Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, has experienced a turbulent start since its IPO earlier this year.
The stock rocketed to $225 per share within days of its $135 initial public offering before falling more than 50% over the following weeks.
Shares now trade around $150, and the stock continues to exhibit considerable volatility that is keeping many investors cautious.
Near-term pressure could intensify as insiders and early investors begin selling additional shares, with most unlock periods expiring by year-end.
Elon Musk’s own shares unlock one year after the IPO, though the CEO has stated he has no intention of selling any of his stake.
Despite the rocky start, SpaceX carries a price-to-sales ratio close to 100, reflecting the enormous long-term growth potential investors are pricing in.
During the company’s second-quarter earnings call, Musk said SpaceX updated its revenue growth timeline and now expects to reach $1 trillion in annual revenue by 2030.
That target is extraordinary given the business generated just over $20 billion in revenue over the past four quarters, representing a potential 50-fold increase in sales.
The primary engine behind that growth is SpaceX’s AI segment, which centers on renting out compute capacity to third-party customers including Anthropic, Alphabet (NASDAQ: GOOGL), and Reflection AI.
Management says it can stand up new data centers and servers extremely quickly, expecting to end the year with 2 gigawatts of capacity and targeting closer to 10 gigawatts by the end of next year.
CFO Bret Johnsen added detail on the economics, stating, “The current economics have translated into a less than one-year payback on our new capital deployments for compute.”
For context, Google Cloud CEO Thomas Kurian noted that Alphabet (NASDAQ: GOOG) achieves that payback rate only on its custom TPU servers, while its average server carries a two-year payback period.
SpaceX exclusively uses Nvidia (NASDAQ: NVDA) GPUs, making that payback comparison a striking signal of the company’s operational efficiency if it holds up over time.
A key wildcard is the successful deployment of low Earth orbit data centers, which depends on the commercial launch of Starship, SpaceX’s super-heavy, fully reusable rocket system.
Wall Street is discounting Musk’s $1 trillion revenue claim, with the analyst consensus projecting roughly $530 billion in AI-related revenue by 2031, with total revenue potentially reaching $600 billion to $650 billion when including Starlink and launch services.
Using comparable infrastructure-as-a-service companies like CoreWeave (NASDAQ: CRWV) and Oracle (NYSE: ORCL), which trade at around 6 times sales, SpaceX could be valued at $3.6 trillion based on 2031 revenue projections of $600 billion.
That would represent a 77% increase from today’s valuation, turning a $1,000 investment into roughly $1,770, or a 12% compound annual return over five years.
While that is a reasonable return on paper, the level of risk embedded in those projections is substantial, and investors would need to apply a significant margin of safety before buying at today’s prices.
The biggest structural risk remains whether the compute rental market stays in a supply shortage, because without that dynamic SpaceX loses much of its pricing leverage against established hyperscalers.
For investors willing to accept that uncertainty, SpaceX represents a bold long-term bet, but those seeking higher confidence in solid returns may find better opportunities elsewhere in the market today.
