Although the deal remains tentative and, in The Journal’s words, “could fall apart,” the development may reveal something important for SpaceX investors. Let’s take a closer look. <\/p>\n
Image source: The Motley Fool. <\/p>\n Why investors should pay close attention to this deal <\/p>\n To really understand the significance of this deal, we should step back and remember how closely SpaceX’s future is now tied to artificial intelligence<\/a>. <\/p>\n Until Feb. 2, 2026, SpaceX<\/a> was best known for launching rockets and managing its satellite-based internet service, Starlink. But in early February, SpaceX acquired xAI, forming a massive entity that’s now valued at about $1.6 trillion. <\/p>\n The acquisition not only brought two of Elon Musk’s businesses under the same roof but also provided xAI with a larger capital base to help it scale faster. The idea is that eventually, the AI business will become SpaceX’s major growth engine, even if it’s burning cash right now. Indeed, in SpaceX’s pre-IPO roadside show, the company claimed AI will unlock a $26.5 trillion market opportunity, whereas the market opportunity for the other two businesses is about $2 trillion. <\/p>\n Here’s the kicker, however: xAI generated an operating loss of about $6.4 billion in 2025. Although the rest of SpaceX’s operations helped offset some of that damage, the company still posted a net loss of about $4.9 billion for the year. <\/p>\n This is where the potential deal with the Pentagon comes in. If the Pentagon becomes a multi-billion-dollar customer, SpaceX’s AI segment could start carrying some of the financial load investors expect it to shoulder. At the very least, it could help offset this segment’s heavy losses, bringing the space company closer to profitability. <\/p>\n And this isn’t just any old customer, either. This is the DOD, a government agency. Once SpaceX is approved to handle its workloads, which, mind you, could contain sensitive or classified information, walking away from it won’t be easy, nor will it be cheap. Indeed, the high switching costs alone could turn this contract into a pretty durable, long-term revenue stream — one that could increase in value if the agency decides to purchase more computing power over time. <\/p>\n Does the deal with the Pentagon make SpaceX a screaming buy right now? <\/p>\n I wouldn’t call SpaceX a screaming buy right now, nor even a murmuring one. And it has everything to do with SpaceX’s valuation right now. <\/p>\n The stock has been trading at a premium since its mid-June market debut. It currently trades more than 40% below its all-time high; even so, SpaceX trades at more than 80 times sales. <\/p>\n At the end of the day, SpaceX investors are being asked to believe in many things that seem outlandish at first glance. Lunar settlements, missions to Mars, orbital data centers. Some of these ambitions may eventually materialize; others could remain fantasies. For now, I would continue watching SpaceX from the sidelines, at least until its valuation comes back down to earth.\u00a0 <\/p>\n Should you buy stock in Space Exploration Technologies right now? <\/p>\n Before you buy stock in Space Exploration Technologies, consider this: <\/p>\n The Motley Fool Stock Advisor analyst team just identified what they believe are the\u00a010 best stocks<\/a> for investors to buy now\u2026 and Space Exploration Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. <\/p>\n Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $371,842!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,244,783!* <\/p>\n Now, it’s worth noting\u00a0Stock Advisor’s total average return is 900% \u2014 a market-crushing outperformance compared to 207% for the S&P 500.\u00a0Don’t miss the latest top 10 list, available with\u00a0Stock Advisor, and join an investing community built by individual investors for individual investors. <\/p>\n See the 10 stocks \u00bb<\/a> <\/p>\n *Stock Advisor returns as of July 18, 2026. <\/p>\n Steven Porrello<\/a> has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy<\/a>. <\/p>\n<\/a> <\/p>\n