SpaceX Could IPO in June at a $1.75 Trillion Valuation. Here Is 1 Stock to Buy Before It Does.

Expectations are rising for a potential SpaceX IPO in 2026. Last year, analysts speculated on whether the business would achieve a $1 trillion valuation. Then reports leaked of a potential $1.5 trillion valuation. And now, some are expecting a gargantuan $1.75 trillion valuation.

If SpaceX achieves its desired valuation, reports suggest that it could target raising $50 billion in new capital, perhaps more. Keep in mind that reports also suggest that the company booked an $8 billion profit last year off $15 billion to $16 billion in revenue.

So these funds won't be needed to make up for a money-losing business. Instead, expect the company to invest in new growth initiatives that hitherto would have been financially impossible. The most exciting initiative is building AI data centers in space. If SpaceX goes ahead with these plans, one other AI stock becomes an obvious benefactor.

The SpaceX IPO could kick-start AI data centers in space

There's an old saying that investors would be wise to remember in times like this: During a gold rush, sell shovels. It's not that I'm bearish on SpaceX as a business. But with $50 billion in fresh capital to support an otherwise profitable business, SpaceX suppliers arguably stand to gain the most -- whether or not SpaceX succeeds from an investment standpoint.

What exactly will SpaceX do with its newfound capital? "The IPO narrative includes two aspirational capital deployment targets, orbital data centers (up to 1 million satellites for space-based AI computing) and Moonbase Alpha," explains a new research report from Morningstar.

Moonbase Alpha is essentially a plan to establish a human colony on the moon -- largely a backup plan for the company's previous vision of establishing a colony on Mars. This is an almost entirely speculative venture, with no clear profit-generating strategy apart from aiding in research and development initiatives.

Orbital data centers, meanwhile, are also highly speculative. But the real world use case is arguably much more defined. One of the biggest costs involved in developing and executing new AI technologies is the usage of data center infrastructure, which supports the complex machine learning and computation required. Data centers, of course, need to pay for the land involved, the components used in construction, and the energy costs to power and cool the entire system. Electricity alone accounts for 20% to 30% of data center operating costs. For AI data centers, this share is even higher.

What SpaceX hopes to do is finish testing of its Starship rocket: a rocket with significantly more payload capacity than any other rocket in existence. The company would then use that rocket to launch modular data centers that can operate in space, taking advantage of the free real estate and ultra-low operating temperatures to keep cooling costs to a minimum. The company's Starlink satellite internet network, then, could be used to relay transmission between these data centers and Earth.

"The orbital compute concept addresses real terrestrial constraints, such as power, cooling, and permitting," Morningstar's report concludes, "but the scale targets require about 6,667 Starship flights annually -- roughly 530 times the current global launch mass -- placing realization well beyond any near-term planning horizon." In short, Morningstar analysts are skeptical as to whether SpaceX will ever succeed in its promise to put data centers into space.

This AI stock should benefit no matter what happens with SpaceX

There are significant hurdles to SpaceX's vision of achieving space-based data centers, everything from the financial considerations involved to the laws of physics like the vacuum of space's impact on cooling abilities. But no matter what happens, Nvidia (NASDAQ: NVDA) should come out a winner.

Image source: Nvidia.

Despite growing competition, Nvidia retains a market share of around 85% when it comes to the AI chip market. Through early investment, the performance and ecosystem benefits of using Nvidia GPUs are arguably second to none. That's why AI competitors like OpenAI and xAI -- the AI start-up backed by Musk and now owned by SpaceX -- all agree on one thing: They want more Nvidia chips.

xAI has been lining up to buy more Nvidia chips for years. And it's not alone. According to Reuters, "Big tech companies are expected to spend more than $600 billion this year to buy advanced chips and build out massive data centers needed to deploy and train AI systems." SpaceX acquired xAI specifically to support its goal of deploying space-based data centers.

Whether or not this venture succeeds, it only adds more pressure on its competitors to source their Nvidia chips as quickly as possible. Whether or not orbital compute infrastructure ever becomes feasible, expect much of SpaceX's IPO funding to eventually end up in Nvidia's pockets.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.