Elon Musk has delivered massive multibagger gains for long-term Tesla shareholders, though the stock is down by more than 20% so far this year. The question for many is whether he can do the same for Space Exploration Technologies (SPCX +0.45%) shareholders. After making its debut earlier this summer, SpaceX has become a battleground stock, with some investors thinking the $1.85 trillion market cap company will be worth trillions more in years to come, while others think it is grossly overvalued.
Which team is right? Here is what a $5,000 investment in SpaceX stock today could be worth by 2030.
Space Exploration Technologies
Today’s Change
(0.45%) $0.63
Current Price
$141.50
Key Data Points
Market Cap
Day’s Range
$137.90 – $143.29
52wk Range
$104.83 – $225.64
Volume
55.1M
Avg Vol
116M
Growing AI revenues
The company’s name might be SpaceX, but its future hinges on its massive investments in artificial intelligence (AI). Since it acquired xAI (which, it should be noted, was also controlled by Musk) early this year for $250 billion, SpaceX has embarked on a massive build-out of data centers for AI infrastructure. This will allow it to meet its own needs for the Grok chatbot and sell computing power to third parties.
Its AI revenue was $2.5 billion last quarter, up from $737 million a year earlier. Capital expenditures for SpaceX’s AI segment totaled $15.8 billion in the second quarter alone, a massive amount that it hopes will translate into revenue growth in the near future. It has signed deals to supply computing power to the likes of Alphabet and Anthropi, and on the Q2 conference call, Musk said he believes SpaceX is on pace to reach $100 billion in annual recurring revenue by the end of this year. By 2030, he expects SpaceX’s total revenue to reach $1 trillion.
While I would be skeptical that its AI business can go from basically zero to $1 trillion in revenue within five years, there is clearly strong demand for compute capacity, which is why SpaceX is spending so aggressively to build it.
Image source: Getty Images.
Don’t forget about Starlink
AI is not the only part of the SpaceX business growing quickly. There is Starlink, its satellite internet connectivity platform, which is supported by SpaceX’s own launch business.
Starlink revenue was $4.3 billion last quarter, up 65% year over year. New versions of the Starlink satellites are being built, and it will soon begin launching them into orbit, where they will hopefully enable direct-to-device connections with smartphones. This gives SpaceX a huge addressable market to pursue, and it wouldn’t be surprising if the segment generated $100 billion in revenue by 2030 if the bull case plays out.
Still, there are competitors in this sector, including aggressive investors Amazon and AST SpaceMobile. Starlink is the leader today, but it is unlikely that SpaceX will monopolize the skies.
Where will SpaceX stock be in 2030?
To determine where SpaceX stock may be in 2030, we need to consider its current market cap of $1.85 trillion, and a share count that is likely to be boosted by further secondary stock offerings and employee stock-based compensation in the coming years, diluting the current shares’ value.
Over the last 12 months, SpaceX’s revenue was just $21 billion. This is going to grow quickly over the next few years, possibly surpassing $100 billion in the near future, simply because of its aggressive capital spending plans for AI infrastructure that can generate computing power for sale. But the target of hitting $1 trillion in annual sales — something no company has ever achieved — by 2030 feels far-fetched. You also have to ask how profitable it will be to lease compute after supply eventually grows to meet demand.
A hypothetical SpaceX with $500 billion in revenue and a 20% profit margin would have $100 billion in earnings. If the company’s market cap stayed essentially flat at $1.85 trillion over those years, that would give it a price-to-earnings ratio (P/E) of 18.5 five years in the future. This may look like an attractive valuation compared to the average for the S&P 500 index, which trades at a P/E of 30 today. However, that figure is based on an extremely optimistic scenario about potential earnings five years in the future for a highly capital-intensive business. In that light, I’d suggest that an investment made in SpaceX today is likely to be worth a lot less in 2030. I’d predict that SpaceX stock should trade around $100 five years from now, which would leave a $5,000 position opened at $140 per share worth about $3,571.
