The SpaceX IPO Could Raise $75 Billion. History Suggests This Stock Will Be a Bigger Winner Than SpaceX Itself.

SpaceX is gearing up for what could be the largest initial public offering (IPO) in history, targeting a capital raise of around $75 billion and a valuation between $1.75 trillion and $2 trillion. Investors are lining up to own a piece of Elon Musk's company, which is revolutionizing rockets, satellite internet, and potentially even AI-native data centers.

While Wall Street fixates on SpaceX's debut, history offers a subtle but compelling lesson: The biggest long-term winners from hyped-up IPOs are rarely the headline companies themselves. Instead, they are usually the essential suppliers powering ambitious visions behind the scenes.

In the case of SpaceX, the company that best fits that description is Nvidia (NASDAQ: NVDA). The money that the company raises with this stock sale is expected to fuel a major spending spree on advanced computing, and Nvidia is poised to capture an outsize share of it -- much like other infrastructure enablers have during past tech booms.

Image source: The Motley Fool.

History shows that infrastructure providers often outshine

Stock market history is filled with examples of pick-and-shovel players that become more lucrative investments than the companies that were directly chasing the actual "gold rush."

During the internet era of the late 1990s, numerous dot-com companies skyrocketed following their IPOs on enthusiastic narratives -- only to crash once reality impinged on their optimistic visions. Meanwhile, Cisco Systems (NASDAQ: CSCO) made a mint by providing the routers and switches that made web development possible in its early days. Until the dot-com bubble burst in 2000, ongoing demand for Cisco's hardware brought sustained returns to its investors.

Similarly, during the cloud computing surge of the 2010s, data center builders like Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) entered the spotlight. However, it was chipmakers enabling the underlying processing power that captured the most durable upside.

The patterns are clear: IPO proceeds don't vanish into thin air. Instead, the capital these companies raise flows downstream to the vendors whose technology makes innovation feasible. The $75 billion war chest SpaceX hopes to build underscores this idea. The company is vertically integrated in many ways, yet it will remain highly dependent on other companies' cutting-edge GPU architectures for autonomous flight simulations and powering orbital data networks.

Will Nvidia benefit from the SpaceX IPO?

Musk has confirmed that, even as SpaceX invests in developing its own custom silicon in-house, it will continue buying Nvidia hardware at scale post-IPO.

The cash infusion from the IPO will accelerate projects such as expanding Starlink's footprint, advancing Starship reusability, and designing data centers that could eventually be placed in orbit. Each of these initiatives demands clusters of GPUs for training models and deploying real-time inference. As such, Nvidia's relationship with SpaceX remains structural and recurring (for now).

Nvidia's near-monopoly in the general-purpose AI accelerator market should result in a meaningful slice of SpaceX's newly gained liquidity flowing into its thriving data center chip business. Meanwhile, I suspect SpaceX stock will experience the typical bouts of post-IPO volatility, particularly after lock-up agreements expire and insiders begin taking profits.

Nvidia stock is positioned to compound in the long run

What truly sets Nvidia apart is the durability of its competitive advantages. SpaceX's IPO will be just another catalyst for the GPU giant. As Musk's integrated AI-space economy materializes, demand for powerful computing hardware should only intensify.

Nvidia's ecosystem of GPU architecture, its CUDA software platform, and its networking equipment makes the company a full-stack solution. This structure creates a formidable moat that competitors have struggled to breach throughout the AI revolution.

Investors who bet on the SpaceX IPO itself will end up chasing short-term momentum pops. But those who own Nvidia stock will be positioned to enjoy multiyear tailwinds driven by accelerating investment in AI infrastructure.

Adam Spatacco has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.