IN SUMMARY
SpaceX’s highly anticipated IPO has captured global investor attention, with reports suggesting a potential valuation of approximately US$1.75 trillion, making it one of the largest listings in history. While the company’s bold vision of becoming a multi-planetary civilization dominates headlines, the investment case increasingly rests on the commercial scalability of two rapidly evolving businesses: Starlink connectivity and AI infrastructure.
The company currently operates across three key segments:
- Space: launch infrastructure and satellite deployment
- Connectivity: the Starlink satellite internet platform
- AI: xAI, including Grok, X (formerly Twitter) and hyperscale AI data cente infrastructure.
Importantly, the traditional rocket-launch business appears to be more of an enabling platform than the primary long-term value driver. The strongest economics currently reside within Starlink, which already contributes more than 60% of group revenue and generates EBITDA margins exceeding 60%. Subscriber growth has been exceptional, increasing from 2.3 million users in 2023 to more than 10 million today across 164 countries.
The note highlights the substantial long-term optionality within Starlink. Internal estimates suggest the platform could potentially scale to 50 – 200 million subscribers over the next five years, implying a revenue opportunity approaching $100 billion annually at attractive margins.
At the same time, SpaceX is investing aggressively into AI infrastructure through xAI and its rapidly expanding data centre operations. The AI division is currently the group’s largest consumer of capital, with management positioning it to benefit from surging global demand for AI compute capacity. A recently disclosed agreement with Anthropic, worth approximately US$1.25 billion per month through 2029, signals the potential scale of this opportunity and may materially accelerate revenue growth from 2026 onwards.
Finally, we highlight Scottish Mortgage as a publicly traded “proxy asset” for investors who cannot get exposure to SpaceX directly.
The bottom line
Despite these compelling growth opportunities, the valuation remains demanding. SpaceX is still loss-making and continues to consume significant capital as it scales both satellite infrastructure and AI data centres. The investment case therefore relies heavily on future execution, sustained growth and the company’s ability to commercialise its technological leadership.
In our view, SpaceX represents a rare “generation-defining” company with potentially transformative businesses spanning connectivity, AI and space infrastructure. However, investors should recognise that the current valuation already discounts a substantial portion of future success and leaves limited room for execution missteps.
Article courtesy of Old Mutual.
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