Think SpaceX's IPO Is Too Expensive? 2 Recent Developments Could Change That

SpaceX is the most anticipated IPO in a long time -- possibly ever. If the company successfully raises $75 billion at a $1.77 trillion valuation, as it's expected to do, it would be several times larger than the previous "largest IPO" record holder.

One of the most common reasons I've seen for investors not planning to buy shares in the IPO is valuation. And it's certainly easy to see why. SpaceX generated $18.7 billion in revenue in 2025, which means that at the targeted valuation, the stock would be priced at about 95 times sales at the IPO price. This is for an unprofitable company whose revenue, quite honestly, did not grow particularly fast last year -- at least not fast enough to justify such a rich valuation.

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The valuation calculus just changed

In the past month, SpaceX has reported two major deals that are instant game-changers for the company, at least in terms of revenue and valuation.

• First, Anthropic agreed to a three-year deal to pay SpaceX $1.25 billion per month for exclusive access to its Colossus 1 data center, which houses over 220,000 Nvidia (NASDAQ: NVDA) GPUs.
• Just recently, Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) agreed to a three-year deal to pay SpaceX $920 million per month for access to about 110,000 additional Nvidia GPUs to help meet its own compute needs.

Here's why this is so important. These two deals generate $2.17 billion in monthly revenue. That's $26 billion per year to SpaceX from just these two revenue streams -- more than the revenue it generated from Starlink, xAI, and its rocket launch business last year combined.

For the AI division, this is huge. SpaceX's xAI, which includes Grok and X (formerly Twitter), generated $3.2 billion in revenue last year, so this represents more than 800% revenue growth for this part of SpaceX.

From a valuation standpoint, consider what this means. Adding $26 billion to SpaceX's existing revenue, which most analysts expected to be in the $22-26 billion range in 2026 prior to these deals, means that at the initial valuation, SpaceX's IPO will be priced at roughly 35 times 2026 sales. Not cheap by any means, but a lot more palatable than a P/S ratio of 95.

Is SpaceX a buy on these deals?

There are pros and cons to the Anthropic and Google deals that investors need to be aware of. For one thing, the reason the Anthropic deal happened in the first place is that SpaceX had built out far more compute capacity than it needed for Grok AI. It specified in its S-1 that the Anthropic deal was a way "to monetize unused compute capacity." It's clear that the use of Anthropic's Claude AI tools is growing much faster than Grok's.

Having said that, kudos to SpaceX for turning the problem of excessive capacity into one of the largest AI compute contracts in the entire industry. The S-1 stated that the company expects more deals of this nature in the future, so this could become a core part of SpaceX's business.

So, is SpaceX a more attractive stock after these deals? It depends. It's certainly more attractive at 35 times sales than nearly 100. And the deals seem like a savvy way to turn a business weakness (Grok not gaining AI market share) into a big opportunity. $26 billion in virtually guaranteed revenue is solid, especially if these are the first in a series of AI compute deals. But the fact remains that the investment thesis in SpaceX is largely based on revenue streams that are still in their infancy or don't yet exist at all. Keep this in mind before investing.

Matt Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.