It’s hard to believe that only a few months ago, SpaceX was primarily an enterprise that manufactured rockets, managed launches, and deployed a satellite constellation for servicing mobile phone and broadband purveyors. But in February, Elon Musk folded xAI, another arm of his empire, into SpaceX, and his entire narrative about the prime force for driving the enterprise’s rise took a pivot heard round the world. Suddenly, Musk was overwhelmingly wagering SpaceX’s future not on its two legacy franchises, but on AI.
The IPO on June 12 was a crucial test of whether the world would buy his new, epic vision, or not. A big jump over the offer price of $135 would show a ringing endorsement, while a dive would signal that folks and funds just weren’t buying Musk’s futuristic promises for the likes of super-low-cost orbital data centers powered by the sun. Around noon, we got the answer: SpaceX shares shot higher at the open, and closed at $160. a 19% jump. By day’s end the market cap notched an incredible $2.2. trillion, easily becoming the biggest U.S. IPO of all time, easily eclipsing number two Alibaba (2014) by ten-fold. Hence, investors are proving true believers, they’re all-in on Musk promises not only that AI will prove an absolutely colossal market, but effectively that he’ll capture a lot more of it than a roster of mega-rivals encompassing Alphabet, Microsoft, Meta and sundry hustling challengers.
A key chart in the SpaceX prospectus shows just how heavily Musk’s counting on AI versus his other two businesses. He forecasts a future total addressable market for the enterprise of $28.5 trillion, and that of that total, AI will account for $26.5 trillion or 93%. That’s almost 14 times the combined $2.0 trillion for its satellite and rocket sides.
The implication: The rocket and Starlink mobile and broadband sectors will grow fast, but AI will supply the moonshot. Indeed, the Space segment generated just $4.1 billion in revenue last year, and suffered losses. At present, Starlink’s the jewel. In 2025, its sales vaulted 50% year-over-year to $11.4 billion, furnishing over half SpaceX’s top line. Starlink operates a galaxy of 9,600 satellites, three-quarters of the total fleet in orbit. Over ten-million users pay subscriptions for mobile and broadband service. The business is well protected, since it’s far the biggest global purveyor in commercial satellites. It’s also an annuity-style steady source of cash flow.
During a June 6 interview hosted by J.P. Morgan CEO Jamie Dimon, Musk made a strong case for Starlink’s prospects, and especially its competitive moat. Musk noted that the new Starship reigns as the world’s first fully-reusable rocket. Its only major expense is what’s in the tank, the hydrogen-methane blend that’s cheaper than jet fuel. These fiery towers can carry as many as 50 satellites in a single flight. Musk projects that SpaceX will expand its network ten-fold to 100,000 digital birds in the years ahead, and that his superior capacity and extremely low cost ensure by far the dominant position for years to come.
Musk’s own math dictates that SpaceX is now an AI play, and needs to deliver bigger than big time
SpaceX doesn’t specify the period covered by its total addressable market forecasts. We can assume they’re cumulative figures that run at least a couple of decades. The rub: SpaceX is starting life as a publicly traded player at a valuation of $2.2 trillion. According to a discounted cash flow analysis by David Trainer, CEO of research firm New Constructs, it would need sales of at least $1.1 trillion by 2035 to justify the “underwriting” valuation of $1.75 trillion. The revenue bogey is 50% more than the top sales-maker, Amazon, posted in the past four quarters. By Fortune‘s estimate, the big bump on June 12 hiked the sales requirement by about a third to almost $1.5 trillion.
But as Musk states in the TAM tables, the two non-AI areas “only” promise $1.6 trillion combined. And we’re talking over 20 or 30 years. It’s impossible to know Musk’s estimates for their annual sales in, say, 2035, but we could be talking a couple of hundred billion. Getting there would be a huge coup—and highly challenging by the way—but it wouldn’t get SpaceX anywhere near the way over $1 trillion it will need to hand shareholders a decent return.
Bottom line: AI will need to do the heavy lifting. The transformation of SpaceX into an AI play created matchless buzz that’s spawned the biggest valuation ever for a debut. But it’s also hugely raised the bar on what Musk must achieve, especially following that huge first-day pop. As Reena Aggarwal, a Georgetown University professor who’s an expert in IPOs puts it, “SpaceX’s debut isn’t about valuation based on fundamentals, but supply and demand for its shares.” Now, investors will look beyond the buzz to the trajectory of sales and profits, and where they’re leading. Given the orbital-high hopes, any disappointment will trigger a hurtling descent.
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