Space Exploration Technologies (NASDAQ: SPCX) stock is starting to look more and more attractive to me. While I was skeptical of it around the time of its IPO, it has won me over, but not thanks to anything it’s doing in outer space. What I’m more interested in is what it’s doing on Earth, specifically in the artificial intelligence (AI) business.
I think SpaceX has evolved to become an AI company, and how it’s doing in this segment makes me think it’s starting to look like a smart buy.
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Super intelligence has become the top reason to invest in SpaceX
A few months before it went public earlier this year, SpaceX acquired xAI, another one of CEO Elon Musk’s companies. This brought social media platform X (formerly known as Twitter) and xAI (which produced the Grok family of AI models) under the SpaceX umbrella. At the time of the IPO, what it then labeled its AI segment was a relatively minor division, and while it was growing quickly, I never thought it could grow as quickly as it has.
It has since renamed it the “super intelligence (SI)” segment, and in Q3, it delivered 830% revenue growth to $7.56 billion. That makes it larger than the space and connectivity units combined, so it’s easy to see that SpaceX is now becoming an AI company, especially because this rapid growth rate will likely persist for some time.
In fact, Musk has predicted that SpaceX’s annual recurring revenue could reach $500 billion to $1 trillion by the end of next year. While that’s a huge stretch and I don’t think it will happen, the reality is that SpaceX isn’t the stock most people thought it was, and it’s better off viewed through the lens of an AI investor rather than a space investor.
While SpaceX’s ultimate goal and company heading is space exploration, AI is just too big of an opportunity to ignore, and establishing itself as a major player while collecting massive revenue is a smart move, as it will help fund its other endeavors in the future.
We’ll have to see what the future holds for SpaceX’s AI division. Still, in the meantime, the growth it’s providing may be enough to justify the stock’s price tag, as Musk’s revenue call implies that its AI division will be growing in at least the triple digits for the foreseeable future. If it can grow that quickly, then I think SpaceX deserves a spot in many investors’ portfolios, as there are relatively few AI pure plays available on the market. While SpaceX has other business units, AI is clearly becoming the top reason to invest in it.
