How Nvidia Stock Could Be the Biggest Loser From the SpaceX IPO

The SpaceX initial public offering (IPO) is shaping up to be one of the most anticipated market events in years. But buried inside its pre-IPO filings is a detail that should make Nvidia (NVDA) investors stop and think.

SpaceX, a company founded by Elon Musk, disclosed plans to make its own chips. Could SpaceX's IPO set the stage for one of Nvidia's biggest competitive threats yet?

Why Nvidia Dominates the AI Chip Market Right Now

To understand the risk, you first need to understand how central Nvidia has become to the artificial intelligence boom.

Nvidia's graphics processing units, or GPUs, are the backbone of nearly every major AI system being built today. From OpenAI to Anthropic to xAI, all the frontier AI labs run their models on Nvidia hardware. 

At a recent shareholder and analyst event, Nvidia CEO Jensen Huang made the economics crystal clear. The real metric that matters in AI is not the price of the chip, but the cost to produce one million tokens of AI output. 

Nvidia's latest systems deliver far more tokens per second per watt than any rival, which is why customers keep buying even as prices rise. Huang told analysts that Nvidia has strong visibility into more than $1 trillion in demand for its Blackwell and Rubin GPU platforms through the end of 2027.

He also noted that OpenAI has committed to deploying over 10 gigawatts of Nvidia systems for its next-generation AI infrastructure. These kinds of lock-ins look nearly impossible to disrupt, but SpaceX may be trying anyway.

SpaceX's GPU Plans Could Chip Away at Nvidia's Dominance

According to Reuters, which reviewed an excerpt from SpaceX's pre-IPO registration document filed with the U.S. Securities and Exchange Commission, the company lists "manufacturing our own GPUs" among its planned capital expenditures. These chips are primarily designed for AI workloads, similar to the tensor processing units that Google (GOOGL) (GOOG) developed to reduce its reliance on external suppliers.

SpaceX is targeting an IPO this summer at a valuation of around $1.75 trillion. The SpaceX filing stated that the company "expects to continue sourcing a significant portion of compute hardware from third-party suppliers," but offered no guarantee that it could meet its own chip ambitions on time. 

Musk has teamed up with Intel (INTC) on a project called Terafab, a large-scale AI chip manufacturing facility planned for Austin, Texas.  The facility is designed to handle chip fabrication, packaging, and testing at a massive scale, with plans to produce one terawatt of compute power per year. 

Musk said Terafab will use Intel's 14A process, which he described as state-of-the-art and expected to be mature by the time the facility scales up. If SpaceX becomes self-sufficient in chip production, that directly reduces how much it spends with Nvidia going forward. And SpaceX is not a small customer.

What This Means for NVDA Stock Investors

Huang has acknowledged that xAI and other Musk-affiliated companies are current Nvidia customers. Losing even a portion of that demand would sting, especially at the scale Nvidia is projecting.

Google and Amazon (AMZN) are already developing their own chips. Every major Nvidia customer that goes in-house reduces the addressable market Huang is counting on to hit that $1 trillion target. NVDA stock, which recently soared to all-time highs, has been priced for near-perfect execution. 

For now, Nvidia remains the dominant force in AI computing. But the SpaceX IPO is worth watching closely. 

Out of the 49 analysts covering NVDA stock, 44 recommend “Strong Buy,” three recommend “Moderate Buy,” one recommends “Hold,” and one recommends “Strong Sell.” The average NVDA stock price target is $268.80, above the current price of about $208.