Alphabet Turned $900 Million in SpaceX Into $94 Billion — Here’s the Lesson for Investors

Big tech companies don’t just build products — they place bets. Amazon (NASDAQ:AMZN | AMZN Price Prediction) poured billions into a cloud division that looked like a side project in 2006. Microsoft (NASDAQ:MSFT) wrote a $1 billion check to a scrappy AI lab called OpenAI in 2019. And Alphabet (NASDAQ:GOOG), back in 2015, handed roughly $900 million to a rocket company that most Wall Street analysts treated as a vanity project for Elon Musk. 

A decade later, that rocket company is public, and Alphabet’s stake is worth more than the entire market capitalization of Ford (NASDAQ:F), Kraft Heinz (NASDAQ:KHC), and Southwest Airlines (NYSE:LUV) combined. This is what patient capital looks like when it actually works — and it offers shareholders a window into how Alphabet thinks about risk that its search-ad business alone never could.

The Numbers Behind a 100-Bagger

According to Alphabet’s recent Form 13F, the company held 551.2 million shares of SpaceX (NASDAQ:SPCX) valued at approximately $94.2 billion as of June 30 — more than 100 times the roughly invested 10 years ago. That single stake now accounts for 95% of Alphabet’s total investment portfolio. 

SpaceX went public on June 12 at $135 a share, and Alphabet’s disclosed position made it the company’s largest institutional shareholder by a wide margin, ahead of four other major holders. Granted, paper gains aren’t cash in the bank. SpaceX shares closed at $141.29 on Wednesday — 4.7% above the IPO price, but 17% below the June 30 mark that Alphabet used to value its stake. That’s a reminder that 13F filings are snapshots, not real-time trackers, and they’re published up to six weeks after quarter-end. In any case, even after the pullback, Alphabet is sitting on a gain few venture investors ever see.

Why This Matters More Than the Headline Number

Alphabet’s core operations are compounding on their own: consolidated revenue rose 24% year-over-year to $119.8 billion in the second quarter, marking its 12th straight quarter of double-digit growth. Google Cloud revenue expanded 82% to $24.8 billion, and YouTube generated $11 billion in ad revenue for the quarter.

That operational strength is why Alphabet trades at a trailing P/E of roughly 17 — a discount to the broader technology sector average that MarketBeat pegs around 75x. Compare that to peers making similar outsized private bets:

Alphabet also holds a stake in Anthropic, which the company’s Q2 filing said contributed to a $99.0 billion gain on equity securities that boosted net income by $77.1 billion, or $6.26 per diluted share, for the quarter. Strip that out, and Alphabet’s core business still generated an adjusted EPS of $2.85, beating what analysts had expected out of the ad and cloud businesses alone.

Key Takeaway

The SpaceX stake is a bonus, not the investment thesis. Alphabet’s core advertising, cloud, and AI businesses are growing revenue at 24% annually while trading at a below-sector P/E multiple, and the SpaceX position simply proves management is willing to make outsized, long-duration bets that pay off. 

That said, investors shouldn’t buy Alphabet stock for the SpaceX exposure alone — it’s an illiquid, largely unmonetizable paper gain until Alphabet actually sells shares, and SpaceX’s own volatility (a 14% pullback from its post-IPO peak) shows these things don’t move in a straight line. 

Regardless, for shareholders who already like Alphabet’s search, cloud, and Gemini businesses, the SpaceX windfall is the kind of asymmetric payoff that should make patient investors sleep well at night. A near-25% return on invested capital and a 49% return on equity did the heavy lifting long before SpaceX ever went public.

Contact [email protected] for any questions or corrections.