable in the first quarter, generating $1.19 billion in operating profit. The AI division's losses were so large that they pushed the entire company into a $1.94 billion operating loss despite $4.69 billion in total revenue. The filing shows that xAI accounted for 76 percent of SpaceX's $10.1 billion in capital spending during the quarter, underscoring how much of the company's resources are now devoted to building AI infrastructure rather than rockets.

What Are the Legal and Reputational Risks Tied to Grok?

SpaceX's IPO filing explicitly acknowledges serious risks posed by Grok's less-restricted operating modes. The company highlighted Grok's "Spicy" Imagine Mode and "Unhinged" Voice Mode, which come with fewer safety guardrails and have generated significant controversy. According to the filing, these modes present heightened risks including reputational harm, generation of potentially explicit content, misinformation, and "nonconsensual or exploitative imagery".

The concerns are not theoretical. Earlier in 2026, Grok's image generation tool was used to create and distribute nonconsensual AI-altered explicit images of real people and sexualized images of children. California Attorney General Rob Bonta opened an investigation into X, accusing Musk's xAI of "facilitating the large-scale production of deepfake nonconsensual intimate images that are being used to harass women and girls across the internet." The Paris Public Prosecutors' office also expanded its investigation into X to cover complaints about Grok's dissemination of Holocaust denial content and sexually explicit deepfakes.

In response to these investigations, X announced restrictions on Grok's ability to create images of real people in revealing clothing. However, the filing notes that the company did not specify an estimated cost burden for these risks, though it did set aside $530 million for "litigation losses that are probable and reasonably estimable".

How Is Musk Maintaining Control While Going Public?

Despite filing for an IPO that could value SpaceX at $1.75 trillion, Musk has structured the company to maintain near-total control. The filing reveals a dual-class share structure where Class B shareholders receive 10 votes per share, while Class A shares sold to public investors carry only one vote each. This arrangement allows Musk to retain 85.1 percent of the combined voting power of the company.

The company has adopted numerous provisions that severely limit shareholder rights and protect Musk's position:

• Voting Structure: Class B shares held by insiders carry 10 times the voting power of public Class A shares, concentrating control with Musk and a handful of other insiders.
• Legal Protections: Shareholders are forced to pursue legal claims through arbitration rather than courts, and cases can only be filed in specific jurisdictions chosen by the company.
• Removal Restrictions: Musk cannot be removed as CEO by anyone other than himself, effectively giving him lifetime control regardless of shareholder sentiment.

The board has tied much of Musk's compensation to audacious targets, including establishing a permanent human colony on Mars and building space data centers with compute capacity equivalent to 100 terawatts, or roughly 100,000 one-gigawatt nuclear reactors.

What Does the IPO Mean for Musk's Business Empire?

The $1.75 trillion valuation target would make SpaceX the largest IPO in history, surpassing Saudi Aramco's 2019 offering, which valued the company at $1.7 trillion. If achieved, it would put Musk on track to become the first trillionaire in history. The company is aiming to list shares as early as June 12, with a roadshow launch targeted for June 4 and the share sale expected as early as June 11.

The filing also reveals the increasingly interconnected structure of Musk's business empire, often called the "Muskonomy." SpaceX merged with xAI in a deal that valued the rocket company at $1 trillion and the AI startup at $250 billion. Through its AI infrastructure platform, SpaceX has inked deals for Anthropic to pay it $1.25 billion per month to use compute capacity from its Colossus and Colossus II data center clusters in Memphis, Tennessee through May 2029.

Much of SpaceX's future revenue projections rely on technology that has not yet been built. The company is planning to operate data centers powered by solar power in space, targeting a potential market of $28.5 trillion according to the filing. The company's plans also include Mars missions and expanded satellite internet services, though these remain largely aspirational at this stage.

What Do the User Numbers Reveal About X and Grok's Scale?

The IPO filing disclosed that X has approximately 550 million monthly active users, with users generating roughly 350 million posts per day. Grok, the AI chatbot integrated into X, has attracted significant adoption, with 117 million monthly active users engaging with Grok's AI features. In the three months ended in March, Grok's Imagine content generation tool produced approximately 10 billion images and over 2 billion videos per month.

SpaceX touts Grok's deep integration with X as a strength, arguing that it allows the chatbot to access fresh, real-time information from the social platform and "enhances Grok's truth-seeking capabilities." However, this same integration has also made Grok a vehicle for spreading misinformation and generating harmful content at massive scale, as evidenced by the legal investigations now underway.

The filing also noted that across both Grok and X, 1.3 billion accounts were active in the twelve months ended March 31, 2026, demonstrating the vast user base that Musk is attempting to monetize through AI services.