SpaceX Stock Drops 7% As Musk Denies Secret AI Handset Report

SpaceX shares fell 7% on Wednesday after Elon Musk denied a report that the company showed investors a prototype AI-powered handset device ahead of its blockbuster initial public offering.

Key Points:

Musk's AI Device Emerges

SpaceX privately showed investors and stakeholders a prototype AI-powered handset before its recent stock market debut, according to people familiar with the matter who were briefed on the plans. The device is reportedly slimmer than an iPhone and built to run on a proprietary operating system rather than existing mobile platforms, resembling something between a compact touchscreen phone and a standalone AI gadget. It draws on technology from xAI, the artificial intelligence venture Musk folded into SpaceX earlier this year in an all-stock deal, and is expected to use Qualcomm chips.

SpaceX told investors the project remains early-stage, cautioning that the design could still change significantly and that the device may never reach production or public release.

The push comes as rivals across Silicon Valley chase similar ambitions in consumer AI hardware. OpenAI is developing its own AI device with former Apple design chief Jony Ive, and the ChatGPT maker recently hired another Apple executive, who previously led development of the Vision Pro headset, to help move the project along. Turning a dedicated AI gadget into a mainstream product has proven difficult industrywide, with earlier entries such as the Humane AI Pin and Rabbit R1 largely failing to gain traction.

Also Read: OpenAI And Anthropic Want SpaceX-Sized IPOs, But Wall Street May Choke

SpaceX Stock Slides On Denial

Musk called the report "utterly false" in a post on X, offering no further detail beyond the two-word rebuttal. Shares of SpaceX fell about 7% Wednesday, extending a slide that has left the stock roughly 30% below its June peak.

The slide also erased more than $50 billion from Musk's net worth in a single session, according to one estimate, ending his brief run as a trillionaire and underscoring how closely his fortune tracks SpaceX's volatile stock.

Vital Knowledge analysts wrote that it's hard to imagine SpaceX becoming a force in consumer electronics. Musk-led companies still draw outsized valuations built partly on promised products, the analysts noted, even when those products remain years from reality. The mixed reaction left investors with little clarity on how much weight to put behind an unconfirmed report that SpaceX has not directly addressed beyond Musk's brief denial.

The denial follows a familiar pattern. Musk rejected a similar report in February that SpaceX was developing a Starlink-linked phone, and the company has since deepened its wireless ambitions through a satellite-to-phone partnership with T-Mobile and separate talks over broader mobile infrastructure.

Read Next: Why Is ETH Still Weak While Ethereum Staking Hits Record Highs?