Investors ambivalent about SpaceX’s AI pivot under Elon Musk

SpaceX swallowed Elon Musk’s AI company xAI in a deal valued at $1.25 trillion, and not everyone on Wall Street is popping champagne about it. The merger, completed around the start of February 2026, combined SpaceX’s $1 trillion valuation with xAI’s $250 billion price tag. What followed was a rapid-fire transformation: rebranding services under the SpaceXAI banner, rolling out Grok AI models, and sketching plans for orbital AI data centers powered by the Starlink satellite network. Then came a record-setting IPO in June, with the combined entity fetching a valuation somewhere between $1.5 trillion and $1.77 trillion. The financials tell two very different stories In 2025, xAI posted operating losses of roughly $6.355 billion against revenues of just $3.201 billion. The company spent more than $12.7 billion on infrastructure alone that year. In Q1 2026, SpaceX reported total revenue of approximately $4.69 billion but swung to an operating loss of $1.94 billion, with AI expenditures dragging the whole operation into the red. Leading analysts have used phrases like “material threat of value destruction” to describe what could happen if the AI bet doesn’t pay off. The orbital compute ...