SpaceX stock may stay flat through 2027 despite 92% revenue growth and AI expansion

SpaceX stock may stay flat through 2027 despite 92% revenue growth, as AI expansion, high valuation and space-based data centre plans shape its outlook.

SpaceX, Elon Musk’s space and technology company, made history in June with its initial public offering (IPO), which valued the company at $1.77 trillion. The IPO was the largest corporate stock market debut in history.

SpaceX stock outlook through 2027 as revenue grows and AI business expands. (Photo by Patrick T. Fallon / AFP) (AFP)

SpaceX raised $75 billion through the IPO. The company plans to use this money to expand its artificial intelligence (AI) business and satellite internet services.

Despite the strong IPO and growing business, SpaceX shares may deliver limited returns through the end of 2027. The company’s large valuation makes it harder to achieve the kind of growth that could lead to major gains in its stock price, according to The Motley Fool.

SpaceX’s business has several growth opportunities, including rocket launches, satellite internet and AI infrastructure. However, investors may have to wait for more information before deciding whether the stock is worth buying at its current price.

SpaceX is changing the space industry

For decades, space exploration was mainly associated with government agencies such as the US National Aeronautics and Space Administration (NASA). SpaceX has helped change this by showing that private companies can also achieve major milestones in space exploration.

SpaceX became the first private company to return a rocket from low Earth orbit. In 2020, it also became the first private company to send astronauts to the International Space Station, according to The Motley Fool.

Unlike government-led space programmes, SpaceX operates as a profit-driven company. This gives it a strong reason to improve efficiency, reduce costs and develop new technology.

The company focuses on making rockets more reusable and improving rocket design. These efforts can help SpaceX reduce the cost of launches and compete more effectively with other companies in the space industry.

SpaceX also benefits from vertical integration, which means that a company controls several stages of its own production and operations instead of depending heavily on outside suppliers. This approach can help it control costs and coordinate different parts of its business, according to The Motley Fool.

Its rocket launch business supports its Starlink satellite internet service. SpaceX uses its rockets to send large numbers of Starlink satellites into space, allowing the company to expand its internet network at a lower cost than relying on rival launch providers.

The two businesses also support each other by helping SpaceX make better use of the cargo capacity available on its rockets and spacecraft. Carrying more useful cargo during launches can improve efficiency and help the company benefit from economies of scale.

SpaceX is also trying to manufacture more of its own equipment. Its production activities include rocket components, satellites, power infrastructure and computer chips. By controlling more parts of its supply chain, SpaceX aims to reduce its dependence on outside suppliers and improve coordination between its different businesses. This could give the company a competitive advantage as it expands its operations, according to The Motley Fool.

SpaceX revenue rises 92% as AI business expands

SpaceX’s second-quarter results showed that its business is still growing quickly, despite its huge market value. Revenue increased 92% year over year to $7.8 billion. The company recorded growth across its business segments, but its AI operations stood out. Revenue from the AI business jumped 213% to $2.56 billion, according to The Motley Fool.

SpaceX’s market capitalisation was around $1.9 trillion in the article’s analysis. Market capitalisation refers to the total market value of a company’s outstanding shares, and a valuation of this size can make it difficult for the business to deliver further large stock gains.

SpaceX’s AI business includes assets acquired through its combination with xAI, another company controlled by Elon Musk. xAI is associated with the X.com social media platform, the Grok large language model and large amounts of advanced computing hardware, according to The Motley Fool.

Grok, xAI’s AI model, has struggled to match leading providers such as OpenAI and Anthropic in terms of adoption by businesses and consumers.

SpaceX has responded by focusing more on AI infrastructure rather than relying only on the popularity of its own AI model. It plans to make money by renting computing power to other companies that need resources to develop and operate AI systems.

This strategy includes major agreements with Google and Anthropic. Under the reported deals, Google is expected to pay SpaceX $920 million per month, while Anthropic is expected to pay $1.25 billion per month for access to its AI infrastructure, according to The Motley Fool.

These agreements could help SpaceX earn revenue from companies that need substantial computing power for AI development. They also show how the company is trying to build its AI infrastructure business even as its own Grok model faces competition.

Space-based data centres could be SpaceX’s next big move

SpaceX is also exploring ways to combine its AI and space businesses by building data centres in space. The idea is to use its space technology and infrastructure to support the growing demand for computing power, according to The Motley Fool.

Elon Musk believes space-based data centres could eventually offer advantages because they would have access to abundant solar energy and could benefit from easier cooling. These features could help address some of the energy and cooling challenges faced by data centres on Earth, according to The Motley Fool.

However, the idea remains speculative. SpaceX has yet to prove that space-based data centres can become a practical and commercially successful way to handle AI workloads.

If the plan succeeds, SpaceX could strengthen its vertical integration by connecting its rocket launch services, satellite technology and AI infrastructure. This could also create a strong competitive advantage, known as an economic moat, making it harder for rival data centre companies to compete with its business, according to The Motley Fool.

Why SpaceX stock may stay flat through 2027

SpaceX’s expanding businesses and strong revenue growth could make its shares attractive to investors over the long term. However, SpaceX’s high stock valuation is a major concern. The company has a price-to-sales (P/S) ratio of 68. This means investors value SpaceX at 68 times its yearly sales. According to The Motley Fool, this leaves little room for mistakes if the company’s growth slows or fails to meet expectations.

The high valuation is also a concern for investors who think the AI boom could be a bubble. If interest in AI stocks falls, companies with very high valuations could see their share prices drop.

Even though SpaceX’s revenue has grown by 92% and its AI business is expanding quickly, its stock may not rise much. This is because investors already expect the company to grow significantly in the future.

The Motley Fool expects SpaceX’s stock to stay around its current price until the end of 2027. It advises investors to wait for more information instead of rushing to buy the stock at its current high valuation.

SpaceX has strong revenue growth, a growing AI infrastructure business and plans to connect its space and AI operations. However, its high stock valuation could limit gains for investors through 2027, even if the company continues to grow.