Space Exploration Technologies Corp. raised $85 billion in its initial public offering earlier this month, creating a significant capital pool likely to flow through a sprawling ecosystem of suppliers. As the company expands its launch business, scales Starlink's satellite network, and builds artificial intelligence infrastructure through sister company xAI, the IPO proceeds are expected to benefit a wide range of sectors including semiconductors, networking equipment, aerospace materials, power systems, and data center infrastructure. While Nvidia Corp. is often cited as a primary beneficiary, numerous other companies are positioned to gain from the next phase of spending.

The xAI Buildout Could Boost AI Infrastructure Suppliers

The largest spending commitments may ultimately come from xAI and its rapidly growing AI infrastructure footprint. Training advanced AI models requires massive amounts of computing power, networking equipment, cooling systems, and electricity. This demand could benefit companies such as Dell Technologies Inc., Super Micro Computer Inc., and Arista Networks Inc., all of which play key roles in building AI clusters.

AI infrastructure extends well beyond servers. As data centers become larger and more power-intensive, companies focused on energy and cooling systems could also see gains. Vertiv Holdings Co. and GE Vernova Inc. have emerged as critical suppliers to the AI boom, while Caterpillar Inc. provides backup power solutions frequently used in large-scale data center deployments. Tesla Inc. and Bloom Energy Corp. could also find themselves linked to the expansion through energy storage, distributed power systems, and electricity infrastructure.

Starlink Expansion Could Create Another Set Of Winners

While AI attracts most of the headlines, Starlink remains one of SpaceX's most capital-intensive growth engines. The satellite internet business requires a steady supply of electronic components, communications equipment, and advanced manufacturing inputs. Companies such as STMicroelectronics N.V., Flex Ltd., TE Connectivity Plc, Amphenol Corp., and Texas Instruments Inc. operate in areas that support aerospace electronics and communications systems. As SpaceX continues launching satellites and expanding Starlink's global footprint, demand for components throughout the supply chain could rise alongside it.

Rocket Manufacturing Has Its Own Supply Chain

Building rockets requires far more than chips and servers. Aerospace materials suppliers including Hexcel Corp., ATI Inc., Constellium SE, and CPS Technologies Corp. provide advanced materials used in demanding aerospace applications. These companies typically receive far less investor attention than software or semiconductor names, but they occupy critical positions within the aerospace manufacturing ecosystem. Engineering and design firms may also see increased activity as SpaceX continues expanding launch facilities, manufacturing capacity, and infrastructure projects. AECOM, for example, operates in areas that could benefit from large-scale construction and engineering spending.

The Bigger Story

For years, investors have treated SpaceX primarily as a standalone company. The IPO changes that dynamic. Just as Nvidia's rise created opportunities across the broader AI supply chain, SpaceX's public-market debut could shine a spotlight on a much larger ecosystem of companies helping build rockets, satellites, AI clusters, and energy infrastructure. The company's $85 billion raise is now one of the largest pools of growth capital in the market. While Nvidia may capture much of the attention, investors looking for second-order beneficiaries may find opportunities throughout the SpaceX and xAI supply chains.

Space Exploration Technologies Corp has become a holding in roughly 100 exchange-traded funds, yet it remains absent from ESG portfolios following a severe assessment from MSCI. The research firm assigned SpaceX its lowest possible ESG rating of CCC on June 11, citing significant governance risks and severe controversies. This rating effectively disqualifies the stock from inclusion in many ESG funds, which typically screen out companies with bottom-tier governance scores or low overall ratings.

The exclusion creates a sharp contrast between mainstream ETF strategies and ESG mandates. While SpaceX has quickly integrated into space, innovation, growth, and broad-market ETFs, ESG funds have stayed on the sidelines. Major ESG funds such as the iShares ESG Aware MSCI USA ETF, iShares ESG MSCI KLD 400 Social ETF, and iShares ESG Aware MSCI EAFE ETF do not hold the stock. These funds rely on MSCI or Sustainalytics methodologies that limit exposure to companies with severe controversies or weak governance practices.

Governance Risks Drive Low Rating

MSCI's assessment focused heavily on governance factors, including corporate oversight, shareholder rights, disclosure standards, and insider control. The firm also assigned an "orange flag" controversy designation to SpaceX. Governance has historically been viewed as the ESG factor most closely linked to financial outcomes, making the rating a significant barrier for ESG managers.

The situation presents a dilemma for ESG investors. By excluding a stock that has rapidly become a market favorite, ESG funds risk lagging benchmarks if SpaceX's growth trajectory continues. However, proponents argue that the screening process identifies risks the broader market may overlook, potentially validating the strategy if governance issues materialize later.

ESG Investing Faces Headwinds

The exclusion comes as ESG investing faces broader challenges. Bloomberg Intelligence ETF analyst Eric Balchunas noted that ESG has largely vanished from industry discussions, citing more than 125 ESG ETF closures in recent years. Many funds are dropping ESG terminology from their names as investor demand fades. Critics argue that ESG screens force investors to miss out on high-growth opportunities, a point underscored by SpaceX's surge since its public debut.

For now, the market remains split. Nearly 100 ETFs own SpaceX, but none carry an ESG mandate. The divergence underscores the ongoing debate over whether governance screens add value or simply exclude high-performing assets.