SpaceX Is About to Be Worth More Than $1.7 Trillion. Here's Whether That Valuation Makes Sense.

The SpaceX (NASDAQ: SPCX) IPO is close to liftoff. With initial shares priced at $135, the offering looks set to raise a record-breaking $75 billion, valuing the company at around $1.77 trillion and making it the eighth-largest by market cap. That's a lot for a company that was not profitable in 2025 and is not profitable today. However, SpaceX is an extraordinary company that has repeatedly defied doubters, and bulls argue its ability to break new ground justifies that valuation.

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The greatest difficulty in valuing SpaceX is that a lot of the projections boil down to one statement: "It's space!" Or more accurately, "It's space and AI!" Both markets could have life-changing potential, but costs and revenues are hard to project. For example, one thing to know about SpaceX is that its IPO prospectus assumes a total addressable market (TAM) of $28.5 trillion. Because, well, it's space.

Plus, historical IPO growth expectations don't necessarily apply because companies are staying private for longer. There are a lot of comparisons with Tesla (NASDAQ: TSLA), but the electric vehicle maker was founded in 2003 and went public seven years later, while SpaceX was founded in 2002 and is only going public now. Investors who buy SpaceX after the IPO will miss out on years of potential explosive early-stage growth.

SpaceX is three businesses in one

Despite the name, SpaceX is about more than going to space. The prospectus calls it an "innovation engine" because it combines space, artificial intelligence (AI), and communications, but looking at the way those divisions break down, the AI market is actually where it sees the most potential.

Starlink: Satellite communications

SpaceX's network of over 9,000 satellites provides high-speed internet to more than 12 million customers in over 160 countries. By using satellites rather than cables, Starlink is particularly useful for people in remote locations. Starlink is the most measurable of the SpaceX business segments, and the IPO prospectus puts its TAM at $1.6 trillion. It was also the only profitable arm of the business last year: Starlink generated $11.4 billion of SpaceX's $18.7 revenue in 2025.

Space division: Going to Mars

SpaceX is a market leader in space stocks, accounting for 84% of space launches in 2025. The workhorses here are its Falcon reusable rockets, which transport satellites, spacecraft, and people into orbit, and the Dragon spacecraft, which can carry passengers and cargo.

It is also developing Starship, a huge -- and cash-intensive -- reusable rocket that it says will carry over 100 metric tonnes not just to the moon, but to Mars and beyond. The 12th Starship flight test took place in May, and the firm says paid orbital missions should begin in the next six months. Putting the futuristic idea of taking people to Mars to one side, at a practical level, SpaceX says Starship will be able to carry 60 satellites at once, which will be crucial for scalable space expansion.

Its space activities, mostly the launch services, brought in $4.1 billion in revenue in 2025. It spent around $3 billion on Starship, taking its total Starship spending to $15 billion. The firm estimates space TAM at $370 billion.

AI: Infrastructure on earth and in space

SpaceX bought xAI, which includes the X social media network and the Grok chatbot, in February. It plans to build AI infrastructure in space, powered by the sun that will be better able to handle energy-hungry data centers than those on earth. The idea is to deploy orbital AI satellites by 2028.

This is where the valuation becomes fantastical, because we're talking about calculating the maintenance, launch, and insurance costs of data centers in space. The spending levels are eyewatering -- SpaceX's AI capital expenditure was $12.7 billion in 2025, which pales next to the whopping $7.7 billion in just the first quarter of 2026. The rationale is that it needs to spend aggressively so it can take a significant part of what it predicts could be a $26.5 trillion addressable market.

Does the valuation make sense?

SpaceX's plans are bold, but they also carry a lot of risk. If it succeeds in building cost-effective data centers in space, that $1.77 trillion valuation could make sense. The trouble is that all the stars need to align for that to happen. For starters, if the Starship isn't reusable, it will become too expensive. Its launches need to go well so that it can start putting next-generation satellites into orbit. The recent Blue Rocket explosion shows how badly things can go wrong.

Outside of breaking down the individual parts of the business, another way to understand the valuation is to look at its price-to-sales ratio (P/S ratio). This divides the market cap by revenue and gives an idea of what investors will pay for each dollar in sales. SpaceX's P/S ratio is over 90, which is expensive compared with around 20 for Nvidia. Rocket Lab, another space stock, has a P/S ratio of 85.

Ultimately, I am a cautious investor, and the "It's space!" rationale isn't enough to support SpaceX's valuation. We're talking about two industries that could both have huge potential, but equally sizable unknowns. I'm happy to wait for the IPO frenzy to fade and for SpaceX to deliver more certainty.

Emma Newbery has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia, Rocket Lab, and Tesla. The Motley Fool has a disclosure policy.