Experts say SpaceX valuation depends on an impractical orbital AI data center plan

Alphabet stands to gain approximately $100 billion from its early 2015 investment in SpaceX, with the company's stake now representing one of the most valuable private technology holdings in history. According to regulatory filings, Alphabet held a 6.11 percent stake in SpaceX at the end of 2025, a position that would be worth over $120 billion if SpaceX achieves the $2 trillion valuation anticipated at its upcoming initial public offering. The stake is expected to dilute to around 5 percent following SpaceX's merger with xAI earlier this year, though it would still be valued above $100 billion. Google originally invested roughly $1 billion in SpaceX when the company was valued at $10 billion, making this potential return a monumental windfall for the Silicon Valley giant. SpaceX is preparing for what would be the largest IPO in history, with plans to raise up to $75 billion and achieve a valuation between 1.6 and 1.8 trillion euros. Elon Musk, who controls approximately 40 percent of SpaceX, would become the first person in history with a fortune exceeding $1 trillion. The company has already filed confidentially for the public offering, targeting June for the transaction, and is planning an extensive road show to attract both institutional and retail investors. SpaceX, which owns the Starlink satellite communications business, has conducted over 30 funding rounds since its founding, raising nearly $12 billion from investors including Sequoia Capital, Andreessen Horowitz, and Fidelity. However, the astronomical valuation is fueling debate among industry experts. Musk is promoting a ambitious vision of launching a million AI servers into orbit to create a 100-gigawatt space data center, along with plans for a lunar factory to manufacture these satellites. According to aerospace engineers and physicists interviewed for analysis pieces, the plan faces fundamental thermodynamic and logistical challenges, including the impossibility of conventional cooling in the vacuum of space, the need for enormous radiator surfaces, and the risk of catastrophic satellite collisions known as Kessler syndrome. Additionally, SpaceX faces mounting competitive pressure, with Chinese aerospace companies already launching rockets at significantly lower costs and rivals like AST SpaceMobile developing superior satellite phone technology that could threaten Starlink's dominance in mobile communications.