SpaceX Is Worth $2 Trillion. Could It Still Be Cheap?

SpaceX shares jumped 7.6% on 5 October to close at US$171.09, taking the stock roughly 27% above its US$135 IPO price.

There wasn’t one blockbuster announcement behind the move.

Instead, several bullish narratives converged: Morgan Stanley reiterated its US$300 price target, TD Cowen and CLSA recently initiated Buy ratings, AI stocks were strong, and excitement continues to build around SpaceX’s rapidly expanding AI ambitions.

Then there’s Starship.

On 28 September, Starship reached orbit for the first time and deployed 26 Starlink V3 satellites — an important step towards SpaceX’s goal of making its enormous rocket fully and rapidly reusable.

But after the latest rally, investors face a more difficult question:

At more than US$2 trillion, how much of SpaceX’s future are you already paying for?

From IPO to US$2 trillion

SpaceX only became a public company in June.

The company priced its IPO at US$135 per share on 11 June, before beginning trading under the ticker SPCX on 12 June. After underwriters exercised their full option, SpaceX sold nearly 639 million shares and raised approximately US$85.7 billion.

The IPO valued the company at approximately US$1.78 trillion.

Since then, the ride has been anything but smooth.

1. 11 June
   IPO priced at US$135
2. 12 June
   SPCX begins trading
3. Post-IPO high
   ~US$226
4. Post-IPO low
   ~US$105
5. 28 September
   Starship reaches orbit for the first time
6. 2 October
   Shares close at US$158.96
7. 5 October
   Shares jump 7.6% to US$171.09

At the latest price, SpaceX’s market capitalisation is around US$2.2 trillion.

For a company that has been public for less than four months, that’s extraordinary.

So are its growth expectations.

SpaceX isn’t just a rocket company anymore

The SpaceX investment story used to be relatively straightforward: rockets and Starlink.

Today, investors are effectively buying into several businesses at once.

And these aren’t simply distant ideas.

SpaceX generated US$7.8 billion in Q2 revenue, up 92% year-on-year. Connectivity produced US$4.3 billion, while AI contributed US$2.6 billion. Adjusted EBITDA reached US$3.5 billion.

Starlink consumer subscribers more than doubled year-on-year, while government, aviation, maritime and other enterprise revenues also increased.

But perhaps the most aggressive part of the growth story is AI.

The argument that makes US$2 trillion look small

Think of SpaceX’s valuation as a mountain.

Standing at the bottom, US$2 trillion looks enormous.

The bullish argument asks what the view might look like from the top.

SpaceX currently operates around 1.4 gigawatts of AI compute capacity and has outlined ambitions to reach roughly 10 gigawatts by the end of 2027. Elon Musk has suggested the company could potentially generate US$300 billion to US$500 billion of annual revenue from that level of infrastructure.

Take the upper end of that scenario.

If SpaceX eventually generated US$500 billion annually from AI infrastructure alone, a US$2 trillion market capitalisation would equate to roughly four times that revenue.

And that calculation doesn’t assign separate value to Starlink, launches, direct-to-cell, Grok, Starship or SpaceX’s longer-term orbital computing ambitions.

Suddenly, US$2 trillion doesn’t sound quite so absurd.

But there is an enormous catch: those are assumptions, not today’s economics.

Ten gigawatts of available computing capacity does not automatically mean ten gigawatts of fully utilised, revenue-producing capacity.

AI compute pricing could fall as supply expands. Building that infrastructure requires enormous amounts of capital. SpaceX spent US$15.8 billion on AI capex in Q2 alone. And even US$500 billion of revenue tells investors little about eventual free cash flow without knowing the margins required to generate it.

The calculation is therefore useful not because it proves SpaceX is cheap.

It shows why two rational investors can look at the same US$2 trillion company and arrive at radically different conclusions.

Why Morgan Stanley thinks SpaceX could still be cheap

Morgan Stanley’s Adam Jonas makes a similar argument through a different lens.

On conventional valuation measures, SpaceX looks expensive. The company trades at around 30 times Morgan Stanley’s estimated 2028 enterprise value to operating profit, versus roughly 16 times for a group of mega-cap AI companies.

But adjust that valuation for expected growth and the picture changes.

Morgan Stanley calculates SpaceX at approximately 0.3 times EV/EBIT/growth, versus roughly 0.5 times for its mega-cap comparison group.

Jonas’ conclusion: SpaceX is “cheap and getting cheaper” as earnings grow, supporting his US$300 price target.

That’s the core of the bull case.

Investors aren’t arguing that US$2 trillion is a small number.

They’re arguing that SpaceX could grow into an enormous number unusually quickly.

What could go right?

SpaceX has something few companies can replicate: businesses that potentially reinforce one another.

1. StarshipCould dramatically cut the cost of reaching orbit.
2. Cheaper launchesMake bigger Starlink constellations more economical.
3. StarlinkProduces recurring connectivity revenue.
4. AI infrastructureSupports Grok and third-party customers.
5. Orbital computeStarship could one day deploy computing into space.

Starship could dramatically reduce the cost of reaching orbit. Cheaper launches make deploying larger Starlink constellations more economical. Starlink produces recurring connectivity revenue. SpaceX’s AI infrastructure supports Grok and third-party customers. And eventually, Starship could deploy computing infrastructure directly into space.

SpaceX has said it expects to begin deploying orbital AI compute satellites as early as 2028.

That vertical integration is the most interesting part of the thesis.

If Starship becomes rapidly reusable, Starlink continues scaling and SpaceX successfully builds one of the world’s largest AI infrastructure businesses, today’s company could look dramatically different within five years.

What could go wrong?

The biggest risk may simply be that too much goes right in today’s valuation model.

SpaceX doesn’t merely need to grow. At more than US$2 trillion, it needs to deliver enough growth to support expectations that are already enormous.

Starlink illustrates the trade-off.

Consumer subscribers increased 101% year-on-year in Q2, but average revenue per user fell 22.4%, partly because SpaceX expanded internationally and introduced cheaper plans.

AI presents another risk.

The segment generated US$2.6 billion in Q2 revenue but recorded an operating loss of US$1.26 billion, while requiring US$15.8 billion of quarterly capex.

Then there are the risks unique to SpaceX:

• Rocket failures
• Delays to Starship
• Regulation
• Spectrum constraints
• Government-contract exposure
• The immense capital required to build satellites, rockets and data centres simultaneously

And SpaceX’s short history as a public company has already demonstrated the final risk: the price you pay matters.

So, is now a good time to enter?

Perhaps the more useful question isn’t whether SpaceX will be a larger company in five or ten years.

It’s:

What has to happen for today’s US$2 trillion-plus valuation to make sense?

Someone buying SpaceX today is implicitly making several bets.

Starlink needs to continue scaling. Starship needs to progress towards rapid reusability. AI infrastructure needs to turn enormous capital expenditure into enormous revenues — and ultimately profits. Grok needs to remain competitive. And SpaceX needs to execute across all of these businesses quickly enough for earnings to catch up with its valuation.

If those assumptions prove conservative, today’s price could eventually look far less extraordinary.

If execution slips, there is considerably less room for disappointment.

SpaceX’s first four months on the market demonstrate that distinction perfectly.

An investor who bought at the US$135 IPO price is up around 27%.

Someone who bought near the US$226 post-IPO high is still down around 24%.

It’s the same company.

What’s different is the price each investor paid for its future.

And that may be the most important consideration after SpaceX’s latest rally.

The question isn’t simply whether you believe SpaceX will change the future.

It’s how much of that future you’re willing to pay for today.