Elon Musk's decision to merge his space exploration company SpaceX with his artificial intelligence startup xAI has created one of the most unusual corporate combinations in tech history, valued at $1.25 trillion and now planning what could become the largest initial public offering ever. The merger, completed in February 2026, combines a company that launches rockets with one that builds the Grok chatbot, signaling how central AI has become to Musk's business empire and how fiercely companies are competing to dominate the technology.

SpaceX announced on Wednesday that it plans to raise up to $75 billion when it goes public this month, setting the stage for the largest-ever stock market debut. This would easily break the record for the largest IPO, which was set by Saudi Aramco in 2019 when the oil giant went public and raised $26 billion. If successful, the offering could put Musk on course to becoming the world's first trillionaire, according to company projections.

What's Driving This Unusual Merger?

The SpaceX-xAI combination reflects a broader trend in the AI industry: companies are burning through enormous amounts of cash to compete in what many see as a winner-take-most race to build artificial general intelligence, or AGI, systems that can surpass humans at many tasks. Some investors and executives view public equity markets as the cheapest source of capital available right now, particularly in a rising interest rate environment.

However, the merger was controversial from the start. Some SpaceX investors protested that Musk's acquisition of xAI was essentially a bailout and unethical given that he controlled both companies. Despite these objections, Musk moved forward with the deal, combining SpaceX's massive revenue base with xAI's AI ambitions.

The financial picture reveals why Musk may have felt compelled to act. SpaceX lost $2.6 billion from operations last year on $18.7 billion in revenue, and losses continued piling up at the start of 2026. xAI, which features the Grok chatbot, lost $6.4 billion in operations last year, according to company documents. Together, these losses total roughly $8.9 billion annually, yet the combined entity is valued at $1.25 trillion, reflecting investor confidence in AI's future rather than current profitability.

How Is the AI Industry Funding This Expansion?

• Public Market Access: Companies like SpaceX, Anthropic, and OpenAI are moving toward IPOs to access capital markets, which offer cheaper funding than venture capital in a rising interest rate environment.
• Record Valuations: Anthropic was recently valued at $965 billion, OpenAI at $852 billion, and SpaceX at $1.25 trillion after the xAI merger, reflecting investor enthusiasm for AI despite massive current losses.
• Competitive Pressure: The race to build AGI and maintain technological leadership is driving companies to spend billions annually, making public equity offerings essential to sustain operations and development.

"These companies are now burning through cash to win the AI race, and public equity is the cheapest source available, particularly in a rising interest rate environment," said Michael Field, chief equity analyst at Morningstar.

Michael Field, Chief Equity Analyst at Morningstar

What Other AI Companies Are Planning IPOs?

SpaceX is not alone in pursuing a public offering. Anthropic, the maker of the Claude chatbot, announced on June 1 that it has submitted a confidential filing with the U.S. Securities and Exchange Commission for a proposed IPO. The San Francisco-based company, which was formed in 2021 by former OpenAI leaders, has experienced meteoric growth from a little-known research laboratory to one of the world's most valuable startups.

Anthropic has reported making annualized revenue of $47 billion from selling its technology to people and organizations using Claude to write code and perform other work and personal tasks. This revenue figure is significantly higher than what most AI startups have achieved, though the company has not yet disclosed profitability.

OpenAI, the maker of ChatGPT, is also planning an IPO as soon as this fall. The company began in 2015 as a nonprofit dedicated to developing AI for the common good but is now valued at $852 billion. While OpenAI helped set off the current AI boom with ChatGPT's late 2022 launch, Anthropic's meteoric rise and Claude's growing popularity have left the ChatGPT maker playing catch-up in some market segments.

Are Investors Worried About an AI Bubble?

Despite the excitement surrounding AI investments and record stock market highs, worries about an AI bubble are looming in the background. Some experts fear that tech companies and venture capitalists are pouring too much money into a still-nascent and unproven technology. The sheer scale of losses at companies like SpaceX and xAI, combined with their trillion-dollar valuations, raises questions about whether current market prices reflect realistic expectations.

For now, however, the market shows no signs of a slowdown. Alphabet, Google's parent company, has seen its market value grow from $2.3 trillion a year earlier to $4.54 trillion at the beginning of June, a sign that investors believe AI spending is producing dividends. Meta's market value, by contrast, has declined from $1.76 trillion to $1.55 trillion amid investor concerns about the company's massive AI spending, suggesting that not all AI investments are viewed equally by the market.

The SpaceX IPO represents a critical moment in the AI industry's evolution. If the offering succeeds at its $75 billion target, it will signal that investors remain confident in the long-term potential of AI companies, even those currently operating at massive losses. If it underperforms, it could trigger a broader reassessment of AI valuations across the industry.