This Is SpaceX's Biggest Market, and It Might Surprise You (Spoiler Alert: It Has Nothing to Do With Space)
Key Points
SpaceX is the largest rocket launcher in the world, and the company's mission is to develop technology that supports multiplanetary living.
Its Starlink business is the largest satellite connectivity business in the world.
It recently merged with xAI, which has been losing money.
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SpaceX is expected to go public in June in what will be the biggest initial public offering (IPO) ever on the stock market. The company is looking to raise about $75 billion, according to recent reports, and debut on the stock market with a valuation of nearly $2 trillion. That would put it in the top-10 most valuable companies if it were public today, and it would be even more valuable than Elon Musk's other company, Tesla (NASDAQ: TSLA), which is worth $1.6 trillion today.
The investing community is psyched for the IPO and for the opportunity to be a part of Musk's vision for space travel and living.
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But that may not be what this stock is really all about.
Read on to see why.
Image source: Getty Images.
Elon Musk's vision for SpaceX
SpaceX was created in 2002, and it has spent the past 24 years breaking through ceilings in space travel. It was the first company to successfully reuse rocket boosters, and 85% of launches today use them. It has launched 650 rockets and is the largest launcher of rockets in the world, serving private and government clients.
Its mission is to develop technology to make life "multiplanetary." According to Musk: "It's about believing in the future and thinking that the future will be better than the past. And I can't think of anything more exciting than going out there and being among the stars."
It's about the future more than it is about space, which is just one element of the company's business. The other two are connectivity and artificial intelligence (AI). SpaceX includes the Starlink broadband satellite business, which is the connectivity aspect, as well as the xAI business, which it recently merged with.
The opportunity is somewhere else
Space travel is core to the company's mission, and SpaceX has been the U.S. government's primary partner in this area. Last year, it launched 11 out of 12 National Security Space Launch (NSSL) "medium and heavy lift missions" and all five NASA U.S. missions to the International Space Station (ISS).
SpaceX generated $4.1 billion in revenue last year and an operating loss of $657 million. Management sees a total addressable market (TAM) of $370 billion for this business.
The Starlink business is its most developed segment as well as its only profitable one. It's the most advanced business of its kind, with 9,600 low-Earth satellites in orbit, or 75% of all active maneuverable satellites in orbit. It's expected to launch a much more powerful satellite later this year that will increase Starlink's downlink capacity 20-fold. It generated $11.4 billion in revenue in 2025 and $4.4 billion in operating income. Management assesses a $1.6 trillion opportunity here.
Finally, it has consumer and enterprise AI applications through xAI, and it's investing to gain dominance in this area. It believes it has the largest data center cluster in the world, and while these data centers are becoming more cost-efficient, management is aiming to launch data centers into orbit and use the power of the sun to run them. It's investing heavily in AI, with $13 billion in capital expenditures last year out of the company's $21 billion total. The AI business generated $3.2 billion in revenue last year, with a $6.4 billion operating loss.
Management sees a $26.5 trillion TAM in this space, with $22.7 trillion coming from what it calls "enterprise applications." These are all kinds of AI applications at the organizational level, including commercial and government, and it includes things like agentic AI and workflow models. The competition is already fierce in this area, with Palantir Technologies and ServiceNow already in the lead, and entrants like Amazon and Alphabet, which have formidable resources to invest.
Investors should consider that this is what SpaceX believes to be its largest opportunity, by far, and invest accordingly.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Palantir Technologies, ServiceNow, and Tesla. The Motley Fool has a disclosure policy.
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