SpaceX Valuation Drops as Investors Question AI Infrastructure Spending

Space Exploration Technologies Corp. has experienced a significant valuation reset, with its share price falling to approximately $123, dropping below its $135 IPO price. The stock previously reached an all-time high of $225.64, and the company's total market capitalization has pulled back to about $1.6 trillion from a peak exceeding $2 trillion. This decline reflects investor skepticism regarding the returns on massive AI and infrastructure spending.

To drive a long-term valuation target of $5 trillion, the company is pursuing the Starmind initiative, which aims to deploy a constellation of up to 1 million satellites to process artificial intelligence workloads in space. Simultaneously, its AI division, SpaceXAI, is generating substantial terrestrial revenue. Anthropic pays $1.25 billion per month for services at a data center near Memphis, Tennessee, and Google Cloud pays $920 million per month for compute capacity.

Despite these revenues and $22 billion in government contracts from NASA and the U.S. Department of Defense, SpaceX faces execution risks and competition from Blue Origin, Rocket Lab, and Amazon's Project Kuiper. Further volatility is expected as lock-up expirations by December could increase the public float from 5% to 40% of outstanding shares, though Elon Musk's shares remain locked until mid-next year.