SpaceX, his other major company after Tesla, would normally not be viewed as an ‘AI Company’ in this AI Tech Wave.
But for its Starlink unit that provides global internet access to remote users, stationary, mobile, or at war. And of course it’s $2 billion investment in ‘cousin’ company xAI/x.com/Grok, at the behest of its Chief Pilot Elon Musk that I wrote about last summer.
The last one is noteworthy because it’s the only public company in the collection. With a market cap of over $1.4+ trillion. Relative to its top global Auto company competitors like Toyota with a $290+ billion and BYD (China) at a $115+ billion market cap.
“SpaceX is preparing for an IPO, driven by Elon Musk’s ambition to deploy AI data centers in space.”
“The decision to go public marks a shift for SpaceX. An IPO could provide billions in capital needed for the technically demanding and costly space-based AI initiative.”
“Musk also views a SpaceX IPO as a strategic move to bolster his AI company, xAI, against competitors and potentially enable investments between the two entities.”
Yes, it leads with ‘AI Data Centers in Space’, being talked up recently by Elon Musk himself. A thesis with speculative scientific assumptions, and formidable challenges I recounted a few days ago. Both theoretical and practical.
The WSJ then goes on to lay out the SpaceX IPO narrative fed by its sources:
“SpaceX resisted going public for years. Then came the rise of artificial intelligence.”
“Elon Musk’s rocket maker became one of the country’s most valuable private companies due in part to its ability to develop risky space businesses outside the scrutiny of public investors. Its executives liked to say the company wouldn’t IPO until its rockets were regularly flying to Mars.”
That calendar objective, if real, would be at least a decade or two into the future given the current space science, as well as other technical and financial realities.
But then ‘came AI’:
“That was before the rush to build data centers for AI computing prompted Musk, Jeff Bezos and others to propose putting them in space. The idea has prompted skepticism from many engineers, given the technical challenges posed by building solar-powered AI data centers that zip around Earth.”
“But it has continued to gain traction and Musk has become obsessed with the idea of SpaceX being the first to do it, people familiar with the matter said. Such a feat would be hard to attempt without the billions of dollars in capital an initial public offering could deliver in one fell swoop.”
“The billionaire also sees a SpaceX IPO as a way to help his AI company, xAI, catch up to rivals, some of the people said. Musk has a long-running rivalry with OpenAI Chief Executive Sam Altman, who last year explored buying a rocket company to deploy satellites with AI computing capabilities into space.”
“Two of xAI’s competitors, OpenAI and Anthropic, are eyeing their own IPOs this year, and Musk seems eager for SpaceX to hit the public market first, some of the people said.”
“SpaceX is expected to select banks to lead the stock offering soon; Musk has told people he wants to complete the IPO by July.”
“Musk’s apparent change of tune on SpaceX’s IPO plans in the middle of last year surprised many. The billionaire has loudly complained about running his existing public company, Tesla, and repeatedly tangled with regulators and the courts over issues like his compensation.”
And of course the rapidly building ‘Fear of Missing Out (FOMO)’ of Space AI Data Centers, with Amazon/Blue Origin Jeff Bezos and others in the mix:
“SpaceX had for years been developing technology such as computing nodes that would be helpful for an AI satellite network, former employees say. By this fall, it had a breakthrough in its attempts to figure out how to build and launch data centers into space, according to people familiar with the matter, after devoting more resources toward solving technical issues.”
“But competitors were pushing forward, too. Altman investigated partnering with or acquiring Stoke Space, a startup rocket maker, over the summer. During an event in Italy in October, Bezos said that shifting data centers to orbit made sense.”
“Later that month, Musk took to his social-media platform, X, and suggested that solar-powered AI satellites were the future. He posted about the topic several more times in November.”
“What had been a medium- or long-term goal for SpaceX—developing orbital data centers—became a matter of utmost urgency for Musk mid-last year, according to people familiar with the matter.”
“Building and launching thousands of satellites would be technically demanding and costly, and SpaceX officials quickly decided the easiest way to raise the tens of billions of dollars it required was to dip into the newly thawed U.S. market for IPOs, the people said.”
Then there’s the need for more investment capital on the LLM AI/Grok side of the equation:
“Meanwhile, Musk’s AI company, xAI, was trailing rivals including OpenAI and Google’s Gemini by key metrics such as revenue and user base. A SpaceX IPO was seen by some of its investors as a potential cash cow that could supercharge xAI’s growth and in turn help SpaceX.”
“If SpaceX succeeds with putting data centers in space, its investors expect xAI to become a customer.”
And of course one can’t rule out cross-investments across Elon’s companies, be they private or public:
“Some investors believe SpaceX could purchase a percentage of xAI, or Musk, who owns more than 40% of SpaceX, could tap that stake to invest in his other companies, including xAI. Plus, a publicly traded stock creates a capital safety net of sorts and would be reassuring to investors.”
“The two companies have existing ties: In July, SpaceX agreed to invest $2 billion into xAI, The Wall Street Journal has reported, as part of a $5 billion financing. The xAI chatbot Grok powers customer-support features for Starlink, SpaceX’s satellite internet service.”
“In early December, SpaceX Chief Financial Officer Bret Johnsen began privately telling some investors that the company was considering an IPO in 2026; later that month banks began their bake-off pitches to the company to lead the stock offering.”
“Johnsen sent SpaceX employees a memo Dec. 12, noting that a key reason the company was investigating an IPO was to “deploy AI data centers in space.”
“Getting satellites for AI launched will be no easy feat. SpaceX will need to get its Starship vehicle working, as its orbital data-center satellites are based on a design optimized for the rocket, the Journal has reported.”
“The company has been testing the powerful rocket in flights for almost three years, but it hasn’t deployed any operational payloads yet. SpaceX is expected to launch an upgraded Starship on a test flight soon.”
By many analyst estimates, EACH of those, Optimus humanoid robots, and Robotaxis, have added half a trillion or more of investor enthusiasm in Tesla’s current $1.4+ trillion public market cap.
Add ‘AI Data Centers in Space’ as the third balloon that could see a bubbly half a trillion plus in investor enthusiasm via a SpaceX IPO later this year.
After all most of the ardent Elon Musk investors are already mentally investing in Elon Musk and his overall narratives first, and individual companies private or public, second.
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