{"id":546458,"date":"2026-06-21T08:52:16","date_gmt":"2026-06-21T08:52:16","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/546458\/"},"modified":"2026-06-21T08:52:16","modified_gmt":"2026-06-21T08:52:16","slug":"spacex-valuation-hinges-on-uncertain-ai-economics-says-professor-aswath-damodaran","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/546458\/","title":{"rendered":"SpaceX valuation hinges on uncertain AI economics, says Professor Aswath Damodaran"},"content":{"rendered":"

After Elon Musk’s SpaceX<\/a> completed its market debut, veteran valuation expert Aswath Damodaran<\/a> has warned that the company\u2019s soaring valuation rests heavily on uncertain assumptions around artificial intelligence (AI), even as its core businesses remain relatively niche.<\/p>\n

\u201cIf you look at SpaceX, it started as a space launch business\u2026 but even after they got their feet on the ground, it\u2019s not a big business,\u201d Damodaran said, noting that despite its technological edge, the market for satellite launches remains limited.<\/p>\n

The real shift, he argued, came with the addition of Starlink and, more recently, AI ambitions following the integration of xAI. \u201cThat business is now at the core of the revenue\u2026 but if you stop right there, this would be a very good business, but it would be a niche business,\u201d he said.<\/p>\n

The comments came as SpaceX debuted on Nasdaq in the largest IPO ever. The stock opened at $150 under the ticker SPCX<\/a>, 11% higher than its IPO price of $135. <\/p>\n

The company\u2019s valuation has already crossed the $2 trillion mark, making it more valuable than Musk’s automotive company Tesla, which was worth about $1.2 trillion.<\/p>\n

The trillion-dollar narrative, according to Damodaran, is driven almost entirely by AI. \u201cThe market is huge\u2026 that\u2019s what\u2019s driving the trillion, 2 trillion, 2.5 trillion pricing. But the business is really not a business yet,\u201d he cautioned.<\/p>\n

Its Starlink satellite communications network offers internet service to individuals and organisations, with more than 9,500 satellites deployed since 2019 to service more than 9 million users globally. Starlink generates 50%-80% of SpaceX’s revenue, per a report by Reuters in April.<\/p>\n

Concerns surrounding AI<\/p>\n

Damodaran highlighted fundamental concerns around AI economics, pointing to high costs and weak margins. \u201cThe unit economics right now are not great\u2026 it\u2019s going to stay, in my view, a low gross margin business because of the nature of the business,\u201d he said. He added that high-end AI services remain prohibitively expensive, making scalability uncertain.<\/p>\n

SpaceX acquired xAI in a transaction that valued SpaceX at $1 trillion, and xAI at $250 billion, according to Reuters.<\/p>\n

xAI reportedly posted a net loss of $1.46 billion for the September quarter, compared with a loss of $1 billion in the previous three months. Revenue nearly doubled sequentially to $107 million in the period ended September 30, 2025.<\/p>\n

Mounting pressures for SpaceX<\/p>\n

He also flagged a strategic contradiction in SpaceX\u2019s approach. \u201cWe\u2019re going to compete\u2026 win a significant market share of the AI market. But in the same breath, you\u2019re also saying we\u2019re renting out space in our data centres to our biggest competitors,\u201d he said, calling it a tension that \u201cwill have to gel\u201d.<\/p>\n

More broadly, Damodaran cautioned investors against equating growth with value. \u201cWe make this mistake of assuming growth is always good\u2026 growth with huge reinvestment and substandard margins\u2026 might not just be neutral to value but actually be value destructive.\u201d<\/p>\n

Ultimately, he stressed that even the most compelling narratives must align with financial reality. \u201cThe best investment stories still have to connect to the numbers,\u201d he said.<\/p>\n

SpaceX\u2019s listing also made Elon Musk the world\u2019s first trillionaire, with the Bloomberg<\/a> Billionaires Index estimating his net worth at roughly $1.05 trillion. <\/p>\n","protected":false},"excerpt":{"rendered":"After Elon Musk’s SpaceX completed its market debut, veteran valuation expert Aswath Damodaran has warned that the company\u2019s…\n","protected":false},"author":2,"featured_media":546459,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[270],"tags":[234300,105349,4932,18,234303,19,17,133,451,2731,157624,234301,214587,234304,234302],"class_list":["post-546458","post","type-post","status-publish","format-standard","has-post-thumbnail","category-space","tag-artificial-intelligence-economics","tag-aswath-damodaran","tag-bloomberg","tag-eire","tag-elon-musk-trillionaire","tag-ie","tag-ireland","tag-science","tag-space","tag-spacex","tag-spacex-ipo","tag-spacex-nasdaq-debut","tag-spacex-valuation","tag-starlink-revenue","tag-xai-acquisition"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/116787252183616404","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/546458","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=546458"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/546458\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/546459"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=546458"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=546458"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=546458"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}