Only five U.S. companies have market caps of more than $2 trillion. That number will soon increase to six. Elon Musk’s SpaceX is targeting a valuation of more than $2 trillion when it goes public later this year, making it the highest-valued IPO stock ever.

However, the company that has been Musk’s biggest success story so far — Tesla (TSLA +0.96%) — isn’t a member of the $2 trillion club. Is SpaceX really worth more than Tesla?

Why SpaceX might deserve a higher valuation than Tesla

SpaceX focuses on three businesses. Each has enormous growth potential.

The company’s Starlink satellite internet service has more than 3 million subscribers globally and continues to grow. It’s already highly profitable, generating a reported $8 billion in earnings last year. Starlink offers strong recurring revenue, which usually boosts valuation multiples.

Starlink’s total addressable market is huge. Billions of people worldwide lack reliable internet access. Cruise liners and aircraft that aren’t always in reach of cell towers are also key markets for the satellite internet service.

SpaceX also dominates the commercial launch market with its reusable rockets. Customers include NASA, the U.S. Department of Defense, and spy agencies. Musk’s goal is for SpaceX to colonize Mars. His company’s Starship spacecraft could help make his vision a reality. It’s designed to carry crew and cargo beyond Earth’s orbit. SpaceX’s potential to commercialize space represents its biggest long-term revenue opportunity.

In addition, Musk recently merged his AI-focused company, xAI, with SpaceX. xAI’s flagship product is Grok, a powerful large language model. xAI might seem to be a questionable fit for SpaceX. However, Musk believes that terrestrial solutions won’t be enough to meet the growing electricity demand for AI systems. In his view, space-based AI powered by solar energy is more scalable than Earth-based data centers.

Why Tesla could still be worth more

However, SpaceX’s valuation is harder to justify on fundamental grounds. Despite its problems, Tesla continues to generate strong free cash flow ($6.2 billion last year). The company’s financial base is much more mature than SpaceX’s.

To be sure, Tesla faces more intense competition than ever in the EV market. The company doesn’t have the pricing power that it once had. Still, it would be premature to write off Tesla’s EV prospects, especially amid soaring gas prices.

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More importantly, Tesla’s fortunes don’t hinge entirely on selling EVs. The company could have a huge opportunity in the robotaxi market. Tesla’s big competitive advantages are cost and scalability. Its self-driving technology relies only on computer vision and doesn’t require expensive LiDAR systems. Every Tesla vehicle equipped with its FSD (Full Self-Driving) software could, in theory, be used for autonomous ride-hailing.

Tesla also ranks among the top robotics stocks. Musk predicts that the company’s Optimus humanoid robot will be “the biggest product ever.” He stated last year, “I do think if Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world.”

Even if you think Musk is being way overoptimistic, there’s still a case to be made that Tesla should be valued more than SpaceX based on traditional financial metrics.

The unvarnished truth

Is SpaceX really worth more than Tesla? The unvarnished truth is that it depends on which factors you weigh more heavily.

SpaceX arguably has a higher upside potential than Tesla, but it comes with greater uncertainty. Tesla has a track record of success but faces real challenges. Both companies are closely linked to Musk, which has both pluses and minuses. Both could be worth more — or less — than their current valuations suggest.

Perhaps the best answer to whether or not SpaceX is worth more than Tesla or vice versa is that we’ll have to wait and see.