The Biggest IPO in History Is Almost Here

SpaceX is targeting a valuation of $1.75 trillion when it lists on the Nasdaq, according to CNBC. For context, that would make it one of the largest companies in America on day one.

OpenAI and Anthropic are also in the IPO queue. But SpaceX is the headliner — and it's arriving first.

According to 24/7 Wall St., Starlink alone is on track to generate $20 billion in annual revenue with significant EBITDA margins. Add in the Colossus supercomputer developed by Elon Musk's xAI — a separate but affiliated venture — and you have something that doesn't fit in a single industry bucket.

This isn't just a rocket company. It's a satellite internet provider, an AI infrastructure-adjacent play, and a multi-sector conglomerate all rolled into one.

The Index Fund Problem Nobody's Talking About

This IPO could break passive investing as we know it.

Every American with a 401(k) invested in an S&P 500 index fund is about to face a problem. Index funds are supposed to track the market. But if SpaceX — a $1.75 trillion company — isn't in the index the moment it lists, those funds instantly become inaccurate representations of the U.S. market.

Morningstar laid this out plainly: omitting SpaceX from major indexes, even temporarily, would be significant — comparable to the S&P 500's exclusion of Tesla, which traded publicly for more than 10 years before finally meeting the profitability requirement for inclusion in 2020. Tesla was painful. SpaceX at nearly double the current market cap of Tesla would be a different order of magnitude.

Nasdaq has already moved. According to Morningstar, Nasdaq has changed its rules in anticipation of listings like this — a quiet admission that the old system wasn't built for what's coming.

What Sector Does SpaceX Even Belong In?

When a company goes public, S&P Global and MSCI run it through a four-tier classification system: sub-industry → industry → industry group → one of 11 S&P sectors. Those sectors include information technology, communications, industrials, and eight others.

According to CNBC, S&P Global and MSCI prioritize revenue source as the primary factor in that decision. SpaceX's own S1 filing states that its Space and Connectivity segments — rockets and Starlink — contributed "the substantial majority" of consolidated revenue in the first quarter of 2026 and all of 2025.

That points toward Industrials as the leading candidate. That's the sector home to aerospace and defense companies like Lockheed Martin and Boeing.

SpaceX also runs satellite broadband and has significant adjacency to AI infrastructure. Its association with Elon Musk's xAI means Grok — an AI assistant — is part of the broader corporate family. Any honest classification review has to weigh whether Information Technology or Communications Services is actually the better fit.

Rich Lee, Head of Program Trading and Execution Strategy at Baird, writing in Traders Magazine, called the SpaceX IPO "a glimpse into the future of indexing" — arguing that the company represents a new class of conglomerate that the existing GICS classification system wasn't designed to handle.

The classification decision will affect billions of dollars in ETF flows the moment it's announced.

The Scale Problem for Passive Funds

Morningstar's own Pitchbook US Modern Market 100 Index — which attempts to include major private companies alongside public ones — shows SpaceX, OpenAI, and Anthropic would instantly rank among the largest companies in the United States upon listing.

For index funds that track total U.S. market cap, these aren't rounding errors. They're seismic shifts.

If the S&P 500's inclusion committee drags its feet the way it did with Tesla, passive investors will spend weeks or months holding a benchmark that simply doesn't include one of the five or ten largest American companies. That's a real tracking error with real money attached.

According to Morningstar, Dimensional Fund Advisors — which runs broad quasi-passive funds — exercises deliberate patience when adding recent IPOs due to lockup restrictions. That's manageable for a $10 billion company. It's a different conversation for a $1.75 trillion one.

What This Means for Regular Investors

If you're in a passive S&P 500 or total market index fund — and most Americans with retirement accounts are — here's what you need to know.

First, your fund will NOT automatically hold SpaceX the day it lists. Index inclusion takes time, requires eligibility reviews, and depends on rules that were written for a different era.

Second, the sector classification will determine which thematic ETFs — tech ETFs, industrial ETFs, communications ETFs — benefit most from the forced buying that comes with index inclusion. That decision by S&P Global and MSCI is worth watching closely.

Third, the IPO window itself creates a brief, chaotic period where the largest new company in America is essentially outside the financial system's standard containers.

The money will be enormous. The market structure stress will be real. Most of the breathless IPO coverage will focus on Elon Musk and the opening day pop — while completely missing the structural story underneath.