SpaceX's artificial intelligence division, which includes the social media platform X and the AI chatbot Grok, lost $6.4 billion on just $3.2 billion in revenue last year, dragging down the entire company's profitability and inflating its stock price by nearly $1.6 trillion. The problem isn't just the losses; it's that Grok and X are growing slower than SpaceX's genuinely profitable businesses, yet investors cannot buy the good parts without the bad ones.

When SpaceX went public in 2026, the company's valuation jumped from $800 billion to $2.4 trillion. That $1.6 trillion increase corresponds almost entirely to the addition of the AI segment, which includes Grok. Yet the financial performance tells a different story. Between 2024 and 2025, SpaceX's AI division grew revenue by only 23 percent, even as operating losses quadrupled to $6.4 billion. Meanwhile, the company's space and connectivity divisions (which includes the Starlink satellite internet service) grew revenue by 36 percent and earnings by 90 percent.

How Does SpaceX's Business Actually Break Down?

To understand why investors are frustrated, it helps to see how SpaceX divides its operations. The company reports three distinct segments, each with vastly different financial profiles:

• Space Segment: The original rocket launch business reported losses of $657 million on $4.1 billion in revenue last year, but this segment is improving and represents the company's core competitive advantage.
• Connectivity Segment: Starlink, the satellite internet service, earned $4.4 billion in operating profit on $11.4 billion in revenue, making it the company's most profitable division with a 38.6 percent operating margin.
• AI Segment: Consisting of X (formerly Twitter) and xAI (which produces Grok), this division lost $6.4 billion on $3.2 billion in revenue, representing a negative 200 percent operating margin.

If investors could separate these businesses, the space and connectivity divisions alone would command roughly $700 billion to $800 billion in valuation based on their growth rates and profit margins. That's close to what SpaceX was valued at before going public. Instead, the AI segment's massive losses have inflated the overall company valuation to $2.4 trillion, forcing investors who want exposure to SpaceX's rocket and satellite businesses to also fund Grok's losses.

Why Is Grok Growing Slower Than SpaceX's Profitable Businesses?

The growth disparity is particularly troubling for investors. In 2025, SpaceX's AI division grew revenue by 23 percent, compared to 36 percent growth in the space segment and even faster growth in connectivity. While Q1 2026 showed acceleration in AI revenue growth after SpaceX began selling computing power to Anthropic, Elon Musk has indicated this arrangement is "short-term," raising questions about whether the growth will be sustainable.

Musk has publicly stated his belief in a $26.5 trillion total addressable market for AI services, subscriptions, and infrastructure, which explains his aggressive investment in Grok and his recent $60 billion acquisition of Cursor, an AI coding tool. However, the financial results so far suggest that Grok is not yet capturing meaningful market share in this enormous opportunity. The losses are mounting faster than revenue is growing, which is the opposite of what investors typically see in high-growth technology companies.

What Does This Mean for SpaceX Investors?

The bundling of SpaceX's profitable space and connectivity businesses with the money-losing AI division creates what financial analysts call a "conglomerate discount." Investors who want to own a world-class space launch company and a dominant satellite internet provider are forced to also own a social media platform and an AI chatbot that are collectively burning billions of dollars annually.

This structure explains why some investors, despite being bullish on SpaceX's core space business, have decided to avoid the stock entirely. The company's IPO prospectus made clear that these three segments are bundled together, and there is no way to invest in space and connectivity without also funding Grok's losses. As long as the AI division continues to lose money faster than it grows revenue, the overall company valuation will remain inflated relative to the value of its profitable businesses.

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