SpaceX in 5 Years: Boom, Bust, or Quietly Crushing It?

The SpaceX IPO is quickly approaching. While there are ways to invest in SpaceX today, most investors are simply better off waiting for shares to be publicly available.

According to reports, SpaceX is targeting a $1.77 trillion valuation, raising as much as $75 billion in new capital. That capital will be quickly deployed as SpaceX believes it has a total addressable market of $28.5 trillion.

Not every expert is excited about the IPO. A recent Morningstar report concludes that the entire company is currently worth just $780 billion -- less than half of SpaceX's top-end valuation range. "[L]ong-term investors eager ​to participate ⁠in SpaceX's future endeavors and potential success will have opportunities to do so with a greater margin of safety than the initial offering is likely to ⁠provide," one of Morningstar's analysts warns.

In short, Morningstar is excited about SpaceX as a business, but not as an investment if the company has an initial valuation between $1 trillion and $2 trillion, as is likely the case.

Image source: Getty Images.

Most IPO stocks show heavy volatility when shares first hit the market. I expect the same for SpaceX. But what about far beyond the upcoming IPO? What will the company look like five years from now? Based on the company's recently published IPO prospectus, we have a pretty good idea of what to expect.

SpaceX will aggressively pursue this major growth opportunity

Want to know what SpaceX will look like five years from now? Look no further than how the company describes its growth opportunities moving forward. According to the company's latest IPO disclosure:

"We estimate that our quantifiable [total addressable market] is $28.5 trillion, consisting of $370 billion in Space from space-enabled solutions; $1.6 trillion in Connectivity across $870 billion in Starlink Broadband and $740 billion in Starlink Mobile as well as additional opportunities in enterprise and government; $26.5 trillion in AI across $2.4 trillion in AI infrastructure, $760 billion in consumer subscriptions, $600 billion in digital advertising, and $22.7 trillion in enterprise applications."

I am particularly excited about SpaceX's Starlink and rocket business. But the figures discussed in the company's S-1 report leave no room for confusion: Artificial intelligence will be SpaceX's biggest growth opportunity. Of the company's projected $28.5 trillion total addressable market, $26.5 trillion is AI opportunities alone.

Expect SpaceX to heavily invest in its Grok AI engine, scale terrestrial data center capacity, and attempt to put data centers into space -- so-called orbital data centers.

To be clear, the company's AI focus has major risks. That division is still unprofitable, and competition is quickly mounting among other deep-pocketed big tech firms. "We ​don't see Grok as one of the leading AI labs today," concludes Morningstar's analysts -- a major reason why the company isn't keen on buying shares during the IPO.

So while SpaceX's success five years from now is debatable, the trajectory is clear: SpaceX wants to be the biggest AI company on the planet by 2031.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.