Top analyst: 71% of SpaceX’s $2 trillion value rests on AI. Grok’s numbers are ‘almost comical’ by comparison

SpaceX entered the public market with a $1.77 trillion IPO, though analysts question if the valuation aligns with current performance. Keith Snyder, a senior equities analyst at the Center for Financial Research and Analysis, states that xAI accounts for 71% of the company’s current $2 trillion market cap, a figure he claims relies on “almost comical growth for AI.”

Why is the SpaceX valuation being questioned?

The skepticism centers on the company’s S1 filing with the Securities and Exchange Commission. SpaceX claimed it identified the “largest TAM in human history,” estimating a total addressable market of $28.5 trillion.

Of that total, $26.5 trillion is allocated to AI. This includes $22.7 trillion for enterprise applications, $2.4 trillion for AI infrastructure, $760 billion for consumer subscriptions, and $600 billion for digital advertising.

Snyder described these figures as “wildly optimistic.” He noted that he could not match the $2 trillion market cap even when factoring in extreme growth projections for AI.

How does Grok’s adoption compare to competitors?

Current data shows a gap between SpaceX’s projections and user conversion. Of the 117 million people interacting with Grok via its freemium model, only 1.6%—approximately 1.9 million subscribers—pay for premium tiers.

This conversion rate trails ChatGPT, which had roughly 5% paid users in 2025. Data from AI adoption tracker Ramp further shows xAI has a 3% business adoption rate, while Anthropic and OpenAI both stand at 40%.

Evan Bailyn of First Page Sage noted that while services like Spotify are integral to daily life, Grok remains a “nice to have” addition to the X platform with little incentive for users to pay for premium access.

What are the primary risks for xAI?

Kyle Poyar, a former operating partner at OpenView, stated that users may never pay for Grok if they do not adopt it for “sticky high-value use cases” on a daily or weekly basis.

Vineet Kumar, a professor at Purdue University’s Mitch Daniels School of Business, warned that overly generous free offerings can discourage users from upgrading to paid plans.

Snyder expressed concern that xAI currently acts as a “glorified Amazon Web Services” by renting excess computing power to competitors like Google and Anthropic. He argued that xAI lags behind OpenAI and Anthropic in model complexity and sophistication.

What may happen next for SpaceX’s AI business?

To increase its market share, xAI may need to develop “stickier” use cases similar to those employed by Anthropic. Failure to evolve its model could result in continued low conversion rates as competitors maintain their lead in the enterprise market.

Analysts expect that xAI must climb a steep hill to challenge the enterprise market share currently held by OpenAI, Google Gemini, and Anthropic. The company’s ability to convert its massive free user base into paying customers will likely determine if its valuation remains sustainable.

Frequently Asked Questions

What was the total addressable market (TAM) claimed by SpaceX?
SpaceX estimated a quantifiable TAM of $28.5 trillion, with $26.5 trillion specifically allocated to AI.

How many Grok users are currently paying for premium services?
Approximately 1.9 million users, which represents 1.6% of the 117 million people using the freemium model.

How does xAI’s business adoption rate compare to its rivals?
According to Ramp, xAI has a 3% business adoption rate, compared to 40% for both OpenAI and Anthropic.

Do you believe AI growth can justify a trillion-dollar valuation for a space company?