Aswath Damodaran, known as the "Dean of Valuation" and a professor at NYU's Stern School of Business, has publicly questioned SpaceX's valuation, particularly its artificial intelligence (AI) segment. SpaceX's initial public offering (IPO) paperwork estimated a total addressable market (TAM) of $26 trillion for its AI business, a figure that Damodaran described as "reaching the end of what's plausible and pushing beyond." He noted this AI TAM constitutes a significant portion of SpaceX's claimed $28.5 trillion total company TAM, yet he believes a more realistic TAM for AI products and services is between $3 trillion and $4 trillion ainvest.com.
Damodaran's valuation model for SpaceX, based on its space launch, connectivity (Starlink), and AI segments, estimates the company's equity value at approximately $1.3 trillion, which is significantly lower than SpaceX's target valuation of around $1.77 trillion ainvest.com. He views the AI unit, which includes the Grok chatbot from xAI, as facing intense competition and high investment costs, leading to weaker margins compared to Starlink, which largely drove SpaceX's profitability in 2025 wallstreet-online.de.
Keith Snyder, a senior equity analyst at CFRA, also questioned SpaceX's AI projections, indicating that 71% of SpaceX's estimated $2 trillion market cap relies on "almost comical growth for AI." He pointed out that SpaceX's S-1 filing claimed 93% of its total addressable market, or $26.5 trillion, would be in AI, across infrastructure, consumer subscriptions, digital advertising, and enterprise applications. Snyder highlighted that Grok, xAI's chatbot, has only a 1.6% premium subscriber rate out of 117 million users, compared to ChatGPT's 5% in 2025, and only 3% enterprise adoption versus 40% for Anthropic and OpenAI dailynews.us.
Damodaran has historically criticized inflated TAM estimates in other high-profile IPOs like Uber and Airbnb. While acknowledging AI's potential long-term role for SpaceX, he cautions that the company's valuation is heavily influenced by market sentiment rather than just financial fundamentals. He noted that AI segment profitability is likely to be constrained by rising costs and competition from other large language model providers ainvest.com. He explicitly stated he would not buy SpaceX shares at the projected IPO price, finding it too high, but did not rule out future investment once new opportunities emerge, referencing cases like Meta Platforms and Uber after their IPOs wallstreet-online.de.
Damodaran's comments reflect a broader skepticism about AI valuations, which he has previously discussed as heading for a "reckoning" philstockworld.com. This sentiment is echoed by observations of companies like OpenAI, which saw its valuation jump from $157 billion in October 2024 to $852 billion by March 2026, and Nvidia, which went from a $1 trillion company to $5 trillion in roughly the same period, driven by collective conviction rather than just earnings pickurai.ai.
