SpaceX's AI transformation cost: From the most profitable space company to a capital black hole

``` SpaceX, which is accelerating the largest IPO in history, is caught in a structural dilemma that investors can hardly ignore. This aerospace company, once known for its capital efficiency, has shifted to a “high-intensity cash-burning model” after merging with Musk’s AI company xAI. According to Bloomberg columnist Chris Bryant, after the merger with xAI, SpaceX’s business scope has expanded from rocket launches to AI research and development, cloud computing, and potential space-based data centers. Prospectus data shows that capital expenditures for all of 2025 will exceed $20 billion, higher than the $18.7 billion in revenue for the same period; capital expenditures in the first quarter of 2026 further climb to over $10 billion, twice the revenue for the quarter. The prospectus also explicitly warns that capital expenditures will “increase significantly” in the future. According to a previous WallstreetCN article, SpaceX plans to submit an updated prospectus this Wednesday afternoon, disclosing for the first time the target offering price range and officially launching the IPO pricing process. SpaceX plans to sell less than 5% of its shares, at a total value of about $60-80 billion, targeting a valuation of $1.75-1.8 trillion, more than 90 times last year's revenue. Analysts note that with OpenAI and Anthropic also preparing for IPOs at the same time, the simultaneous entry into public markets by these three cash-intensive tech firms will significantly test investors’ capital-absorbing capacity. Transformation of Capital Consumption Model after Merging with xAI SpaceX’s previous capital efficiency was its core competitive advantage. According to PitchBook, before its AI transition, SpaceX completed over $9 billion in venture financing, and through reusable rocket technology, in-house component development, government contracts, and its profitable Starlink business, it was able to highly leverage limited funds. But the February merger with xAI fundamentally changed this logic. PitchBook senior research analyst Franco Granda pointed out, “SpaceX was an outstanding enterprise in many respects, but after merging with xAI, it is completely different, and the rate of spending is worrisome.” xAI was founded in 2023 and has so far raised over $40 billion, directly competing with OpenAI and Anthropic. Meanwhile, continued R&D of the heavy-lift Starship rocket has also increased capital pressures. As of the end of March, SpaceX held about $24 billion in cash and short-term securities, but at the current burn rate, even tens of billions in IPO funding will not be enough to sustain operations for long. High Investment and Long Cycle: Profitability Remains Challenging SpaceX’s ambitions go far beyond this. In addition to AI and cloud computing, the company plans to build its own chip manufacturing plant to reduce reliance on TSMC and Samsung Electronics. Reportedly, Musk’s Tesla will also help fund this highly complex project, which could ultimately cost over $100 billion. Meanwhile, SpaceX’s debt has swelled to about $29 billion. On the commercial front, xAI has made some progress. Anthropic has agreed to pay SpaceX $1.25 billion per month for compute rental, giving SpaceX a dual role as both an AI lab and a CoreWeave-like cloud service provider. The company is also exploring the possibility of deploying data centers in space, but the maintenance and upgrade paths for orbital data centers remain unclear. The prospectus admits that the company plans “to invest large amounts of capital in building AI computing infrastructure and expects to go through years of investment cycles before these deployments turn into sustainably positive AI segment adjusted EBITDA.” It is worth noting that this profit metric already excludes depreciation and amortization of tangible assets, while the lifespans of chips and satellites are both quite limited. High Valuation Faces Market Test A target valuation of $1.8 trillion means investors must accept that traditional cash flow and profit metrics “do not apply” here. This logic mirrors Tesla’s valuation narrative—“the golden dawn always seems out of reach,” with rosy visions remaining perpetually distant. Even well-established tech giants are facing pressures in the current market. Microsoft, Meta, and other major cloud computing players have underperformed compared to semiconductor companies due to doubts over returns on data center investments—the latter being the most direct beneficiaries of the AI arms race. While SpaceX does hold unique strategic assets: its rockets account for over 80% of all payloads delivered to orbit globally. Last week, its dominance became even clearer after a launch pad explosion at Blue Origin, owned by Jeff Bezos. However, SpaceX’s financial performance is still far from that of chipmakers with strong pricing power and high profit margins. Until it has the ability to design and manufacture its own processors, the company must continue buying chips from third parties, and the payout cycles for many investments may be far in the future. SpaceX, OpenAI, and Anthropic are all rushing to tap public markets, vying for a limited pool of institutional investor capital. In theory, whoever raises the most funds first will have the strongest computing power, enabling the development of the best AI models and winning the race towards “superintelligence.” But for investors coming in at a $1.8 trillion valuation, the size and uncertainty of this bet is, likewise, “beyond Earth’s orbit.” Risk Warning and Disclaimer The market involves risk, and investment should be cautious. This article does not constitute personal investment advice nor does it take into account the special investment objectives, financial circumstances, or needs of any individual user. Users should consider whether any opinions, viewpoints, or conclusions herein fit their particular situation. Investment based on this is at one’s own risk. ```