NEW YORK CITY, New York: Investors preparing to buy into SpaceX's nearly US$2 trillion initial public offering are betting not only on Elon Musk's dominance in rockets and satellites, but also on his ambitious plan to turn the company into a major artificial intelligence player.

The company, based in Starbase, Texas, has built the world's largest rocket business through reusable launch systems and its rapidly expanding Starlink satellite internet network. But SpaceX's valuation is increasingly tied to what investors believe it could become rather than to what it currently earns.

At the center of that strategy is Starship, SpaceX's next-generation rocket system, which Musk hopes will dramatically reduce launch costs, expand the commercial space market, and eventually support large-scale AI infrastructure and even Mars colonization efforts.

"The risk isn't whether SpaceX is a real business; it clearly is," said Josh Gilbert, an analyst at trading platform eToro, where the stock will be available on its debut day.

"The risk is whether a $1.75 trillion valuation adequately prices in the execution challenges that come with being part rocket company, part internet provider, part AI venture, and very much driven by the vision of one individual," Gilbert added.

SpaceX disclosed steep losses in its IPO filing this week, reporting a net loss of $4.28 billion in the three months ended March 31, eight times higher than a year earlier. The figures underscore how heavily the company is spending to develop Starship, expand Starlink, and build AI-related infrastructure.

Analysts say traditional valuation methods are difficult to apply to a company with such large losses and long-term ambitions.

"You are not going to justify a $1.75 trillion or $2 trillion valuation for SpaceX using traditional fundamental metrics alone," said Greg Martin, co-founder of Rainmaker Securities.

"Many investors ... believe SpaceX could become a $5 trillion to $10 trillion company over time," Martin added.

Despite repeated delays across several Musk ventures, many investors remain optimistic. Tesla's Cybertruck, unveiled in 2019, only began deliveries in 2023, while products such as the Roadster 2 and Optimus robots remain under development.

Still, Reuters reported that many investors and fund managers believe SpaceX's satellite and launch businesses alone justify much of the company's enormous valuation.

Starlink remains central to the business model. The satellite internet unit generated $3.26 billion in revenue during the March quarter, up nearly one-third from a year earlier, although profitability was pressured by international expansion and rising operating costs.

SpaceX said in its filing that "Our ability to execute our growth strategy is highly dependent on Starship," warning that delays or higher-than-expected costs could slow deployment of next-generation satellites and AI infrastructure.

The filing also showed that losses at the company's AI business widened to $2.47 billion, while capital expenditures tripled to $7.72 billion.

SpaceX acknowledged the risks itself in the filing, saying "The complexity and interdependence of our engineering, manufacturing, assembly and terrestrial, space transportation, and infrastructure systems mean that a disruption in one component can have cascading effects throughout our operations."