SpaceX at $3 Trillion? Investors Have Lost the Plot
US stock valuations are approaching levels last seen during the dot-com bubble. Investors argue this time is different because of AI. But that is exactly what investors said about the internet in 1999. Nothing illustrates today’s optimism better than the SpaceX IPO.
At launch SpaceX was valuing itself at $2 trillion. This means a valuation of 117 times sales. Meta went public at 28 times sales, Google was listed at 10 times sales, at a time of 234% revenue growth. Space X only saw 33% revenue growth last year. But, the real kicker is that Space X isn’t actually making any profit. It made a $4.9 billion loss last year, a bigger loss than previous year. By 2028, there is a speculation that if things go well, they will see a price to earning ratio of 2,798, Historically a P/E of over 20 is considered overvalued. One analyst model calculated that to justify a valuation around $1.75 trillion, SpaceX would need revenue approaching $1.1 trillion annually within a decade, implying roughly 50% annual growth for ten years—a level never achieved by a company already generating nearly $20bn in sales. To put $1.1 trillion it into context the largest sales last year was $742 billion recorded by Amazon. This is hugely ambitious already, priced into the share is success in every part of the buinesss.
One reason for investor optimism is the Musk factor. Musk has a record of achieving things many thought impossible. Reusable rockets, electric vehicles and satellite internet all exceeded expectations. But investors should remember that many timelines have slipped by years or even decades. The Boring Company has not dug any commercial hyperlink tunnels. Tesla has a few self-driving taxis. But, whilst Musk attracts certain investors, he is politically divisive and a future US administration could look less kindly on Musk backed business.
Starlink is arguably the most valuable part of SpaceX. It is innovative, useful and increasingly profitable. The question is whether even a hugely successful satellite internet company can justify a multi-trillion-dollar valuation. The next big section of the mega companies is space travel. Now for many this is really very exciting, who doesn’t dream of flying to Mars, well me actually, but anyway, there’s no doubt, SpaceX has broken frontiers and achieved unprecedented progress. But, it doesn’t mean per se, it will be a profit cash cow like a Microsoft or Google. There are only so many multi-millionaires queuing up to fly into space. The dream of AI data centres in space, may take off, but it is still an embryonic idea.
Yet, SpaceX don’t believe in self-imposed boundaries, the company talks bullishly about the potential for space to capture untold markets. In their IPO prospectus, they talk about a total actionable market TAM value of $28 trillion. Space is a big place, and they intend to monetise it. But, talking about a potential market of $28 trillion is reminiscent of the mania behind the railway, radio and internet bubbles of the past. The problem is investors get carried away by the story rather than valuing a business.
There is a danger of getting high on your own supply. If you think you can turn space into an economy the size of the United States, SpaceX may justify its impossible earnings. But, to say this is an optimistic take would be the biggest understatement of the year.
AI Infrastructure
Part of the bullish case for SpaceX increasingly relies on its links to xAI, AI infrastructure and future AI data-centre projects. What Musk has done is to combine Twitter, Grok and other AI startups into the more attractive flagship Starlink and SpaceX division. Yet SpaceX reported revenue from its nascent AI division of just $3.2 billion in 2025. And of course, they didn’t make any profit, but a big loss. Now Goldman Sachs estimate revenue will surge to $322 billion by 2030, which is why investors heavily weigh future AI prospects in the company’s valuation.
But The AI industry faces a paradox. Demand is rising, but competition is intense. OpenAI, Anthropic, Google, Meta and Chinese firms are all cutting prices. The risk is that AI becomes enormously useful without becoming enormously profitable. And Already business are becoming more cost-conscious, there are signs of cutting back on token expenditure. Firms are waking up to the fact it’s easy to burn through AI tokens, without seeing profits increase.
AI mania?
To produce AI is quite expensive. Companies are burning through costs of electricity and chips, but it is harder than expected to set high price. Now, one possible reason for SpaceX high valuation is if they can successfully get into AI chip manufacture and AI data centres. They have promised to build satellites that function as AI data centres, I suppose you don’t have to worry about domestic opposition to data centres. Selling AI infrastructure is likely to be more profitable than selling AI agents to customers. But, there is still considerable speculation about the scope of profit growth.
OpenAI is now the next biggest firm which is not publicly listed. It is currently valued at around $852billion. But, OpenAI has a problem, it again has ambitious revenue targets. From $20 billion today to $175bn by 2030. but the market is increasingly competitive. And ahead of a potential listing, Microsoft recently announced it would switch from OpenAI to cheaper AI models. The kind of reality check, that could undermine record AI valuations.
Stock Euphoria
The problem is that it is more than just individual companies offering excitement about a fantastic future that may or may not materialise. There is a mood of euphoria amongst some investors, driven by the past track record of growing share values. But as the Economist notes, this has slipped into a manic attitude. In particular, the economist highlights the growth of basic gambling on shares through the use of short-term options. Trading in options has doubled since 2020, interestingly this mirrors a growth in actual gambling in US society.
This is not traditional investors hedging against losses, but gamblers with money to burn betting on shares going to the Moon or Mars. But, as every physicist will tell you what goes up, also comes down.
Now, you can defend some of the share price growth based on fundamentals. Demographic factors mean there are more old savers putting money into the stock market. Corporate profitability has increased. Profit margins are higher and profit as a share of GDP has grown. Yet, the size of the stock market to GDP has reached record levels. And out of interest, house prices to income have also reached a record level. Never before have we seen both shares and house prices reach record levels. Yet, whilst corporate profit rises, consumer sentiment sinks to the lowest level on record, it is a real two speed economy. And share valuations rely on continued profit growth, which may eventually reach limits because of an economy left behind.
AI will almost certainly change the economy. SpaceX may continue to achieve extraordinary things. But a great company is not always a great investment. At a valuation of $2–3 trillion, investors are no longer paying for what SpaceX is. They are paying for what they hope it might become. History suggests that paying today for perfection is rarely a winning strategy.
Related
https://substack.com/home/post/p-199273735
https://fortune.com/2026/06/06/spacex-ipo-stock-price-valuation/?utm_source=chatgpt.com
https://www.economist.com/business/2025/05/15/will-openai-ever-make-real-money
https://paulkrugman.substack.com/p/elon-musk-human-ponzi-scheme
https://substack.com/home/post/p-199273735
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