Space Exploration Technologies Corp (SPCX +2.06%) went public in June, and while it's been a bit of a bumpy ride since then for the space stock, its valuation still hovers around $2 trillion, which is massive given that the company, which more commonly goes by just SpaceX, remains unprofitable.
While it's known for its rockets and ambitions in space, artificial intelligence (AI) is a massive focus for the business. In the company's S-1 filing, it outlined AI as accounting for the bulk of its total addressable market, as it totaled an estimated $26.5 trillion, versus just $370 billion for space.
AI is a huge focus for SpaceX. That includes sending data centers into space and also developing AI models. And when it comes to the latter, CEO Elon Musk recently made a very bold prediction.
Image source: Getty Images.
Could SpaceX end up leading the AI race?
There's tremendous competition in AI with many companies developing their own AI models and chatbots. Musk's company owns Grok. And he believes that it may not be too long before his efforts pay off and his company's AI rivals the best models available. "I am cautiously optimistic that SpaceX will have a Fable/GPT-6 level model in 2 to 3 months," he posted on X, his company's social media platform. Even further out, Musk believes that it may become the best one. "If our second derivative remains strong, SpaceX will reach pole position in about 6 months"
Musk has been heavily involved in AI and co-founded OpenAI in 2015, the company behind ChatGPT, with Sam Altman. Musk ultimately left the company and has now been investing heavily in SpaceX's AI efforts. Earlier this year, SpaceX acquired Cursor, an AI start-up, for $60 billion. SpaceX has been securing compute deals with tech companies, and analysts project that by 2030, its AI revenue will total a whopping $275 billion.
NASDAQ: SPCX
Key Data Points
SpaceX has loads of potential, but its valuation means it also carries a lot of risk
Musk has an optimistic vision for where SpaceX will be in the future, with Starlink, space, and AI expected to be fast-growing areas for SpaceX. But Musk can also be a bit too optimistic at times, which can lead to inflated expectations and disappointment later on.
Investors should consider the risks that come with investing in a business at such a high valuation and where so much depends on future growth panning out, because while SpaceX can spend and invest heavily on AI and other growth opportunities, those will be highly costly endeavors to pursue, and if its losses mount, the market may begin to lose its patience.
SpaceX is an intriguing growth stock to buy, but investors who decide to buy it will need to brace for plenty of volatility ahead.
