1. AI division booked a $2.5 billion loss in operating income in the first quarter of 2026. The AI division began as X, but when Musk got AI religion, he pivoted towards developing the Grok large language model and two large AI data centers. To a large extent, he was searching for a way to make X profitable as the site right wing toxicity caused the loss of billions of dollars in advertising revenue. 2. The AI division is causing SpaceX as a whole to suffer massive bottom line losses. It is offsetting the healthy net income of the Internet service division.
3. Transforming X into an AI company with a large language model and accompanying GPU infrastructure was both a me-too investor move and an act of financial desperation. Musk's acquisition of X led to advertising revenue declining from $4.7 billion in 2022 to $1.8 billion in 2025. It was easy for Musk to take X private because the widening losses reduces the company's equity value.
4. Musk used his voting shares and docile board to shotgun a merger of the xAI financial black hole with the profitable space freight and Internet service business. The xAI division has no clear path towards profitability. Even the industry leader OpenAI, which has a million business subscribers and 50 million paying households, is expected to lose $14 billion in 2026 on $13 billion in revenue. OpenAI is forecasting losses to rise for the next several years.
5. Musk's poor judgement in merging xAI with the space divisions is compounded by the fact that he is CEO for life. The IPO gives him enough voting shares to control the company indefinitely. Given his past mistakes, which include alienating Tesla's customers and potential clients and the X debacle, Musk certainly cannot be considered infallible.

Screenshot of Starlink's operating profits by business division. IPO Prospectus.