SpaceX is coming to market on Friday, and investors can barely contain their excitement. The $75 billion stock offering is reportedly deeply over-subscribed, with some institutional investors ponying up for <head>0 billion blocks of Elon Musk’s empire. There are lots of reasons to be skeptical of the investment — big IPOs tend to sink, the company is losing money, and Musk’s erratic online behavior would be terrifying coming from any other tech CEO — but it doesn’t seem to be slowing anyone down. Tech investors have learned to never bet against Elon, whatever the business logic indicates. But a dispassionate look at SpaceX’s financial plans can still tell us a lot about what they’re betting on: A business centered around orbital data centers that emerged in the last 18 months as Musk sought a vision that would unite his conglomerate ahead of its IPO. In true Musk style, it’s a bold scheme, and one that requires at least three near-impossible feats of engineering: a reusable rocket, a brand-new American chip foundry, and a sprint to build satellites faster than ever before. That kind of business plan can be difficult to score. This week, two analyses tried to offer a more a sober assessment of SpaceX’s plan — one from Morningstar, the financial research firm, and another from Aswath Damodaran, a New York University finance professor who takes a special interest in corporate valuation. Both exercises find SpaceX significantly less valuable than the nearly <head>.8 trillion assessment proffered by the company’s bankers. Morningstar assigns a value of about $825 billion, while Damodaran suggests the company is worth <head>.2 trillion. The significant difference is, in many ways, the result of bolting a world-beating space monopoly to a far riskier AI business. Morningstar’s analyst characterizes the difference between their assessment of a fair value of $63 a share, and SpaceX’s offering price of <head>35, as a $72 call option on the company’s ability to deliver orbital data centers at the rate and capability that Musk believes is possible. In both analyses, the high margins of the company’s space launch business and its satellite internet network are the most attractive things about the company, while its AI business is the most uncertain. To cloud or not to cloud? Part of the question is, what is SpaceX’s AI business? In the company’s S-1 market analysis, it frames its largest opportunity in enterprise AI — that its models will power coding tools built by the team it acqui-hired from Cursor, or the company’s Macrohard project, which is intended to equip digital agents with the capabilities to perform white-collar labor. SpaceX assessed the total market for that business as $22.7 trillion, compared to $2.4 trillion for AI infrastructure and just under $2 trillion for the company’s space efforts. But that contradicts the company’s recent deals to sell significant amounts of compute to Anthropic and Google, ostensible competitors in the model business. That’s not out of place for a Musk company; SpaceX frequently launches satellites operated by competitors to its Starlink network. It just usually does that from a place of strength, not while playing catch-up. Acting like a neocloud might be good near-term business, but it raises the question of where value will accrue in the AI tech stack: Is it better to be a compute provider or a model-builder, if you can’t be both? The scaling logic that dominates the AI business demands that serious frontier labs constantly train new and more powerful models (or, as Musk admitted in his recent lawsuit against Sam Altman, by distilling capabilities from other companies’ models). Any competitor not rushing ahead is likely to fall behind, although the rising abilities of cheaper open source models might undermine that dynamic. Space data centers are one way to square the circle, providing so much compute that SpaceX could effectively do both. Musk’s space data center architecture In a video interview released by SpaceX this week, Musk laid out the logic for why SpaceX is best positioned to deliver on data centers. The core of the argument was that SpaceX is the only company capable of putting a lot of mass on orbit cheaply, building a lot of solar panels, and building a lot of chips. In general, industry experts see space data centers at scale being about a decade away, but Musk argued (with a lot of caveats) that they are much closer. “This is not a promise of what we’ll do,” Musk said in the video. “This is what we are going to try to do, and think we probably can do, which is to get to roughly an annualized rate of a gigawatt per year by the end of next year, in terms of space AI compute.” Based on his expected maximum power delivery of 150 kW per satellite, that’s a production rate of 6,666 satellites a year, or about 556 a month. That’s roughly twice the reported current production rate of Starlink satellites, which is just 70 a week. Though Musk says that t
