Elon Musk has touted SpaceX as humanity’s ticket to Mars. But the company’s pitch to investors for a potentially historic IPO makes it clear that the company’s main business is the same as Big Tech: building artificial intelligence.
The difference lies in how companies cover their expenses. Alphabet and Microsoft have strong operating cash flows, but SpaceX is funded by revenue from rockets and satellites, and its cash burn profile is more like that of a late-stage startup than a trillion-dollar incumbent.
Starlink, SpaceX’s satellite broadband business, doubled its operating profit to $4.42 billion last year, easily covering losses incurred by its space division, which is spending heavily on new satellite-carrying rockets, excerpts of the company’s IPO registration reviewed by Reuters showed.
This has emboldened Musk to reinvent SpaceX as an AI-first company and dramatically shift its spending profile.
In 2025, xAI’s home AI division accounted for 61% of the consolidated company’s total capital expenditures of $20.74 billion. At the same time, the segment’s operating loss amounted to $6.4 billion due to higher costs. But with plans to build a swarm of space-based data centers, SpaceX’s spending is unlikely to slow down anytime soon.
“Investors are looking for clear visibility into how this funding will evolve their business model and whether they can make the economics of computing work at scale,” said Melissa Otto, head of research at S&P Global Visible Alpha.
“In many ways, SpaceX looks like a supersized startup.”
Big Tech has huge revenues and profits
SpaceX’s spending is huge by most measures, but dwarfed by its Silicon Valley rivals. Google’s parent company Alphabet, Microsoft, and Instagram owner Meta, along with Amazon and Oracle, will collectively spend more than $600 billion on AI this year.
Big tech is also generating far more revenue from its existing businesses, which span digital advertising, cloud computing, and enterprise software, giving these companies both a long runway to continue spending on technology and a cushion in case AI demand falls short of expectations.
The distinction is important as SpaceX prepares for what could be the largest initial public offering in history, with a touted $28.5 trillion addressable market, much of which will be related to enterprise AI.
The company aims to raise $75 billion in an IPO at a valuation of $1.75 trillion, but could have to return to the market within a few years if capital spending growth continues to outpace revenue. Capital spending more than doubled last year and exceeded sales by about $2 billion.
The gap could widen further, with analysts estimating the cost of realizing the company’s plans to launch a constellation of 1 million data center satellites to run into the trillions of dollars.
“The (financial) overhang is significant, but manageable if AI revenue growth arrives on the timeline suggested by management,” said Shay Boror, chief market strategist at Futurum Equities.
“The risk increases further as[Starlink’s]subscriber growth matures or AI spending continues to grow faster than monetization.”
What happens if SPACEX buys a cursor?
The newly revealed deal with AI code generation startup Cursor adds to the uncertainty. SpaceX has the option of buying the company for about $60 billion or exiting and paying about $10 billion for the partnership.
This structure allows SpaceX to delay decisions until after the IPO, but the financial implications are significant. If SpaceX opts for a smaller co-op, it would likely lose access to Cursor’s lucrative customer roster, but the financial impact would be months, not years, of its cash runway.
In that scenario, Cursor could help SpaceX improve the productivity of its AI operations without dramatically changing its balance sheet risk, supporting the hypothesis that spending on AI could become more efficient over time.
Neither company has disclosed how they will raise funds for the acquisition. An all-stock deal would leave SpaceX’s cash position intact, but even a small portion of the acquisition price paid in cash could accelerate the need to raise new capital or require significant reductions in spending.
SpaceX did not respond to an email seeking comment outside of normal business hours.
Boroa said the company’s financial position is more like a rocket and satellite company than the AI infrastructure giant it aims to be.
“That doesn’t break the story, but it does mean IPO buyers will be paying upfront for change, which still needs to be more clearly demonstrated in the numbers.”
