Tesla and SpaceX Plunge Below Trillionaire Mark: Is This a Reckoning of AI Valuation?

Tesla and SpaceX Plunge Below Trillionaire Mark: Is This a Reckoning of AI Valuation?​

The dramatic correction in shares of Tesla and SpaceX has profoundly impacted Elon Musk's wealth, pushing him below the trillionaire status. The selloff raises critical questions regarding whether this downturn represents a temporary market pullback or a necessary reset in the high valuations assigned to companies pioneering artificial intelligence and space technology.

Understanding the Steep Correction in Tech Giants​

Tesla has witnessed a significant decline, falling about 21 per cent from its December 2025 peak of $498.83. The stock is currently trading around $393. Concurrently, SpaceX shares have declined roughly 30 per cent from their post-listing intraday high of $225.64, now hovering between $157 and $158.

This dual slide has reduced Musk’s estimated net worth from a peak of $1.45 trillion shortly after the SpaceX listing to below $1 trillion. This development means he is no longer the sole individual holding the title of a trillionaire.

Investor Scrutiny on Tesla and SpaceX Business Models​

Viram Shah, CEO and Founder of Vested Finance, suggests that this correction reflects more than company-specific issues; it signals a broader reassessment of how investors value AI and space endeavors. He notes that Tesla recently reported one of its strongest quarterly delivery figures in recent history, yet the stock still declined significantly.

This continued volatility indicates that the market remains intently focused on Tesla’s ambitious long-term goals regarding autonomous driving and robotaxis, rather than solely appreciating its core electric vehicle operations. Similarly, SpaceX faces pressure after an initial post-listing rally. Despite Starlink continuing profitable growth and the expansion of its launch business, the stock has seen a major descent.

Profit Booking Versus Deeper Market Correction​

Shah attributes the decline to a confluence of factors: profit booking following strong rallies, prevailing concerns surrounding AI valuations, increased short-selling activity, and the inherent volatility associated with newly listed companies that possess limited publicly traded shares.

He believes both elements are at play. While some investors naturally locked in gains from the robust rally across both firms, markets are increasingly reassessing the substantial premiums attached to companies operating in the artificial intelligence and space economies. This shifting sentiment makes it difficult to forecast where these valuations might eventually stabilize.

Advisory for Indian Investors Navigating US Equities​

Instead of viewing this decline as a simple buy or sell instruction, Shah advises investors to concentrate on sound portfolio allocation and their long-term investment thesis. He states that for those maintaining a five or ten year outlook on space and AI, fluctuations of a few weeks should not alter the core strategy.

Investors must also assess whether their exposure to these high growth stocks has become disproportionately large following previous rallies. Shah cautioned Indian investors against impulsively pursuing newly listed, high valuation US companies without thoroughly assessing the inherent risks involved.

For those in India investing in US equities via the Liberalised Remittance Scheme (LRS), position sizing remains paramount. He advised that keeping investments sized appropriately to withstand short-term volatility can ensure that a weak financial quarter does not significantly compromise the overall portfolio health.