SpaceX Valuation: Street Reprices Stock After AI Surge
Investors are adjusting their outlook on the space giant after a quarterly report revealed that its new artificial intelligence division has become the primary driver of corporate revenue.
By Chinedu Okafor ·
The S&P 500-weighted list of major aerospace and technology stocks saw a significant repricing on the morning of October 21, with SpaceX (NASDAQ: SPCX) shares climbing approximately 8 percent in premarket trading. This movement followed a comprehensive wave of upward revisions to price targets issued by Wall Street analysts overnight. The reaction was immediate, as the stock had closed at $147.79 on October 20 before surging in after-hours and early morning sessions in response to a quarterly report that significantly outpaced market expectations.
The primary catalyst for this shift in sentiment was the company's financial performance for the third quarter of 2026. SpaceX reported total revenue of $14.6 billion, representing a year-over-year increase of 161 percent. This figure comfortably exceeded the consensus estimate, which hovered near $12.7 billion. Profitability metrics also saw a dramatic turnaround, with the company posting a net profit of $4.4 billion compared to a loss in the same period the previous year. Adjusted EBITDA reached $8.8 billion, signaling strong operational efficiency across its various business verticals.
The most notable driver of this financial outperformance was the Super Intelligence division, which generated approximately $7.6 billion in revenue. This segment grew nearly 830 percent year-over-year to become the largest contributor to the company's top line. The Connectivity segment followed as a secondary pillar, delivering $5.2 billion in revenue. This was driven by strong subscriber growth, which expanded the Starlink consumer base to 13.6 million users, reinforcing the company’s position in the global broadband market.
During the earnings call, CEO Elon Musk and CFO Bret Johnsen provided guidance for the first quarter of 2027, projecting revenue between $33 billion and $37 billion. This outlook was far above the approximately $22 billion modeled by analysts. Management also outlined fourth-quarter capital expenditure plans of $35 billion to $40 billion, with a specific focus on AI compute infrastructure. These investments are concentrated at sites in Memphis and Southaven, targeting 2.5 to 3 gigawatts of nameplate compute capacity by year-end.
The aggressive expansion strategy is underpinned by what Musk described as relentless demand from hyperscalers and other corporate clients. Compute pricing is reportedly supporting payback periods of less than a year, with some projects potentially returning on investment within six months. The company has also discussed pathways to reach 13 gigawatts or more of capacity by the end of 2027, a scale that would place it among the largest independent compute providers in the industry.
In response to these results, major financial institutions significantly raised their valuations for the stock. JPMorgan more than doubled its price target to $500 from $240, maintaining an Overweight rating. Cantor Fitzgerald lifted its target to $345 from $246, while Barclays and Morgan Stanley both moved to $300. Citi increased its target to $240, and UBS and TD Cowen raised theirs to $230 and $224, respectively. Wells Fargo and Clear Street also adjusted their targets higher to $274 and $248, respectively.
Analysts broadly cited the strong quarterly print, the accelerating AI compute expansion, and progress in Starship orbital capabilities as the key drivers for these higher long-term growth projections. The report also highlighted the deployment of V3 satellites and the rapid adoption of the Grok Bot. Additionally, the formation of special committees to explore a potential combination with Tesla provided an extra layer of speculative interest in the stock’s future trajectory.
While the average analyst price target has moved higher, reflecting greater conviction in the company's trajectory across launch, connectivity, and AI, the scale of upcoming capital expenditures remains a point of focus for investors. The market is now weighing the substantial revenue growth against the heavy investment required to sustain the company's expansion into the compute infrastructure market.
Source: Teslarati
