Investors can cash-in as space travel and AI take us into the new age

The Artemis II mission to the moon has reawakened interest in space travel.

It has also presented the ideal opportunity for the world’s richest man, Elon Musk, to unveil more details of this summer’s $1.75trillion (£1.3trillion) stock market flotation of his rocket company, Space Exploration Technologies – better known as SpaceX.

At a meeting with bankers this week, Musk said that 30 per cent of SpaceX shares could be reserved for private investors.

The Tesla boss wants to launch SpaceX on to the market in June, to coincide with his 55th birthday on the 28th, and a rare planetary alignment (an unusual conjunction of Jupiter and Venus).

Such has been the ensuing buzz that City figures tell me devising a strategy on SpaceX is top of their to-do lists. 

This is even amid Iran ceasefire uncertainty – and mounting controversy over SpaceX’s stratospheric valuation, which would make it America’s sixth-largest company. 

Some see this as wildly over-optimistic, based on any comparable space business or the outlook for SpaceX, which Musk thinks will defy gravity, much like his rockets.

The company, which encompasses the Starlink internet service and the Starlink satellite division, has already merged with Musk’s artificial intelligence company xAI – which owns social media platform X.

The combined entity – officially called x.AI Holdings – also includes the AI agent Grok. Bankers, brokers and lawyers must incorporate Grok into their systems if they want to be part of the initial public offering (IPO). 

Is Musk seeking to ensure these advisers’ assent to the valuation, whatever their misgivings? Perhaps.

But this may not dim the excitement around this ‘generational IPO’. Hopes are high too that SpaceX could become as large a group as $3.8 trillion (£2.8trillion) Apple or $4.4trillion (£3.3trillion) Nvidia, thanks to demand for Starlink, seen by many as the jewel in the crown, and SpaceX’s key role in defence.

But there is also the conviction that, when Musk reveals more details of the June blast-off for SpaceX on April 21, this could revive wider IPO enthusiasm.

War in the Middle East has lowered expectations that 2026 would be a bumper IPO year. But two major Silicon Valley start-ups still aim to go public. Anthropic, the firm behind the ground-breaking Claude AI system, and OpenAI, the ChatGPT firm.

Both hit the headlines this week: Anthropic said its Claude Mythos tool could pose a severe threat ‘to economies, public safety, and national security’; and OpenAI paused its UK Stargate project because of our high energy costs.

These planned flotations are a reminder of the era when an IPO, in the shape of British Gas or another privatisation, represented the chance of a windfall, and often sparked a passion for investing.

A trip into space, or a bet on the AI revolution, could rekindle this spirit. Here’s a guide to getting your ticket to ride.

Reach for the stars

By June, SpaceX’s IPO hype seems set to be huge, with much rational consideration of the company’s merits set aside.

Dan Boardman-Weston of BRI Wealth Management said: ‘This may mean that early private investors realise substantial gains, while anyone who invests later may have to pay a steep premium for future growth.’

A source of this for SpaceX will be the launch of data centres in Starship satellites in orbit. 

Data centres provide AI’s computing power. Peter Singlehurst, manager of Baillie Gifford’s Schiehallion fund, said that the US is running short of sites with the connectivity required for data centres. He added: ‘Scaling-up in space could be a better solution.’

David Coombs, of Rathbones, said: ‘We’re assessing the summer’s IPO prospects but would be most likely to opt for SpaceX.

‘We think it will be profitable, because of incredible proven technology and its wide ‘moat’, or competitive advantage.’

But Coombs voices the widespread anxiety over Musk’s leadership style.

He explained: ‘Musk runs Tesla as a private fiefdom, not a publicly quoted corporation.’

Taking a stake in SpaceX represents a big gamble on the mercurial Musk, who must excel at SpaceX to compensate for Tesla’s loss of dominance in the electric vehicle market to China.

Back the AI Revolution

The SpaceX IPO will make global headlines, but Anthropic and OpenAI will still make a splash. 

OpenAI could be valued at as much as $1trillion (£740billion) thanks to ChatGPT, which boasts 900million users worldwide, although the decision-making of its boss Sam Altman will be under scrutiny, following a critical piece in New Yorker magazine that has been shared on X by Musk.

Against this background, OpenAI is still racing with its $350billion (£260billion) rival Anthropic to go public in the autumn. 

Both are fast growing, but also lavishing vast sums on their large learning models (LLMs) which act like a brain for AI.

If you are setting aside cash for these IPOs, note the warning from Coombs that these LLMs could be ‘commoditised’ if they are replicated by Chinese companies, or a US giant such as Microsoft. 

Eyebrows will be raised if Anthropic and OpenAI do not allay these fears in their IPO prospectuses.

How to climb aboard

Further clarification of the promised (but not guaranteed) allocation of SpaceX shares to private investors should emerge over the next few weeks.

But you can secure a slice now of SpaceX and Anthropic (although sadly not OpenAI) through funds and trusts. The RIT Capital Partners trust backs both SpaceX and Anthropic, and SpaceX is the second-largest holding at Schiehallion.

This Baillie Gifford trust, named for a Scottish mountain formed 700million years ago, focuses on 21st century private companies, including SpaceX and Anthropic.

Schiehallion also holds ByteDance, the Chinese TikTok company, Vinted, the second-hand marketplace and Revolut, the banking app, which could IPO next year. 

Defence constitutes 10 per cent of the portfolio. Other Baillie Gifford funds also offer exposure to the IPOs of 2026. SpaceX is held by Edinburgh Worldwide and Baillie Gifford US Growth, both of which the US activist fund Saba is seeking to control.

Investors should still be able to benefit from the IPO, although the situation may be less clear-cut for anyone with money in Edinburgh Worldwide if Saba wins in forthcoming votes.

Fortunately, Saba has not encroached on Baillie Gifford’s Scottish Mortgage, where SpaceX is the number one holding. This trust (my foray into high-risk) has a chunk of Anthropic, too.

The future…

SpaceX, OpenAI and Anthropic have stayed private until now because private equity investors provided plentiful finance.

Jonathon Marchant of fund management group Mattioli Woods says that such funds are becoming less available, which could bring forth more IPOs. 

Marchant adds that more flotations should emerge as big firms spin off divisions. This could be good news for the London market, which has suffered an IPO drought.

There have been rumours of a flotation for booksellers Waterstones, which together with its American sibling Barnes & Noble, is controlled by US activist investor Elliott.

That’s the kind of IPO that bibliophile investors would like to read about.