Elon Musk's SpaceX is targeting a $1.5 trillion valuation in its upcoming IPO, a dramatic jump from $400 billion last summer. The rocket company's bankers value it at this astronomical figure partly due to its planned merger with xAI, Musk's artificial intelligence venture. The deal, which values SpaceX at $1 trillion and xAI at $250 billion, aims to create orbital AI data centers.

SpaceX's revenue is expected to hit $24 billion this year, driven by its Starlink satellite network and dominance in space launches. The company plans to launch one million satellites and establish a lunar city within a decade. However, critics question whether these valuations are sustainable, noting that xAI lost nearly $8 billion last year despite its massive valuation.

Market analysts are divided on whether SpaceX's sky-high valuation is justified. Some investors see orbital data centers as the next frontier for AI development, while others view the merger as an attempt to capitalize on current AI market enthusiasm. The VanEck Space ETF has doubled in value over the past year, reflecting growing investor interest in space-based technologies.