Morningstar warns SpaceX $1.75 trillion valuation prices in $1.3 trillion of unproven AI bets

SpaceX is set to price its initial public offering on June 11 and begin trading on June 12 at a valuation of approximately $1.75 trillion, a figure that would make it the most valuable IPO ever completed — and one that Morningstar research says is substantially built on businesses that do not yet generate meaningful commercial revenue.

The company, founded and led by Elon Musk, raised $1.5 billion in a pre-IPO funding round in March 2026 at an implied valuation of $450 billion for its commercial launch and Starlink satellite internet businesses alone. The gap between that figure and the $1.75 trillion IPO valuation means investors are being asked to price in approximately $1.3 trillion of value for the orbital data center concept and the xAI artificial intelligence business — two operations with no track record of commercial revenue at the scale the valuation implies.

Morningstar issued what market observers described as a blunt warning in debut research coverage of SpaceX ahead of the listing. The firm identified the valuation gap as the central risk for retail investors entering the offering, noting that the $26.5 trillion total addressable AI market cited in SpaceX's S-1 filing is a projection rather than a current revenue opportunity and that the orbital data center infrastructure required to access it has not yet been built.

Goldman Sachs is the lead underwriter on the IPO. JPMorgan chief executive Jamie Dimon met with Musk in the days before the S-1 filing, a signal of institutional capital's active engagement with the offering. The involvement of both firms at the highest levels reflects the seriousness with which the largest global capital allocators are treating the listing regardless of valuation debate.

Musk used a 30-minute technical presentation released on June 8 to make the investor case for the orbital data center business directly. Speaking ahead of the roadshow's close, he argued that the technology required to build orbital AI computing infrastructure is largely already developed through SpaceX's existing Starlink V3 satellite program, and that the engineering challenges are more tractable than anything SpaceX has previously solved.

"Part of what we want to convey here is that there is not some magic that is necessary, that doesn't exist," Musk said. "A lot of this is technology we've already made for the Starlink V3 satellites. We don't think this is a super hard problem compared to the things we already do."

The first-generation orbital compute satellite, designated AI1, produces 150 kilowatts of peak power and approximately 120 kilowatts of sustained compute — roughly equivalent to a single Nvidia GB300 AI server rack. Musk said SpaceX expects to reach meaningful AI1 production volumes at its Bastrop, Texas manufacturing facility by the end of 2027, with an initial deployment target of 1 gigawatt of space-based computing capacity by that date.

The argument Musk is making to investors is structural. Solar power in low Earth orbit is continuous and requires no grid connections, land permits or utility negotiations. Two terrestrial data center buildout constraints — power availability and permitting timelines — are effectively solved in orbit. SpaceX's S-1 frames those constraints as the primary factor limiting the terrestrial AI infrastructure buildout that every major technology company is currently racing to finance.

The financial profile of the company entering the public markets reflects the scale of investment required to pursue those ambitions. xAI, which merged with SpaceX in February 2026, more than doubled capital expenditure to $12.7 billion in 2025. SpaceX separately spent $3 billion developing its Starship rocket, which is essential to making orbital data center economics viable. In the first quarter of 2026, two of SpaceX's three main business units reported operating losses.

Starlink, the satellite internet service, is the company's most commercially mature business. It crossed 5 million subscribers globally and generated approximately $8 billion in revenue in 2025. SpaceX's filing projects Starlink revenue to double by 2027 as it expands into maritime, aviation and enterprise markets. More than 95 percent of total company revenue comes from the private sector, a disclosure SpaceX included explicitly to counter perceptions of government dependency from its NASA relationships.

Starship's development trajectory is the operational prerequisite for the orbital data center roadmap. The rocket completed its eighth integrated flight test in March 2026, achieving full booster catch for the first time. Musk has said Starship will reach operational status with full reusability before the end of 2026, the milestone required to bring launch costs down to the level where deploying thousands of AI satellites becomes economically viable.

The SpaceX IPO is the most consequential equity offering in the technology sector since Meta's 2012 listing. At $1.75 trillion, it would debut as the third most valuable publicly traded company in the United States, behind only Apple and Nvidia. For investors in Africa and globally, the listing's outcome will test one central proposition: whether a company with $450 billion in proven business value can credibly claim $1.3 trillion more in a market it has not yet entered commercially.

The first milestone that will determine whether that claim holds is Bastrop's AI1 production volume by the end of 2027. Everything else is projection.