This week’s SpaceX IPO crossed a threshold. But what isn’t yet clear is what we crossed into — the beginning, or the end. On the first day of trading, the share price of the company leapt by nearly 20%, making Elon Musk the world’s first trillionaire. The rise in value wasn’t unexpected. While the buildup to the public launch of SpaceX saw exceptional hype, these blockbuster IPOs are always structured in a way to make it likely they’ll rally on day one.

Months had been spent preparing for the IPO to take off. Investment bankers prepared eye-popping forecasts of future earnings growth, Musk limited the number of shares on offer to ensure supply fell well short of demand, and the Nasdaq and Russell stock indices indicated they’d fast-track SpaceX’s addition. This ensured a wave of money from index-tracking ETFs would support its share price. A great deal of American pension pots will now ride on the success of SpaceX.

So, while the company got off to a good start, its first-day rise merely matched the historical average. The real test comes next. If it keeps going up and up, it may indicate we have only just begun the AI era, and the potential upside is huge. But if it turns around at some point and begins sinking, that may indicate that the market reached peak euphoria this week, and that we began the transition to a bear market — where markets dip for a sustained period.

It’s even harder than usual to predict how the share price will do, because one truly extraordinary thing about this IPO is that investors were persuaded to buy the company on faith, not fact. That is to say, SpaceX’s actual track record of generating income has so far been limited, and nowhere near in line with the expectations factored into its price. The company does not currently make a profit, and its price-to-sales ratio of 92:1 sits far above the average in the S&P 500, which is about 3.6:1 — already well above its historical norm.

However, investment bankers — who admittedly are conflicted, since they profited greatly by ensuring a successful IPO — persuaded investors that Musk is an exceptional genius who will turn fiction into fact. But now Musk will have to deliver. And if he doesn’t, an awful lot of Americans will see their pension pots take a hit. Politically, there’s now a great deal riding on where this goes.

In the background lies another concern. Fund managers say there’s a large amount of liquidity in the market to support these bubbly share prices. But that’s because the US government has been borrowing massively and flooding the economy with money — it’s unlikely an accident that the latest market rally coincided with the arrival of the tax refund cheques from the One Beautiful Bill. But reflecting debt concerns, bond markets are starting to get antsy. Even if rising yields don’t knock stocks yet, it will make it ever more difficult for the government to keep this up. All these IPOs may fight over a diminishing pool of cash.

As the first of a series of blockbuster IPOs, with Anthropic and OpenAI next up, the SpaceX launch could signal the real beginning of the AI era with a reordering of America’s largest companies. Alternatively, if Musk fails to deliver value to shareholders and the SpaceX share price returns to earth, hindsight may reveal this to have been the top of the market. It’ll be champagne or pitchforks down the road. The coming months may reveal which.

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John Rapley is an author and academic who divides his time between London, Johannesburg and Ottawa. His books include Why Empires Fall: Rome, America and the Future of the West (with Peter Heather, Penguin, 2023) and Twilight of the Money Gods: Economics as a Religion (Simon & Schuster, 2017).

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China is trying to catch up with America on artificial intelligence. The Wall Street Journal has reported that Zhipu AI — one of China’s six “AI tiger” LLMs — has released a new model that can rival leading US systems, including Anthropic’s Mythos, in cybersecurity tasks such as pinpointing security bugs. While this marks a milestone in China’s drive to catch up with Western AI capabilities, strong performance on a single benchmark does not mean it has taken the lead. Chinese models still lag behind their Western counterparts in broader capabilities, such as autonomous operation. Skepticism is therefore warranted before resorting to hysterical conclusions, but complacency about the geopolitical implications of China’s AI advances would be an even greater mistake.

On the infrastructure side, Chinese AI is still constrained by access to advanced chips, with American labs way ahead in computing capacity as well as investment. Analysis from earlier this year suggests that Chinese models are likely to be at least a few months behind those in the US. But they are still continuing to make progress, or that the geopolitical importance of AI will be decided only by whose LLM has ventured deeper into the technological frontier. The practical applications of AI, countries’ to capture foreign markets, and the application of AI into the real economy will matter just as much.

Here, China may hold an advantage. As with its dominance across many critical supply chains, Beijing may not need to produce the most advanced AI systems — only those that are affordable and widely deployable. In doing so, it could consolidate global influence by supplying functional, low-cost AI at scale.

Beijing seems to be pursuing exactly that path, developing an AI “open-source” strategy that offers affordable, widely available AI models for companies and individuals to use and modify as they wish. The production of the DeepSeek AI model, which matched the performance of Silicon Valley tools such as ChatGPT at a fraction of the cost for users, created goodwill among Chinese models with developers.

The four most popular models on OpenRouter, an AI hardware platform for developers, are now all Chinese. The goal for China is not only to win the frontier-model race, but to make its systems the default layer of AI adoption across industries and global markets. For most economies, the choice is increasingly between an affordable tool they can deploy now and a more robust one that may be out of reach.

And while the countries adopting Chinese models may be exposed to political pressure and cyber threats from Beijing, safer and more capable alternatives matter little if they are unaffordable. American AI companies are already under pressure to monetize products whose operating costs are rising. If Chinese open-source models become the cheap default for startups, universities, governments and businesses across the developing world, then America’s AI lead will be eroded from below.

Perhaps more concerning for America in the long run is how AI can give Chinese manufacturing even more strength, through the ongoing integration of AI as a general-purpose technology. China’s new Five-Year Plan mentioned AI more than 50 times and includes an “AI+” action plan aimed at spreading AI across the economy.

Beijing has been pioneering automation of its critical infrastructure for years, with promising recent results in increasing warplane production capacity. In that regard, China’s open-model strategy and manufacturing dominance will reinforce each other. Cheap, adaptable models accelerate deployment across the real economy while those deployments generate real-world data and use cases that can feed back into further model improvement.

The United States should not dismiss the importance of its lead in the AI race. That lead worries Beijing, not least because a more automated Chinese economy would also become more vulnerable to AI-generated cyber threats. But nor should Washington assume that China cannot catch up with American capabilities over time.

This AI competition represents part of a broader struggle over tech supply chains and geopolitical influence. Decisions over whether to adopt US or Chinese models could produce a more fragmented global reality, with different regions relying on different cloud providers, chips and security structures. The result will likely be a global economy which is divided into competing spheres, rather than one which produces a single winner.

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Miquel Vila is a political and geopolitical risk consultant focusing on industrial strategy, critical infrastructure and global supply chains.

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