Elon Musk presents SpaceX as humanity’s path to Mars, but the company’s pitch to investors for a potentially record-breaking IPO tells a different story. The core business driving its future is not rockets or interplanetary travel—it is artificial intelligence, funded almost entirely by the cash-generating machine that is Starlink.
This strategy has created a striking financial paradox. According to excerpts from SpaceX’s IPO registration reviewed by Reuters, Starlink doubled its operating income in 2025 to $4.42 billion, effectively subsidizing losses elsewhere in the company.
However, the AI division, which now includes xAI, accounted for 61% of the company’s total capital spending in 2025—consuming $20.74 billion and posting an operating loss of $6.4 billion . In simple terms, Starlink’s profits are being funneled directly into an AI furnace.
Unlike tech giants Alphabet or Microsoft, which possess deep operating cash flows from advertising and cloud computing to fund their AI ambitions, SpaceX is running a much tighter ship. The company’s capital spending more than doubled last year, exceeding its revenue by roughly $2 billion. Analysts note that SpaceX’s profile resembles that of a “super-sized startup” rather than a stable incumbent, burning cash to build infrastructure that does not yet generate returns.
This financial tightrope walk comes as SpaceX prepares for what could be the largest IPO in history. The company is targeting a valuation of $1.75 trillion and aims to raise $75 billion . However, valuation experts are skeptical. Aswath Damodaran, the renowned “Dean of Valuation” at NYU Stern, recently calculated SpaceX’s fair value at $1.2 trillion—roughly 30% lower than the company’s target .
Musk is attempting to use future valuation to finance present spending. In a recent deal with AI coding startup Cursor, SpaceX secured the right to acquire the firm for $60 billion or pay $10 billion for a partnership . SpaceX reportedly plans to use the IPO to stabilize its valuation before paying for such acquisitions with stock, minimizing immediate cash outlay.
The risk for prospective investors is clear. While Starlink provides a sturdy financial backbone today, its growth will eventually mature. As strategist Shay Boloor noted, the spending becomes much riskier “once [Starlink] subscriber growth matures or if AI spend keeps scaling faster than monetization” . For now, SpaceX is betting that its colossal investment in AI will unlock a $28.5 trillion market.
