This Trillion-Dollar Behemoth Is a Backdoor Way to Invest in SpaceX. But It’s an Even Better Investment by Itself.
The SpaceX initial public offering (IPO), expected later this year, is going to be one of the biggest stock market events of all time. It will likely be the largest company to ever go public, and the amount of buying and selling in the aftermath will result in some wild moves. Regardless of whether this news excites, scares, or bores you, the reality is, it’s coming. However, many investors want to get SpaceX into their portfolios as soon as possible, and the shares aren’t publicly available.
There are a handful of ways for retail investors to get exposure to SpaceX prior to the IPO, but my favorite is via an investment in Alphabet (GOOG +0.41%) (GOOGL +0.66%). Alphabet owns an estimated 6% of SpaceX, which isn’t a massive stake overall, but if the company goes public at a $1.75 trillion market cap, that will result in a more than $100 billion windfall for Alphabet, should it choose to sell.
Alphabet remains a solid investment option as well, and I think parking your money in its stock while the SpaceX IPO moves closer to reality is a smart move.
Image source: Getty Images.
Alphabet is an AI force
Alphabet may be best known for its Google Search platform, but investors are more excited about its AI capabilities. Its generative AI model, Gemini, has become one of the most widely used. Additionally, its integration with the Google Search platform makes it the most common way the average person will interact with AI on a daily basis. This gives Alphabet a leg up on every other company in the generative AI space.
Today’s Change
(0.66%) $2.62
Current Price
$400.61
Key Data Points
Market Cap
$4.9T
Day’s Range
$396.37 – $402.00
52wk Range
$156.16 – $402.00
Volume
994K
Avg Vol
30M
Gross Margin
60.43%
Dividend Yield
0.21%
Alphabet’s hardware is also a top option. Its cloud computing segment, Google Cloud, is seeing incredible growth, with revenue rising 63% year over year during Q1. Part of the reason for this acceleration is that it’s now selling its custom AI chips, known as Tensor Processing Units (TPUs), to external clients. This makes Google Cloud both a cloud provider and a chip seller — and those are two of the hottest growth sectors in the entire economy. This is helping Alphabet grow rapidly, although it’s spending a ton of money on capital expenditures to do it.
Should Alphabet decide to sell some or all of its SpaceX shares following its debut, that would unlock a massive amount of capital that it could redeploy into its AI infrastructure build-out. That could provide Alphabet with everything it needs to secure its place on top.
Obviously, after such a sale, investors would be free to decide if they’d prefer to be invested in SpaceX or Alphabet, but until I see what SpaceX’s finances actually look like, Alphabet still looks to me like the better investment option.
