The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Robert Cyran

NEW YORK, May 21 (Reuters Breakingviews) - Elon Musk’s SpaceX is ostensibly all about the great beyond. As it prepares to launch into public markets at a $1.75 trillion valuation, talk constantly swirls around literal moonshots like orbital manufacturing, lunar bases and asteroid mining. The company’s boss even stands to earn up to 1 billion shares if he establishes a Martian city with 1 million inhabitants. Yet the world-leading rocket company’s prospectus, released Wednesday, orbits around a black hole of AI hand-waving.

Just look at how SpaceX defines its total addressable market, which it humbly pegs as the largest in human history at $28.5 trillion. That’s absurdly overblown both in absolute size, at over a fifth of the global economy, and for a firm with under $19 billion of revenue last year. But take the numbers on faith and $26.5 trillion of this opportunity, or over 90%, is related to artificial intelligence.

Much of this comes from xAI, the combination of social network X and the chatbot lab that created the foul-mouthed bot Grok. SpaceX acquired it at a $250 billion valuation earlier this year. xAI brings with it a voracious appetite for capital expenditure, spending $7.7 billion in the first three months of the year, more than tripling from the same period in 2025. That’s over three-quarters of all investment by SpaceX. The unit’s operating loss of $2.5 billion in the first quarter was enough to send the entire company into the red.

AI moves quickly, so this snapshot misses important details. Primarily, what’s left out is SpaceX’s deal with leading model-maker Anthropic, which is paying roughly $1.3 billion per month for unused computing capacity at Musk’s Colossus data center. Given xAI’s trailing revenue of just over $3 billion in the last 12 months, the supposedly bleeding-edge lab’s primary business is now renting out spare servers. There are also new costs coming: the company agreed in April to spend $2 billion on mobile gas turbines and acquired the right to buy AI coding firm Cursor for $60 billion of stock.

The main problem is that SpaceX’s core AI efforts aren’t gaining traction. Grok lags on benchmarks compared to rivals, and it’s seeing minimal adoption even in Washington, where Musk bends the ear of the president. First-quarter revenue grew less than 13% year-over-year. Sure, declining ad revenue at X hurt, but assume it remained the same and growth would only rise to 26%. Meanwhile, Anthropic expects to expand five times as fast in one quarter.

SpaceX is, in a very literal sense, a rocket-ship. Financially, though, it’s struggling to reach escape velocity.

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CONTEXT NEWS

SpaceX filed its IPO prospectus on May 21. The rocket, satellite and AI company run by Elon Musk is readying an initial public offering that is seeking to raise $75 billion and value the firm at $1.75 trillion, Reuters reported.

The AI segment generated $818 million of revenue in the first quarter of 2026, compared to $727 million in the same period a year ago. The unit had a first-quarter operating loss of $2.5 billion.