SpaceX's AI Wing Casts Cloud Over Future Earnings, Leading Experts Say

SpaceX's $250 billion acquisition of xAI has become a central factor in assessing the combined company's prospects ahead of its IPO. Analysts say investors should treat the merger as a collection of parts, weighing Starship tests and the rocket business against the new AI unit. Morningstar warns the AI division could trigger substantial value destruction, with estimates approaching $80 billion, while flagging governance risk because Musk controls both entities. SpaceX reportedly targets an IPO valuation near $1.5 trillion, but Morningstar's cash-flow analysis pegs the standalone SpaceX at about $780 billion. The report underscores significant uncertainty around the AI division's earnings trajectory and the potential drag on overall value. It also notes that the merger was not conducted at arm's length, given Musk's control of both companies. Investors should closely watch how the SpaceX-xAI integration unfolds alongside ambitious Starship and Starlink initiatives.