Space Exploration Technologies (NASDAQ: SPCX), also known as SpaceX, got the valuation it was looking for when it went public in June. The initial public offering (IPO) was oversold, and the stock shot up at the open, reaching a market cap of $2.1 trillion. However, the market has lost its taste for the high-flying stock, which is down 17% from its first-day closing price.
The company is growing rapidly, and CEO Elon Musk has set high goals for the future. Is this a great time to buy? Let’s see where SpaceX stock could be by the end of 2027.
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What’s happening now?
SpaceX has three separate segments that also work together synergistically. The rocket-launching business is perhaps its most exciting venture, offering private space travel and working with enterprise clients such as NASA. It plays an important role in the Starlink satellite broadband business, bringing satellites into space, and Musk envisions mini solar-powered data centers for its artificial intelligence (AI) business, which was recently renamed superintelligence.
The company as a whole is growing fast, and each component plays a role. Total revenue increased 161% year over year in the third quarter, and it reported its first quarterly profit. With $32 billion in trailing 12-month revenue, it’s still much smaller than the other large tech stocks that are worth more than $1 trillion, and it has that valuation because the stock is incredibly expensive, trading at 54 times trailing 12-month sales.
The space business increased 84% year over year in the third quarter, but it’s still reporting a small operating loss. Starlink sales were up 69% year over year, with a $2.4 billion operating profit, and artificial intelligence sales increased 830%, reporting a $431 billion operating profit.
What could happen over the next year?
SpaceX sees artificial intelligence as its biggest opportunity, and it already accounts for about half of total revenue. If things continue to move in that direction, which is likely, SpaceX will be more an AI company than a space company.
It recently announced that it has committed to a $40 billion lease of Nvidia graphics processing units (GPUs), the chips that power AI. It secured the funding through several financial firms and boasts that this is the largest GPU financing ever.
