Wall Street is eager to get a piece of SpaceX’s historic IPO, but one prominent hedge fund manager thinks investors are missing the big picture regarding what could end up being the biggest driver of the company’s valuation.
Gene Munster, managing partner at Deepwater Asset Management, recently shared his take on X, laying out what he thinks is the most important aspect of SpaceX’s value, and that he thinks it’s something investors are overlooking.
It comes down to two words – sovereign AI.
“Investors looking at the SpaceX IPO are focused on the launch business and Starlink subscribers,” Munster wrote. “They’re missing the real story. SpaceX, through its constellation of Elon-controlled entities, has quietly assembled the only set of assets capable of building a fully sovereign AI.”
That term refers to an end-to-end AI system fully controlled by the company that owns it. Such a system does not rely on external providers at any layer. Munster thinks SpaceX can achieve this, and if it can, it will be the firm’s real competitive edge.
In his view, SpaceX has four primary pillars needed to reach sovereign AI: a launch monopoly, Starlink’s hyperscaler network, Grok’s proprietary AI model, and Musk’s Terafab AI chip production.
“These four pillars create a closed-loop intelligence system spanning from raw silicon to satellite distribution,” Munster wrote.
The hedge fund manager acknowledged that many Big Tech leaders have parts of the sovereign AI equation, but none have the entire thing. While he thinks Google is the next closest, he maintains that SpaceX is the best-positioned, as Google still relies on chips built by other companies.
Munster recently described Google parent Alphabet as the best stock to own in the Magnificent Seven, noting its progress on the AI front.
“SpaceX is building the AI equivalent of the Apple model,” he wrote. “Design the chips. Make the chips. Build the model. Train it on proprietary data. Deliver it through your own network. Every toll booth from silicon to satellite belongs to you.”
Munster added that another key edge that SpaceX has over Google is that it builds rockets, which are part of the company’s big structural advantage in tech.
He noted that while it is difficult to assess the total economic value of sovereign AI, he thinks it’s key to the bull case.
“If vertical integration is the path to capturing margin in the intelligence economy (and we believe it is), then SpaceX has the most compelling structural advantage of any company in the world,” Munster said.