On May 20, SpaceX filed an S-1 registration statement with the U.S. Securities and Exchange Commission (SEC), under the ticker symbol SPCX, preparing to list on Nasdaq. This is the largest IPO in history, with a targeted valuation of approximately $1.75 trillion. The prospectus revealed the company’s financials to the public for the first time, and the results differ significantly from many people’s expectations.
Most people view SpaceX as a money-printing machine: Starlink has expanded satellite internet globally, and its launch services nearly dominate the orbital market. Yet according to SpaceX’s prospectus, the company reported consolidated revenue of $18.674 billion in 2025, with a net loss of $4.94 billion for the year. A company widely regarded as the most profitable in aerospace is, on paper, losing money.
Where did the losses come from? It goes back to February this year, when Musk completed an all-stock transaction to merge his AI company, xAI, into SpaceX. Since then, xAI has been included in SpaceX’s consolidated financial statements as its “AI division.” This S-1 is the first complete financial disclosure since the merger and marks the first time xAI’s financials have been publicly disclosed in an audited format.
First, let’s look at where the money is coming from. According to the prospectus, SpaceX’s 2025 revenue is divided into three segments. The Connectivity segment, which is Starlink, generated $11.4 billion in revenue, a year-over-year increase of about 50%, accounting for 60% of the company’s total revenue. The launch business generated approximately $4 billion in revenue. The AI segment generated $3.2 billion in revenue.
The key isn't revenue—it's profitability. Of the three divisions, only Starlink is profitable. The launch business reinvests the bulk of its annual revenue into developing the next-generation rocket, Starship, with just this one initiative costing nearly $3 billion. The AI division is a different story: behind its $3.2 billion in revenue lies a $6.4 billion operating loss. In other words, for every dollar of revenue the AI division generates, it loses two dollars.
The company has three business segments, but only Starlink generates profit. The launch business is spending for the future, the AI segment is losing money now, and the entire company’s profitability rests on Starlink alone.
How quickly the AI division is losing money can be clarified with a comparison.
According to the prospectus, the AI division incurred an operating loss of $2.469 billion in the first quarter of 2026, while SpaceX’s total operating loss for the entire year of 2025 was $2.589 billion. The amount lost by a single division in three months is nearly equal to the entire company’s total loss for the previous year.
This comparison holds because xAI was consolidated only in February this year. In the 2025 financial statements, the AI segment reflects only a portion of the year; the first full quarter for xAI to be included in SpaceX’s financials is Q1 2026. The cost of full consolidation was an increase in the company’s quarterly net loss from $528 million in Q1 2025 to $4.28 billion in Q1 2026—an expansion of more than seven times in just one year.
Elon Musk's decision to push for an IPO at this juncture speaks volumes. The AI division's losses are still widening, making future financial reports increasingly difficult to present. Taking the company public before losses grow further essentially invites public markets to share the burden sooner.
What fills the loss黑洞 of the AI division? S-1’s answer is: Anthropic.
The prospectus disclosed a compute services contract. Anthropic, the developer of Claude, pays $1.25 billion per month to SpaceX’s AI division to lease all the compute power from the Colossus 1 data center in Memphis. The data center houses over 220,000 NVIDIA GPUs. The contract extends until May 2029, and based on monthly fees, the annual amount is approximately $15 billion. According to Bloomberg, the total value over the contract period is approximately $45 billion.
Put 15 billion and 6 billion together. Anthropic’s annual compute costs are more than twice the AI division’s operating loss in 2025. This contract is the primary source of relief for this current loss black hole.
The real interest in this contract lies in the identities of the two parties. Anthropic’s Claude and xAI’s Grok are direct competitors in the AI large model market. Yet these competitors have become the largest compute customers for the AI division. In its S-1, SpaceX refers to this arrangement as “monetizing idle compute capacity” and indicates it will sign more similar contracts. But there’s a key detail in this tourniquet: the contract allows either party to terminate with 90 days’ notice. The funds keeping the AI division alive are in the hands of its competitors.
The reason the market is still willing to assign a $1.75 trillion valuation to a loss-making company lies in Starlink's growth trajectory.
According to the S-1, Starlink subscribers increased from 2.3 million in 2023 to 4.4 million in 2024, 8.9 million in 2025, and reached 10.3 million by the end of March 2026. In just three years, user numbers more than quadrupled. This is SpaceX’s only profitable segment and its only line still experiencing rapid growth. The market is betting on this curve, not the current income statement.
Growth hides a shift. During the same period, Starlink’s average revenue per user (ARPU) dropped from $99 in 2023 to $66 in March 2026. While the number of users is rising, the revenue contributed by each user is falling. Starlink is trading lower prices for more users. Whether this curve can sustain its valuation depends on whether the pace of scale expansion can consistently outpace the decline in per-user pricing.
SpaceX’s prospectus presents the public markets with a choice: buying it means simultaneously investing in a rapidly expanding Starlink and an AI division that can lose as much in a single quarter as it did all of last year. Both are now bundled under the same ticker symbol.
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