Anyone else looking forward to this opportunity? Is distributed space computing the next big thing? If this works, will anyone else be able to compete? Starlink is pretty much completely dominating the SATCOM industry.
Is this also accurate? Q: Why is SpaceX suddenly going public and why the focus on AI data centers? A: Leveraging $400bn + of passive /S&P funds to pull ahead of Sam in the AGI scaling race. Sam Altman recently raised the staked in the AI scaling race by gambling his company on $1.5trn of AI compute. There is no way @elonmusk takes the risk Sam manages to pull this off and gifts the only AGI call option to Sam. Space AI data centers are Elon raising the stakes another 10x to price OpenAI (and even possibly Google) out of the AI race. SpaceX should be profitable and so should get S&P inclusion 1 year post IPO - this could be $400bn of forced purchases of SpaceX stock (forced buyers at any price) that he could leverage to raise funds for the AI buildout. At the same time; his Mars mission needs a larger funding source (even larger than Starlink) and needs to deliver higher utilisation of Starships (which sit idle outside of launch windows). Continuous launches of AI satellites will keep all of SpaceX's infrastructure fully utilised outside of Mars 2 year launch windows.
it already is profitable. In 2024, SpaceX generated revenues of ~~~ $13.1 billion and profits around $3.8 billion, https://www.fool.com/investing/2025...024/?msockid=048dc9c6e672640b15d5dd7ae7e065bf
Things finna heat up. Musk will be a trillionaire by the end if the year. X conglomerate will be a 100T company in a decade.
Perhaps getting regulatory approval prior to the SpaceX IPO would make approval for a merger easier than waiting several years. A Tesla merger could be messy. XAI would probably be easy.
XAI is a huge money sinkhole and will be that way for quite a while. Being acquired by a company with rapidly growing revenue streams is very convenient. This merger reminds me of when Solar City was eaten by Tesla. It was a bailout for Solar City investors and there was no benefit for Tesla. That said, it ended up also being non-harmful for Tesla investors. Elon's force of personality was enough to make it happen without too much opposition. Considering there were no barriers restricting the growing synergies between XAI and SpaceX, I question if the merger helps SpaceX investors, but we'll see. XAI investors should be ecstatic. Overall, the two are great fit IMO.
SpaceX just acquired xAI in a deal valuing the combined entity at $1.25 trillion. Elon says it's about building "data centers in space." But let me translate what's really happening here... xAI is burning through $1 billion per month. The company generated $107 million in revenue last quarter while hemorrhaging $1.46 billion in losses. It burned nearly $8 billion in cash through the first nine months of 2025. That's not a business. SpaceX meanwhile generated $8 billion in profit on $15-16 billion of revenue last year. It's the ONLY Musk company that actually prints money. So what do you do when your AI startup is drowning in red ink ahead of your mega-IPO? You fold the cash-burner into the entity that can still raise absurd amounts of capital. And we've literally seen this exact thing before: In 2016, Tesla acquired SolarCity for $2.6 billion. SolarCity was bleeding cash, drowning in debt, and trading near all-time lows. Tesla - the only Musk company at the time that could access the capital markets - absorbed it. Wall Street analysts called it a "bailout dressed as synergy." Tesla's stock dropped 10% on the announcement. The SpaceX/xAI deal is the same playbook. Musk's stated rationale - that AI compute will be cheaper in space within 2-3 years - is the kind of thing that sounds visionary until you think about it for 5 seconds... SpaceX builds rockets. xAI trains large language models. These are wildly different businesses with zero operational overlap. Imagine Microsoft acquiring a cement and steel conglomerate and claiming "tilt-up concrete slabs are essential for data centers." That's the level of logic we're working with here. The real play is simple: prop up xAI's insane burn rate with SpaceX's funding access ahead of what could be the largest IPO in history. And xAI isn't alone in this capital-devouring spiral. The entire AI sector has become a web of companies cross-subsidizing each other's losses. OpenAI squeezes billions from Microsoft. Nvidia invests billions in xAI while selling them chips. Everyone's propping everyone else up. The investment thesis across the industry has devolved into: "Please keep the Ponzi spinning long enough for someone else to be left holding the bag." Meanwhile, the end product - AI - delivers marginal productivity gains for trillions in capex, soaring power costs, and balance sheet carnage. If these services were priced to reflect their true economic cost, most users would find negative value. But investors stopped reading balance sheets and cash flows long ago. The AI models probably can't read them either. What a time to be invested. So what's the play? AVOID the AI infrastructure complex. When everyone's propping everyone else up, you don't want to be holding the bag when the music stops. Look instead at sectors that have suffered from years of underinvestment: energy and commodities. While trillions have been funneled into AI infrastructure, capital spending in oil, gas, and metals has been starved. That's how cycles work - underinvestment leads to supply constraints, which leads to rising returns on capital. Tech has the opposite problem. Overinvestment is destroying returns. When you're burning $1 billion a month to generate $107 million in revenue, that's not a business model - it's a wealth transfer from investors to chip manufacturers. Emerging markets are also attractive here. They've been ignored while capital chased the Mag 7, and valuations reflect that neglect. The Mag 7 now represent roughly a third of the S&P 500. When this unravels - and it will - capital will rotate into the parts of the market where returns on capital are rising, not collapsing. Energy. Commodities. Emerging markets. POSITION ACCORDINGLY
I have been seeing some rotation into some Energy stocks, but there could be limited upside in that sector with Crude under $70. If there is a decent sized correction in AI related Tech stocks, some investors will be Bagholders with their money stranded in stocks that have fallen out of favor.
