The century IPO of SpaceX, valued at up to $1.75 trillion, is about to land on NASDAQ, but a seemingly technical issue is shaking the direction of billions in funds—what sector does it actually belong to? Starlink points to communication services, the rocket business points to industrial, and the space data center stirs the logic of real estate; the classification result will directly determine which ETFs passively buy.

Written by: Zhao Ying

Source: Wall Street Journal

SpaceX is about to land on NASDAQ, and the sector classification issue is becoming a key variable for investors to position themselves for this historic IPO.

According to a report by CNBC on the 24th, SpaceX's target valuation is as high as $1.75 trillion, and it is expected to be quickly included in the NASDAQ 100 Index and the S&P 500 Index after going public. As the company’s business spans multiple areas including rocket launches, satellite internet, artificial intelligence, and data centers, S&P Global and MSCI, responsible for sector classification, are facing an unusually complex judgment.

The practical significance of the sector classification is that investors can indirectly participate in this IPO by buying the S&P industry index where SpaceX ultimately belongs. The classification results will directly influence which industry ETFs and index funds passively increase their holdings in SpaceX, thus impacting the funding flows of related sectors.

Revenue Structure is the Primary Basis for Classification

According to the classification mechanism of S&P Global and MSCI, a newly listed company must be classified into one of 163 "sub-industries," which then narrows down to 74 "industries," 25 "industry groups," and finally lands in one of the 11 S&P sectors, covering information technology, communication services, industrial, real estate, materials, healthcare, consumer staples, consumer discretionary, financials, utilities, and energy.

Representatives from both organizations indicated that revenue is the core driving factor for determining sector affiliation, but "profit status and market perception are also seen as important references and will be considered in the annual review process."

SpaceX disclosed in the S1 prospectus released last week that "the space and connectivity business contributed the vast majority of consolidated revenue in the first quarter of 2026 and for the entire year of 2025." Among them, Starlink’s satellite internet business anticipates revenue exceeding $11 billion in 2025, the rocket launch and space mission business expects revenue of about $4 billion, and the xAI business associated with its artificial intelligence platform Grok is projected to generate $3.2 billion in revenue, the latter also deriving income from data centers in Memphis, Tennessee, and South Haven, Mississippi.

Communication Services Sector is the Most Likely Option

Based on the revenue scale of Starlink, analysts believe SpaceX is most likely to be classified under the S&P communication services sector. This sector currently includes companies such as Alphabet, Meta, Netflix, AT&T, Verizon, Charter Communications, and The Walt Disney Company, along with Echostar, which holds approximately 2% to 3% of SpaceX's equity.

Starlink provides high-speed internet access services covering the globe, and its business model is highly similar to traditional satellite communication and broadband operators, which is the main logic supporting its affiliation with the communication services sector.

Industrial Sector is Also a Potential Option

Meanwhile, SpaceX is also viewed as a candidate for membership in the industrial sector. This sector currently houses several aerospace and defense companies, including Howmet, Boeing, GE Aerospace, Northrop Grumman, L3, and General Dynamics.

SpaceX's rocket manufacturing and launch services business clearly overlaps in nature with the aforementioned defense and aerospace industrial enterprises; if S&P Global and MSCI assign a higher weight to this business in their comprehensive assessment, the affiliation with the industrial sector would also be reasonable.

Space Data Centers May Introduce New Variables for Classification

SpaceX's long-term strategy adds more uncertainty to sector classification. Musk stated at the US-Saudi investment forum in November 2025 that the future of data center business lies in space rather than on the ground: "If you want to produce computing power that is a million times what Earth can generate, you must go to space. Even within a four to five-year time frame, the cheapest AI computing option will be solar-powered AI satellites."

SpaceX also clearly positions itself as a data center company in the S1 document, claiming, "With extreme vertical integration in launch, scalable satellite manufacturing, network connectivity, and ground data centers, we aim to deploy and operate data centers in orbit with costs ultimately lower than those of ground data centers."

Currently, the S&P real estate sector includes three major data center companies: Equinix, Digital Realty Trust, and Iron Mountain; their stock prices have seen significant increases since 2026. However, since space data centers do not occupy ground land, their classification logic is fundamentally different from traditional real estate-type data centers, and the final affiliation remains to be judged by S&P Global and MSCI.