Explosive launch for SpaceX as investors take risk on future of AI

Less well advertised was the fact that most of the $75 billion (£56bn) raised was not going toward colonising Mars or even sending people into space. At least, not directly. The funding has instead allowed Musk to strengthen his position in the AI battle, with SpaceX splashing out a reported $60bn (£44.7bn) just days after the IPO completion to snap up AI coding start-up Cursor.

Cursor uses AI to automate the process of writing code, one of the most prominent current uses for artificial intelligence and an area where it is in direct competition with Open AI and Anthropic - the two other ‘big beasts’ of AI expected to go public later this year.

Musk has got to market first, and industry analysts agree that this, along with the way he subverted the usual IPO process - ditching exorbitant legal fees for the normally standard valuation process and instead effectively setting his own price on the stock - has helped make it a huge early success.

Despite the headlines, however, it is not an investment many large funds have taken a gamble on due to the high price, low medium-term return and inherent risk - with a significant chunk of the money raised coming from private investors sold on Musk’s vision of a future where humanity takes its place among the stars.

That, of course, is a long way off. SpaceX reported a net accounting loss of over $4 billion in 2025, and industry experts have warned that its valuation includes the ability to turn a profit from ventures such as AI orbital data centres and asteroid mining which will have to overcome huge physical and logistical challenges.

Whether SpaceX represents a good investment “depends on what kind of investor you are,” Jeremy Mckeown, an investment consultant at Dowgate Wealth, said.

“Investment funds have taken less of the SpaceX offering than private individual investors, which shows that they are maybe more concerned about the risk involved, and the inflated price of the stock on launch, whereas for individuals this is seen as a chance to own a very small part of history.

“There could be a huge reward, but it would be a long way off - and there are huge risks as well.”

As well as the fears of an ‘AI bubble, there are many other factors that could knock the value of SpaceX, including the often erratic behaviour of its CEO.

Rockets, as both Musk and his fellow space entrepreneur Jeff Bezos know all too well, are a complex business and when they explode they really, literally explode.

If that’s on a launch pad, as with the recent catastrophic failure of Bezos’ Blue Origin, it can damage valuable infrastructure. If it happens in flight however, it could be far worse - the history of spaceflight is sadly inexorably linked to a tragic loss of human life when the technology fails.

“It could be a great investment - but there is an awful lot that could go wrong, and anyone that remembers the tech bubble will know that it can go wrong very fast,” says Jeremy.

Not everyone agrees the AI industry is a speculative ‘mega bubble’ close to bursting however. Some analysts point to the exponential revenue growth of companies like Open AI and Anthropic, both forecast to hit profits in the tens of billions this year.

There is little doubt that AI offers massive potential benefits - but for investors it should be equally clear they represent a huge risk.