Morningstar has issued a sharply lower valuation estimate for SpaceX ahead of the company’s highly anticipated initial public offering, arguing that the aerospace and technology giant may be worth less than half of its reported IPO target.
The research firm estimated SpaceX’s value at approximately $780 billion, compared with the $1.75 trillion valuation the company is reportedly seeking when it debuts on the Nasdaq. The IPO is expected to be one of the largest public offerings in history, with a roadshow scheduled to begin this week and trading expected to start on June 12.
According to Morningstar analyst Nicolas Owens, a significant portion of the uncertainty stems from SpaceX’s artificial intelligence business, which includes xAI and the social platform X. The firm said it remains unconvinced that xAI currently ranks among the industry’s leading AI developers and questioned the long-term economics of the company’s AI strategy.
Morningstar also highlighted concerns about several emerging technologies central to SpaceX’s future growth narrative. These include orbital data centers, which remain largely unproven, and aspects of the Starlink satellite internet business that depend on technological and regulatory factors beyond the company’s direct control.
Despite its skepticism regarding valuation, Morningstar acknowledged that SpaceX shares could perform strongly in the short term due to limited share availability and support from major investment banks underwriting the offering. Goldman Sachs, Morgan Stanley, BofA Securities, Citigroup, and JPMorgan are among the firms participating in the IPO.
The assessment stands out because investor enthusiasm surrounding SpaceX remains exceptionally strong. The company was recently valued at approximately $1.53 trillion on the secondary market platform Forge Global, closer to the IPO target than Morningstar’s estimate.
The Debate Over AI Valuations
The disagreement highlights growing questions about how investors should value companies seeking to capitalize on the AI boom. In recent years, technology firms with exposure to artificial intelligence have attracted increasingly aggressive valuations as investors bet on future growth rather than current earnings.
Morningstar’s concerns center on whether xAI can compete effectively against more established AI leaders such as OpenAI and Anthropic. While Grok has gained visibility through its integration with X, the firm’s analysts argue that the economics of the business remain uncertain and that several key technologies underpinning SpaceX’s AI ambitions have yet to be proven at scale.
The debate reflects a broader challenge facing investors as AI companies move from experimentation toward commercialization and long-term profitability.
A Defining Test for the IPO Market
SpaceX’s public debut is being closely watched as a potential turning point for technology IPOs. The offering is expected to serve as a benchmark for investor appetite toward large-scale AI, infrastructure, and space-related businesses.
The company sits at the intersection of several high-growth sectors, including satellite communications, launch services, artificial intelligence, and data infrastructure. Earlier this year, SpaceX combined with xAI in a transaction that valued the merged business at approximately $1.25 trillion, further strengthening its position within the AI ecosystem.
A successful IPO could create momentum for other major technology listings. OpenAI is reportedly preparing a confidential filing for what could become, again, one of the largest IPOs in history, while Anthropic is also laying groundwork for a future public offering. Whether SpaceX achieves its target valuation or faces a more cautious market response may influence how investors approach the next wave of AI-driven public companies.
