SpaceX's Growth Story Is All About Rockets and AI, but This Is What's Driving Its Business Right Now

The growth opportunities in space travel and artificial intelligence (AI) are undoubtedly major reasons investors are bullish on the upcoming SpaceX IPO. Elon Musk, the CEO behind Tesla, is going to allow investors to finally own a share of his popular aerospace and AI company, potentially as early as June 12, when its shares are expected to go public.

While rockets and possible travel to Mars often make headlines when talking about SpaceX, it's a different area of the company's business that actually fuels it and generates profits: Starlink.

Image source: Getty Images.

Starlink was part of the only division in SpaceX that was profitable last year

Starlink is the main piece of SpaceX's connectivity segment. It provides subscribers with access to high-speed internet all over the world, being particularly valuable to people living in remote communities.

In 2025, the connectivity segment generated revenue totaling $11.4 billion, accounting for 61% of the company's total revenue ($18.7 billion). That was an increase of 50% from the previous year, when the segment generated $7.6 billion in sales. And not only has it been growing fast, but it's also highly profitable. Last year, the segment's operating profit totaled $4.4 billion, while the space segment incurred a loss of $657 million, and the AI business incurred a whopping $6.4 billion loss.

There's a big disconnect between where the company is today and what it hopes to be in the future. Of the $28.5 trillion total addressable market that SpaceX believes it can tap into, just $1.6 trillion of that belongs to connectivity; the bulk of it relates to AI ($26.5 trillion), with the remaining $370 billion relating to space.

Should you buy SpaceX stock when it goes public?

SpaceX makes for an intriguing growth stock to own, but it's important to separate hype from reality. While growth potential in space travel may be compelling, SpaceX's own S-1 filing paints that as its smallest growth opportunity. The business that may be the most investable, Starlink, is simply helping to fuel the company's ambitions in space and AI. And even then, the company's losses surpass the profits it's generating from its connectivity segment.

Investing in the company when it goes public, with its valuation potentially around $1.5 trillion or higher, prices it at an extremely high level right away, leaving you with virtually no margin of safety. The safest option may be to hold off and wait on the sidelines, because at such a steep valuation for a company whose core business centers around providing internet access, the price may simply not be worth it.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.