SpaceX (SPCX +1.25%) is primed for a record-setting initial public offering (IPO) on June 12, with the company setting a fixed initial price of $135 per share, valuing the space-tech leader at a whopping $1.77 trillion. Elon Musk's company is poised to have the largest-ever public debut by market capitalization, and the extent to which the IPO is a success could create significant valuation ripple effects for the broader market in the near term.
But while SpaceX is probably best known for its rocket launches and Starlink internet services, it's actually looking to another tech category as its biggest growth driver: artificial intelligence (AI). In the IPO prospectus that it filed with the Securities and Exchange Commission (SEC) last month, the company outlined a massive $28.5 trillion total addressable market (TAM) -- and AI accounts for a whopping $26.5 trillion of that estimated figure.
Here's why that's important for investors ahead of SpaceX's market debut.
Image source: Getty Images.
AI has become far more central to SpaceX's valuation
In its prospectus, SpaceX said that it has the largest total addressable market in history. The breakdown of the company's estimated TAM is as follows:
- The company says that it has a $370 billion opportunity in space-enabled solutions -- a category that includes rocket launches and related services.
- The company sees a $1.6 trillion opportunity in connectivity solutions, consisting of an $870 billion market for Starlink Broadband and a $740 billion market for Starlink Mobile.
- SpaceX forecasts a $26.5 trillion addressable market across AI offerings -- including $2.4 trillion in AI infrastructure, $760 billion in consumer subscriptions, $600 billion in digital ads, and $22.7 trillion in enterprise applications.
SpaceX grew its revenue 33% annually in 2025 to reach $18.7 billion -- that's strong growth, but it also has to be viewed in the context of the company's valuation. With the company valued at $1.77 trillion heading into its IPO, SpaceX is trading at roughly 94.7 times last year's revenue.
SpaceX carries a ridiculously growth-dependent valuation that can only be justified by the explanation that the company is on the verge of rapid expansion into new markets that will dramatically add to its existing strengths. That's what the massive estimated TAM in the AI compute category, and increasing focus on artificial intelligence seemingly provides.
Tesla provides a template for what's happening with SpaceX
In some respects, SpaceX's AI pivot is similar to what's already happening with Tesla (TSLA +2.05%). While Tesla started out as an electric vehicle (EV) business and still generates the majority of its revenue from auto sales, EVs have become increasingly less focal to the company's valuation.
Sales for the company's vehicles have actually been declining, and profits are under pressure amid softer demand in the category and spending to develop new technologies. Despite lagging performance for its core EV business, Tesla stock is up roughly 34% over the last year. As a result, the company has a market capitalization of roughly $1.24 trillion and ranks as the world's ninth-largest company by market capitalization.
NASDAQ: TSLA
Key Data Points
Meanwhile, the company is valued at 15 times this year's expected sales and 196 times this year's expected earnings. How can Tesla command such a highly growth-dependent valuation when sales actually declined 3% annually last year, and net income has been plummeting? The company has shifted its growth story. Tesla's valuation no longer hinges on EV sales; it's down to autonomous driving technologies and its Optimus humanoid robotics business.
Of course, that doesn't mean that SpaceX is abandoning its launch services and Starlink businesses. These two segments still have substantial runway for growth and will continue to receive substantial investments to facilitate their expansion, but the company's TAM forecast suggests that artificial intelligence initiatives will receive disproportionate funding going forward.
What does a massive AI push mean for SpaceX's bottom line?
With SpaceX targeting AI compute as its largest addressable market by far, the company will have to invest massively to catch up with leading players in the category and build the infrastructure needed to be a top-level competitor capable of rapidly soaking up market share in the fast-growing industry.
Consider the following SpaceX data:
- On revenue of $18.7 billion last year, SpaceX recorded a net loss of $4.9 billion.
- SpaceX had recorded a net profit of $791 million on sales of $14 billion in 2024.
- The company's AI segment saw sales increase only 22% annually to reach $3.2 billion in 2025.
- It recorded an operating loss of roughly $6.36 billion in 2025.
With the company likely needing to invest very heavily to accelerate expansion in the AI market, SpaceX's profit-generating potential could be severely pressured for the foreseeable future. That doesn't necessarily mean the stock won't be a winner over the long haul, but it could set the stage for big valuation volatility.
