SpaceX posted nearly $5 billion in losses for 2025, according to The Information. The culprit? Not rockets. Not Starlink. It’s the massive AI spending that came with absorbing Elon Musk’s xAI.
The report reveals SpaceX generated over $18.5 billion in revenue last year. But the combined financial picture, which now includes the money-burning AI subsidiary, turned what was a profitable space company into one posting billions in red ink.
The xAI Money Pit
Here’s what makes this striking: SpaceX’s core business is actually doing well. Rockets and Starlink brought in roughly $8 billion in profit on $15-16 billion in revenue during 2025. The problem sits entirely on the AI side.
xAI’s numbers paint a stark picture:
- $7.8 billion spent in just the first nine months of 2025
- ~$28 million burned per day on average, mostly on data center buildout
- $250 million in revenue over six months against $2.5 billion in losses
- Quarterly losses kept widening throughout the year
That’s a company spending $10 for every $1 it earns. The losses from xAI completely wiped out SpaceX’s healthy profits and then some.
Why This Matters
This is the clearest picture yet of what the AI arms race actually costs. While OpenAI, Google, and Anthropic have all disclosed massive spending, xAI’s burn rate stands out because it’s now dragging down one of the most successful private companies in history.
The timing matters too. SpaceX filed confidentially for what could be the largest IPO ever in early April 2026, targeting a valuation above $2 trillion. Investors evaluating that offering now have a concrete number for the AI liability sitting on SpaceX’s books.
The February 2026 merger between SpaceX and xAI, valued at $1.25 trillion combined, was the largest corporate merger of all time. Musk’s pitch centers on “orbital data centers,” arguing that within two to three years, launching compute infrastructure into space will be the cheapest way to run AI workloads. SpaceX has asked the FCC for authorization to launch up to 1 million satellites to support this vision.
The Bigger Picture
The $5 billion loss reveals a fundamental tension in the AI industry right now. Companies are spending at unprecedented levels on infrastructure, but revenue from AI products hasn’t caught up. xAI’s Grok chatbot and API business brought in a fraction of what the company spent building it.
For the upcoming IPO, this creates an interesting dynamic. SpaceX needs to convince investors that:
- The core space business remains a cash machine
- xAI’s spending will eventually translate into competitive AI products
- The orbital data center concept isn’t just a pitch deck fantasy
Whether Wall Street buys that story at a $2 trillion valuation, with $5 billion in losses on the books, will be one of the biggest tests of AI optimism we’ve seen yet.
The full report is available at The Information.