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SpaceX IPO buzz and orbital AI projects fueled a powerful rally in space-related ETFs in May.
Lower launch costs and rising government spending are accelerating growth in the space economy.
Blue Origin's rocket explosion showed execution risks remain high despite strong momentum.
Space-related stocks witnessed a massive rally in May as excitement builds around the highly anticipated IPO of SpaceX, which could become the largest public offering ever. According to The Wall Street Journal, the company is targeting a June 12 debut and could raise as much as $80 billion at a valuation near $2 trillion (read: Space Stocks Surge as SpaceX IPO Frenzy Builds).
SpaceX said in a new filing this week that it plans a record-breaking $75 billion IPO, pricing shares at $135 and valuing the company at roughly $1.8 trillion, as quoted on Yahoo Finance.
Space-Based Data Centers Gain Attention
A key driver behind the enthusiasm is Elon Musk’s vision of building data centers in space. The concept is increasingly attracting interest across the tech industry.
Blue Origin founder Jeff Bezos recently told CNBC that space-based data centers are technologically feasible, though commercial deployment may take longer than many investors expect.
Meanwhile, Alphabet is reportedly developing a space-data-center initiative known internally as “Suncatcher,” with test launches expected in 2027. Google is also said to be discussing a rocket launch partnership with SpaceX, according to the WSJ.The satellites will be equipped with Google's custom proprietary AI chips, Tensor Processing Units (TPUs), to process AI workloads directly in orbit.
Why Investors Are Turning Bullish on Space
The economics of the space industry have improved dramatically over the past two decades. Launch costs have dropped roughly 90%, largely due to reusable rocket technology pioneered by SpaceX.
The global space economy reached USD 613 billion in 2024, according to Space Foundation, as quoted on Saxo. According to McKinsey, the global space economy could expand to $1.8 trillion by 2035 from $630 billion in 2023. Key growth areas include satellite broadband, Earth observation, geospatial intelligence, positioning services and in-orbit operations.
Government spending is also acting as a major catalyst, as countries increasingly treat space infrastructure as strategically important for both defense and commercial purposes.
Several companies tied to NASA’s Artemis II lunar mission have also benefited from rising investor enthusiasm surrounding the emerging lunar economy.
Per McKinsey, space applications are expected to grow at a faster rate than global nominal GDP over the next decade. The space economy is becoming an integral part of the daily life, from internet connections and weather data to defence, farming, shipping and navigation.
Risks Remain Elevated
Despite the strong momentum, investors should remain cautious about the sector’s risks. Space companies often face long development cycles, heavy upfront costs, and significant execution challenges. Valuations across many space-related names also appear stretched following the recent rally. Plus, the space is facing competition too.
Space Stocks Retreat After Blue Origin Launchpad Explosion
Investors should note that although space-related stocks had a great month, those stocks sold off sharply to close out the month after a New Glenn rocket operated by Blue Origin exploded during a launchpad test at Cape Canaveral.
The incident weighed on a sector that had recently rallied ahead of the anticipated IPO of SpaceX. Among the biggest decliners, AST SpaceMobile dropped as much as 15% on May 29, while Rocket Lab lost about 3%. The broader space industry was pressured as investors assessed the implications of the test failure for future launch schedules and sector momentum.
Moreover, much of enthusiasm related to the SpaceX IPO has been largely priced-in. Hence, while long-term prospects are bright thanks to the rising defense and space spending and commercial space expansion, massive near-term surge is less likely for the space. Investors should closely keep an eye on the IPO day.
Space ETFs in Focus
Global X Space Tech ETF (ORBX - Free Report) – Up 43.4% over the past month (as of May 29, 2026)
Roundhill Space & Technology ETF (MARS - Free Report) – Up 39.5%
Defiance Drone and Modern Warfare ETF (JEDI - Free Report) – Up 49.8%
View the Zacks #1 Rank List
Image: Bigstock
Space ETFs Skyrocket in May: Can the Rally Last?
Key Takeaways
Space-related stocks witnessed a massive rally in May as excitement builds around the highly anticipated IPO of SpaceX, which could become the largest public offering ever. According to The Wall Street Journal, the company is targeting a June 12 debut and could raise as much as $80 billion at a valuation near $2 trillion (read: Space Stocks Surge as SpaceX IPO Frenzy Builds).
SpaceX said in a new filing this week that it plans a record-breaking $75 billion IPO, pricing shares at $135 and valuing the company at roughly $1.8 trillion, as quoted on Yahoo Finance.
Space-Based Data Centers Gain Attention
A key driver behind the enthusiasm is Elon Musk’s vision of building data centers in space. The concept is increasingly attracting interest across the tech industry.
Blue Origin founder Jeff Bezos recently told CNBC that space-based data centers are technologically feasible, though commercial deployment may take longer than many investors expect.
Meanwhile, Alphabet is reportedly developing a space-data-center initiative known internally as “Suncatcher,” with test launches expected in 2027. Google is also said to be discussing a rocket launch partnership with SpaceX, according to the WSJ.The satellites will be equipped with Google's custom proprietary AI chips, Tensor Processing Units (TPUs), to process AI workloads directly in orbit.
Why Investors Are Turning Bullish on Space
The economics of the space industry have improved dramatically over the past two decades. Launch costs have dropped roughly 90%, largely due to reusable rocket technology pioneered by SpaceX.
The global space economy reached USD 613 billion in 2024, according to Space Foundation, as quoted on Saxo. According to McKinsey, the global space economy could expand to $1.8 trillion by 2035 from $630 billion in 2023. Key growth areas include satellite broadband, Earth observation, geospatial intelligence, positioning services and in-orbit operations.
Government spending is also acting as a major catalyst, as countries increasingly treat space infrastructure as strategically important for both defense and commercial purposes.
Several companies tied to NASA’s Artemis II lunar mission have also benefited from rising investor enthusiasm surrounding the emerging lunar economy.
Per McKinsey, space applications are expected to grow at a faster rate than global nominal GDP over the next decade. The space economy is becoming an integral part of the daily life, from internet connections and weather data to defence, farming, shipping and navigation.
Risks Remain Elevated
Despite the strong momentum, investors should remain cautious about the sector’s risks. Space companies often face long development cycles, heavy upfront costs, and significant execution challenges. Valuations across many space-related names also appear stretched following the recent rally. Plus, the space is facing competition too.
Space Stocks Retreat After Blue Origin Launchpad Explosion
Investors should note that although space-related stocks had a great month, those stocks sold off sharply to close out the month after a New Glenn rocket operated by Blue Origin exploded during a launchpad test at Cape Canaveral.
The incident weighed on a sector that had recently rallied ahead of the anticipated IPO of SpaceX. Among the biggest decliners, AST SpaceMobile dropped as much as 15% on May 29, while Rocket Lab lost about 3%. The broader space industry was pressured as investors assessed the implications of the test failure for future launch schedules and sector momentum.
Moreover, much of enthusiasm related to the SpaceX IPO has been largely priced-in. Hence, while long-term prospects are bright thanks to the rising defense and space spending and commercial space expansion, massive near-term surge is less likely for the space. Investors should closely keep an eye on the IPO day.
Space ETFs in Focus
Global X Space Tech ETF (ORBX - Free Report) – Up 43.4% over the past month (as of May 29, 2026)
Roundhill Space & Technology ETF (MARS - Free Report) – Up 39.5%
Defiance Drone and Modern Warfare ETF (JEDI - Free Report) – Up 49.8%
VistaShares Artificial Intelligence Supercycle ETF (AIS - Free Report) – Up 28.2%
Procure Space ETF (UFO - Free Report) – Up 26.5%