Don't Buy SpaceX Stock Until You Understand This One Risk

Space Exploration Technologies (NASDAQ: SPCX), or SpaceX for short, began trading on June 12 as the most anticipated IPO stock in recent history. There's no company like it, with strong competitive footholds in space and artificial intelligence (AI), making the stock a dynamic one-two punch in hot emerging industries, a long-term growth investor's dream.

Amid all the hype, it might be tempting to buy SpaceX stock right now. To be fair, the company looks to have a very bright future ahead. But before buying shares, investors should understand how SpaceX's stock valuation compares to the rest of Wall Street and why its reliance on AI growth is a risk they should weigh before making any decision.

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A valuation that is out of this world

At its current market cap of $2.03 trillion, SpaceX became one of the world's most valuable companies the moment it began trading. But it's nowhere near the top of the list if you measure by revenue. SpaceX's total revenue was approximately $18.7 billion in 2025. That values the stock at roughly 108 times last year's total sales.

The market clearly anticipates eye-popping growth now that SpaceX has all this fresh IPO capital, about $85.7 billion, to pump into the business. CEO Elon Musk, never one to shy away from ambitious goals, has said he believes SpaceX could generate $1 trillion in revenue in 2030. As astonishing as that growth would be, it underlines just how steep the valuation really is -- over 24 times revenue the company wouldn't see for another four years.

Living up to the hype could be a challenge

Of course, SpaceX must also live up to these astronomical expectations to sustain this valuation and share price, let alone generate a return for investors. That's where it gets even more tricky.

SpaceX disclosed in its pre-IPO filings that it believes its total addressable market is $28.5 trillion. It's a staggeringly large figure, roughly equal to the entire U.S. economy. But $26.5 trillion of that comes from AI, which is the most speculative and currently the least profitable part of SpaceX's business. SpaceX's xAI competes with Anthropic and OpenAI among others, so it's also highly competitive.

So, SpaceX looks like an investment in space on the surface, but this is really about whether xAI can become a multitrillion-dollar business. Otherwise, the math to justify SpaceX's $2.4 trillion market cap becomes much more difficult. That's not to say it won't work out -- Musk has become the world's richest person by consistently building massive, successful companies. That said, investors should understand precisely what they're buying when they buy SpaceX at its current price.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.