Elon Musk’s rocket company SpaceX (SPACE) is bolstering its efforts to go public amid a rush by companies to build AI data centers and put them in space, the Wall Street Journal reported.
The idea to put data centers for AI computing into space has prompted skepticism from many engineers, because of the technical challenges posed by building solar-powered AI data centers that circle Earth.
However, the idea has continued to gain traction, and Musk has become obsessed with the idea of SpaceX being the first to do it, the report added, citing people with knowledge of the matter. Such a feat would be difficult to attempt without the billions of dollars in capital an IPO could deliver.
Musk also sees a SpaceX IPO as a way to help his AI startup xAI (X.AI) catch up to competitors, some of the people said, according to the report.
xAI said “Legacy Media Lies” in an email to Seeking Alpha.
SpaceX did not immediately respond to a request for comment from Seeking Alpha.
Last year in July, it was reported that SpaceX was investing $2B in xAI. The investment marked the company’s first known financial commitment to the AI venture and one of its largest external investments. Earlier this month, xAI announced that it raised $20B in a Series E funding round, up from a previous expected $15B.
The Tesla (TSLA) CEO has a long-running rivalry with OpenAI (OPENAI) CEO Sam Altman, who last year explored buying a rocket company to deploy satellites with AI computing capabilities into space.
Two of xAI’s rivals, OpenAI and Anthropic (ANTHRO), are eyeing their own IPOs this year, and Musk seems eager for SpaceX to go to IPO first, some people said, the report noted.
SpaceX is anticipated to select banks to lead the stock offering soon. Musk has told people he intends to complete the IPO by July, the report added.
Previously, SpaceX executives liked to say the company would not go for an IPO until its rockets were regularly flying to Mars, the report noted. However, this has changed now.
Musk’s change of tune on SpaceX’s IPO plans in the middle of last year surprised many. Musk had complained about running his existing public company, Tesla (TSLA), and repeatedly tangled with regulators and the courts over issues like his compensation, the report noted.
SpaceX had for years been developing technology like computing nodes that would be helpful for an AI satellite network, according to former employees. By this fall, it had a breakthrough in its efforts to figure out how to build and launch data centers into space after devoting more resources toward solving technical difficulties, the report added, citing people with knowledge of the matter.
However, others were pushing forward, too. Altman thought about collaborating with or acquiring Stoke Space, a startup rocket maker, over the summer.
In October, during an event in Italy, Jeff Bezos said that shifting data centers to orbit made sense, the report noted. Later that month, Musk took to his social media company X, and suggested that solar-powered AI satellites were the future. He posted about the topic several more times in November 2025.
What had been a medium- or long-term objective for SpaceX —developing orbital data centers — became a matter of utmost urgency for Musk mid-last year, the report added.
Developing and launching thousands of satellites would be technically demanding and costly. SpaceX officials decided the easiest way to raise the tens of billions of dollars it required was to try to access the newly thawed U.S. market for IPOs, the report noted.
Musk’s AI startup xAI was trailing competitors including OpenAI and Alphabet’s (GOOG) (GOOGL) Google’s Gemini by key metrics like revenue and user base. A SpaceX IPO was seen by some of its investors as a potential cash cow, which could supercharge xAI’s growth and, in turn, help SpaceX, the report added.
If SpaceX succeeds in putting data centers in space, its investors expect xAI to become a customer, according to the report.
Some investors think SpaceX could buy a percentage of xAI, or Musk, who owns over 40% of SpaceX, could tap that stake to invest in his other companies, including xAI. In addition, a publicly traded stock creates a type of capital safety net and would be reassuring to investors, the report added.
In December 2025, SpaceX CFO Bret Johnsen privately started telling some investors that the company was thinking of an IPO in 2026. Later that month, banks started their pitches to the company to lead the stock offering, the report noted.
Johnsen sent SpaceX staff a memo on Dec. 12, noting that a key reason the company was investigating an IPO was to “deploy AI data centers in space,” the report added.
Getting satellites for AI launched will be a tough task. SpaceX will need to get its Starship vehicle working, as its orbital data center satellites are based on a design optimized for the rocket, the WSJ reported.
SpaceX has been testing the rocket in flights for almost three years, but it has not deployed any operational payloads yet. The company is expected to launch an upgraded Starship on a test flight soon, the report noted.