$1 Trillion in Market Cap Erased, but This AI Stock Could Soon Be the World's Most Valuable Company (According to Elon Musk)

Space Exploration Technologies (NASDAQ: SPCX) was one of the biggest IPOs ever, with the company going public at a $1.8 trillion valuation, and an initial surge of buying sent SpaceX's valuation as high as $2.7 trillion.

But the enthusiasm faded quickly, and at its lowest point -- around mid-July -- SpaceX was valued at around $1.4 trillion -- erasing more than $1 trillion in market cap in just weeks.

The stock has rebounded a bit since then but is still down about 5% since its IPO, compared to the S&P 500's (SNPINDEX: ^GSPC) nearly 4% gains.

SpaceX CEO Elon Musk is confident his company can regain ground and says it will eventually become the most valuable company in the world. Here's how he plans to get SpaceX there -- and why he's probably wrong.

SpaceX CEO Elon Musk. Image source: The White House.

Musk's plan to turn SpaceX into the world's most valuable company

Musk said on X (formerly Twitter) recently that SpaceX could generate $3.5 trillion in revenue by 2033, and he said in a separate post:

You don't seem to understand that SpaceX will be worth more than the rest of Earth if we accomplish our goals.

Musk is often overly optimistic about timelines and financial opportunities for his companies. Still, SpaceX is a leading player in rocket launches and AI, and both markets have huge potential. And it's the company's AI business that will be the biggest driver of its growth.

SpaceX management has said its total addressable market (TAM) for the company's AI business -- which includes its Grok AI and the sale of AI data center capacity to customers -- is $26.5 trillion.

It's not unusual for companies to throw out overinflated figures about how big their addressable markets are, especially as they're going public. And SpaceX is making some big bets in this space by building its massive Colossus AI data centers. Evercore ISI estimates that the company's capital expenditures could reach $360 billion by 2030, with most going toward AI investments.

The problem is that SpaceX has just $12.5 billion in total revenue in the first six months of this year. That's a far cry from $3.5 trillion. To put this into perspective, SpaceX would have to generate annual sales eight times Apple's 2025 total revenue to reach Musk's estimate.

And it's not just that it's a hard figure to reach; it's also that SpaceX faces immense AI competition from OpenAI, Anthropic, Microsoft, Alphabet, and others. Microsoft, widely viewed as an AI success story right now because of its thriving Azure business, generates $100 billion in annual revenue from Azure.

How investors should think about SpaceX's AI opportunity

If you're considering investing in SpaceX right now, I think it's pretty irrelevant whether Musk thinks SpaceX will be the most valuable company in the world.

Instead, consider how much the company will need to spend to achieve its goals of becoming an AI powerhouse. SpaceX's capital expenditures already spiked 308% in the first half of this year (compared to the first six months of 2025) to $28.5 billion. And whopping 86% of that spending went to AI.

SpaceX will have to continue this very expensive spending spree just to reach even a sliver of Musk's overly ambitious revenue estimates.

The problem for Musk and SpaceX stock is that most investors are very wary of AI spending in the absence of profits. Profitable AI companies are growing at a healthy clip and are seeing their share prices rise -- think Microsoft, Micron Technology, Sandisk, and others -- but the AI trade overall is skeptical of negative free cash because of AI capital expenditures.

One key reason why SpaceX's stock is faltering right now is that investors don't believe the company's spending spree will pay off. And if SpaceX continues to ramp up the spending as it tries to dominate AI, I think investors could punish the stock even further.

The point here isn't that SpaceX will fail to be an influential AI player. It's that the company is already overplaying its hand by spending too much, and it's coming at a time when investors have little patience.

If Musk wants to build the world's most valuable company, he'll need everyday investors to believe that SpaceX is headed in the right direction, buy the stock, and then hold it for years to come.

As it stands right now, they're moving in the opposite direction.

Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Apple, Evercore, Micron Technology, and Microsoft. The Motley Fool has a disclosure policy.