Author：Wall Street CN

Musk's "Starship Empire" gamble sounds like a pipe dream.

On February 2, Elon Musk announced that SpaceX would acquire its cash-guzzling subsidiary xAI for $250 billion. The merged company will have a portfolio of businesses including rockets, AI chatbots, and the social media platform X.

SpaceX already planned to go public, and now, with the merger, xAI will also receive a share of the funds raised in the new company's IPO. SpaceX informed investors that its valuation has increased from approximately $800 billion in December 2025 to $1 trillion. This deal values xAI at $250 billion. Combined, the merged company is valued at $1.25 trillion.

This deal further intertwines Musk's various companies, creating the world's most valuable privately held company. Of course, Musk doesn't explain the merger that way. He describes it as a way to circumvent the power limitations faced by terrestrial AI data centers. "In the long run, space-based AI is clearly the only way to achieve scale."

In a memo to SpaceX and xAI employees, Musk wrote: “I estimate that within the next two to three years, space will become the cheapest way to generate AI computing. This cost-effectiveness alone will enable innovative companies to train AI models and process data at an unprecedented speed and scale, thereby accelerating our understanding of physics and fostering technological inventions that benefit humanity.”

This may hold true in the long run, but merging xAI and SpaceX now—won't xAI's losses drag down SpaceX?

In fact, Musk's statement didn't even attempt to explain how xAI would help SpaceX send data centers into space. Let's not forget that so-called "orbital AI" was a key element of SpaceX's IPO narrative. This narrative emphasizes SpaceX's transformation from a rocket launch company into a provider of space AI infrastructure and services, leveraging Starship's low-cost recovery technology and Starlink's global communication network to build a highly valued space internet and potential space data center ecosystem.

So, what exactly does xAI bring?

This is an AI model development company responsible for the Grok series of models. It sells Grok subscription services to consumers and has also attempted to sell Grok to enterprises, but without success. Like most AI startups, it is burning through cash. Furthermore, it owns X (formerly Twitter).

Undoubtedly, this move is financially motivated. Musk may be the world's richest man, but he faces the same reality as other AI startup leaders: competing with tech giants like Google and Meta, who possess massive cash flow machines (advertising businesses), is extremely difficult in the field of AI research and development.

However, a merger between SpaceX and xAI wouldn't truly solve the problem. SpaceX's revenue is far from sufficient to fund xAI's needs over the next few years. SpaceX's revenue is reportedly around $15 billion in 2025, while Meta's is $200 billion. Musk's other company, Tesla, is even larger—with revenue projected at around $95 billion in 2025—but it's also undergoing a period of intense investment as it shifts its focus to robotics and robotaxis. Tesla simply cannot afford to fund both xAI and its own strategic transformation simultaneously.

Therefore, Musk's only way out is to convince investors of his vision for a "space data center," hoping to raise enough cash through an IPO to support xAI. He might be able to—he has a "piper-like" appeal to investors. However, he may still face skepticism regarding the "space data center" concept.

Operating a data center in space presents a dizzying array of technical and financial hurdles, including heat dissipation, radiation protection for computers, equipment maintenance, and the exorbitant cost of putting all the hardware into orbit. Critics argue that launching an AWS-like data center into space sounds more like science fiction than a realistic business plan.

The Financialization of Science Fiction and the Theology of Venture Capital

However, critics fail to realize that Musk is selling science fiction.

This is why, although the merger originally served Musk's more "worldly" goal—to enhance the company's overall financial strength, in the memo sent to SpaceX and xAI employees, Musk used rather science fiction language to describe the operational blueprint after the merger, as if telling a story of mankind conquering space and traversing the galaxy.

This is a new way of raising funds: replacing traditional business fundamentals with technological vision as the source of legitimacy for financing. I call it "science fiction financialization".

What is the financialization of science fiction? It refers to an economic form in which capital uses future technological visions that do not yet exist, cannot be verified, or even lack physical feasibility as core assets for valuation, financing, and speculation.

Here, "science fiction" does not refer to the genre, but rather to the fact that the basis for its valuation has the following typical characteristics: the technical feasibility has not yet been proven; the realization time has been radically compressed (such as changing from a "problem of the century" to a "five-year roadmap"); the narrative abandons product-level discourse and rises to the level of civilization-level discourse such as "rewriting the form of human labor", "breaking through the limits of Earth's resources", and "opening up the post-human stage".

The financialization of science fiction is a form of post-industrial capitalism—capital markets price technologies around non-existent future technologies, making "future imagination" itself a tradable asset. Its essence is not a "tech bubble," but rather the securitization of the future. The term "post-industrial" is used to describe this phenomenon because the industrial era followed the sequence of "production—sales—profit—valuation," while in the post-industrial era it becomes "narrative—expectation—valuation—refinancing—potential production," with production postponed and the story brought forward.

The merger blog post on SpaceX's official website states: "This marks not only the next chapter in the mission of SpaceX and xAI, but also the beginning of the next book: to build a sentient sun at scale to understand the universe and extend the light of consciousness to the stars."

This can almost be called a theological dream. Musk's magic flute has created a classic case of "theologicalizing venture capital": entrepreneurs build future narratives, companies transform from "cash flow machines" into "containers of future stories," and investment is similar to "sacrifice" in religion. A community of faith is formed among investors and between investors and entrepreneurs, while those who question it are regarded as "lacking vision."

In this theological context, the valuation logic of venture capital exhibits three characteristics: First, future-first: valuations heavily rely on future imagination rather than current profits. This logic leads to a significant disconnect between cash flow and actual earnings. Second, unquestionable: once investors accept the future narrative, the underlying capital flows and strategic choices are seen as naturally legitimate. Third, the mystification of success: success is explained as the realization of faith and vision, while failure is often attributed to bad timing or "the world not being ready," rather than flawed entrepreneurial or investment decisions.

In short, the theologicalization of venture capital is to transform faith in future technologies and markets into the core logic of capital flow and valuation judgment, giving investment behavior an almost religious nature.

With the incorporation of market sentiment into valuation, investing is increasingly resembling social psychology.

Complementing the theological approach is the investment in atmosphere.

Inspired by the concept of "vibe coding," The Economist coined the term "vibe valuation" to describe the phenomenon where venture capital firms give extremely high valuations to AI startups while intentionally ignoring traditional financial metrics such as annual recurring revenue.

In Silicon Valley, many startups achieve high valuations driven by emotions and subjective feelings (i.e., "atmosphere"). This emotional capitalization primarily encompasses: the founder's compelling narrative, the grandeur of their technological vision, consensus within the investor community, and the anxiety of "not missing the next wave." Atmosphere investing emerges when capital pricing is primarily based on market sentiment, the strength of future imagination, and narrative momentum, rather than current financial capabilities.

If theological venture capital emphasizes science fiction visions, then atmosphere-based investing focuses on collective emotions and social atmosphere. In other words, contemporary investment behavior is increasingly driven by social consensus, public opinion, and psychological resonance. Investors' decisions depend not only on the company itself but also on social media, public discourse, and the investment community.

For example, in the GameStop (GME) stock incident in January 2021, the investor base was entirely driven by the sentiment of the Reddit community, with price fluctuations having little to do with traditional valuation metrics. Reddit retail investors bought large amounts of heavily shorted GME stock through trading platforms, causing the share price to surge nearly 190 times, forcing short-selling funds to liquidate their positions at huge losses. This demonstrates the immense power of "meme stocks," which refer to stocks influenced by online discussions, viral spread on social media, and prevailing emotions. Their popularity among investors often stems from community members' optimistic expectations for their future development or their focus on specific events.

Typical characteristics of atmosphere-driven investing include: First, emotion-driven investment. Investors invest based on emotions, psychological feelings, and even "fear of missing out" (FOMO), rather than financial statements or market size. Second, community amplification. Social media, online communities, and public opinion fields act as emotional amplifiers, making investment behavior highly collective and contagious. Third, narrative dominance. Narratives such as future vision, founder image, technological popularity, and brand story become the core basis for investment decisions.

The investment logic of the atmosphere is also evident in the case of SpaceX merging with xAI.

Investors, while focusing on Musk's narrative of orbital AI, are also influenced by media reports, social media buzz, and discussions within the tech community. This collective consensus and emotional resonance reinforces belief in the future narrative, while simultaneously amplifying the scale and speed of capital flows.

From the perspective of these two investment logics in the post-industrial era, investment is increasingly resembling social psychology rather than accounting. When capital no longer revolves around production capacity, profits, and cash flow, but rather around the strength of beliefs and the emotional climate, investment transforms from a calculation system into a collective psychological mechanism. Theologicalization turns the future into an object of faith, while atmosphere-based investment turns the market into an emotional circuit; the former provides an ultimate narrative that transcends the constraints of reality, while the latter provides a social resonance structure that allows the narrative to be quickly monetized. The combination of the two constitutes a new way of organizing capital.

This means that today's market is no longer just a place to allocate resources, but also a machine for producing future imaginations. The question is no longer just "whether the project can succeed," but rather: when the attention, funds, and institutional resources of the entire society are directed towards a few grand visions, who will bear the structural consequences of the narrative failing? In this sense, the investment logic of the post-industrial era ultimately tests not the limits of technology, but society's ability to collectively bet on an uncertain future.

2026 may be the most spectacular year for IPOs in tech history, with behemoths like SpaceX, OpenAI, and Anthropic all planning to go public. In this supercycle of IPOs, the market itself has become a testing ground for the future—here, belief, narrative, and emotion, like traditional profitability metrics, determine who will dominate the construction of the next technological and social order. The potential cost is that when valuations are based on "civilizational shifts," failure is no longer just company closures, but a misallocation of social resources.