SpaceX (SPCX.US) performance surpassed expectations! The target price of Xiaoma doubled to $500, Damoccan and UBS are optimistic about the long-term outlook

The Zhitong Finance App learned that the results for the third quarter of 2026 announced by SpaceX (SPCX.US) greatly exceeded Wall Street expectations, and the rapid expansion of the artificial intelligence (AI) computing power business became the main driving force for growth. As the company greatly increases its future computing power construction goals, J.P. Morgan Chase, Morgan Stanley, and UBS successively released research reports on October 21, looking forward to SpaceX's long-term development prospects in AI infrastructure, Starlink satellite communications, and Starship business. Among them, J.P. Morgan Chase sharply raised the target price from 240 US dollars to 500 US dollars, Morgan Stanley maintained the target price of 300 US dollars, and UBS raised the target price from 210 US dollars to 230 US dollars.

All three agencies gave SpaceX positive ratings. J.P. Morgan Chase and Morgan Stanley maintained an “gain” rating, while UBS maintained a “buy” rating. Based on SpaceX's closing price of $147.79 on October 20, the target prices given by the three agencies represented potential growth of about 238%, 103%, and 56%, respectively.

SpaceX achieved revenue of 14.575 billion US dollars in the third quarter, up about 161% year on year and 87% month on month, exceeding market expectations of about 12.8 billion US dollars. The adjusted profit before interest, tax, depreciation and amortization (EBITDA) reached US$8.809 billion, which was also significantly higher than market expectations. Morgan Stanley pointed out that the company's revenue and adjusted EBITDA exceeded the agreed market expectations by about 14% and 29%, respectively, and that all three business divisions achieved revenue exceeding expectations.

Among them, the AI computing power business performed particularly well. The third-quarter revenue of SpaceX's Super Intelligence (Super Intelligence) business reached 7.6 billion US dollars, a significant increase from 2.6 billion US dollars in the previous quarter, and higher than market expectations of about 6.4 billion to 6.5 billion US dollars. UBS indicated that the adjusted EBITDA of the business reached $5 billion, and the profit margin rose to 66%, up from 45% in the previous quarter.

This growth has mainly benefited from the rapid expansion of the AI cloud computing leasing business, including Anthropic-related cooperative projects entering the full revenue contribution stage, the Google Cloud business beginning to contribute revenue, and additional revenue brought by the completion of the acquisition of AI programming company Cursor. Morgan Stanley notes that Cursor contributed approximately $608 million in revenue in the first incomplete quarter after the merger.

More importantly, during the earnings call, SpaceX management unleashed plans to expand computing power far beyond the market's previous expectations.

The company already has about 1.7 gigawatts (GW) of computing power capacity at the end of the third quarter. It is expected to increase to about 2.2 GW by the end of October, and plans to reach 2.5 GW to 3 GW by the end of 2026. CEO Musk said he is “highly confident” that the company will add about 10 GW of computing power capacity in 2027, which means that the company's total computing power is expected to reach about 13 GW by the end of next year.

At the same time, SpaceX also plans to build about 20 GW of power and cooling infrastructure by the end of 2027 to reserve space for further expansion. Musk said that currently the main factor limiting the expansion of computing power is no longer the AI chip itself, but the speed of construction of power supply, cooling systems and related infrastructure.

In terms of hardware deployment, SpaceX currently deploys about 200,000 Nvidia GB300 chips every month, and plans to switch to computing power construction centered on the next-generation Vera Rubin platform in 2027. The company also plans to deploy approximately 440,000 Vera Rubin GPUs at the end of the second quarter of 2027 to build a large-scale AI computing cluster for Grok model training.

J.P. Morgan believes that the commercial value of the Vera Rubin platform may be significantly higher than previous generation products. As the deployment of next-generation chips accelerates, SpaceX will not only be able to expand the scale of leasable computing power, but is also expected to improve profitability through higher per-unit computing power revenue.

According to information disclosed by management, the current price of SpaceX's new computing power lease contract is slightly higher than the previous upper limit of 30 to 50 US dollars per watt, and the payback period for newly deployed projects is less than a year. UBS pointed out that Musk expects that as computing power rental prices continue to rise, the payback period for some projects may be shortened to about six months next year.

Musk also said that large cloud computing service providers are in extreme demand for SpaceX computing power, and even if the company's existing and planned computing power resources are expanded several times, they may be fully leased by customers.

In this context, SpaceX management proposed that by the end of 2027, the company's annualized recurring revenue (ARR) could reach 500 billion to 1 trillion US dollars. However, Morgan Stanley specifically pointed out that this figure is a long-term business plan proposed by Musk during the conference call, not the financial guidelines issued by the company in the official results announcement. Its implementation is highly dependent on the progress of computing power construction, pricing capabilities, and the commercialization performance of AI products.

However, rapid expansion would also mean a sharp increase in capital expenditure. SpaceX expects capital expenditure to reach 35 billion to 40 billion US dollars in the fourth quarter of 2026, far higher than the level of about 19.6 billion US dollars in the third quarter.

J.P. Morgan predicts that SpaceX's capital expenditure in 2027 may reach about 300 billion US dollars; Morgan Stanley raised the 2027 capital expenditure forecast from 161 billion US dollars to about 278 billion US dollars. UBS's forecast is more aggressive, with capital expenditure expected to reach approximately $361.9 billion in 2027.

All three agencies believe that huge capital requirements will be an important test for SpaceX's future growth. However, SpaceX management said that the company has an advantage in data center construction costs. The capital investment for each 1GW of computing power may be only about 35 billion US dollars, which is lower than the level of about 50 billion to 60 billion US dollars from other large computing power suppliers.

J.P. Morgan pointed out that SpaceX is currently not considering raising capital through issuing new shares, but is planning to use debt financing channels and growing operating cash flow to support expansion. However, the bank also acknowledged that to achieve such a huge computing power construction plan, various aspects such as electricity supply, infrastructure construction, financing, and customer needs will proceed smoothly at the same time.

In addition to the AI business, SpaceX's Starlink satellite communications business has also continued to grow.

In the third quarter, SpaceX communications business revenue reached 5.2 billion US dollars, up 70% year on year, and adjusted EBITDA reached 3.5 billion US dollars, up 82% year on year.

Starlink added about 1.6 million new consumer users during the quarter, bringing the total number of users to 13.6 million. However, the number of new users was lower than market expectations and was mainly affected by factors such as user terminal product transitions and inventory restrictions.

Meanwhile, average monthly consumer revenue (ARPU) increased 5% month-on-month to $69, reflecting the company's greater emphasis on mature markets with strong payment capabilities. Morgan Stanley pointed out that although user growth fell short of expectations, higher ARPU drove consumer business revenue to exceed expectations.

Looking ahead, SpaceX plans to use the next-generation StarLink V3 satellite to increase network capacity and accelerate the expansion of the mobile communications market. The company expects to begin deploying the Mobile V2 satellite in 2027 and aims to launch related services using the newly acquired spectrum in early 2028.

In terms of space launch business, SpaceX achieved revenue of about 1.77 billion US dollars in the third quarter, an increase of 6% over the previous year. The company successfully entered orbit for the 14th Starship test flight and deployed 26 Starlink V3 satellites, marking the further progress of the Starship project towards commercial operation.

The market's next phase of focus will be the 15th Starship test flight, which is expected to take place in November. At that time, SpaceX plans to simultaneously try to recycle super-heavy boosters and Starship superclass spacecraft. If successful, it will be an important milestone in achieving complete reuse of starships, and is expected to further reduce satellite deployment and space transportation costs.

Additionally, Musk also responded to the possibility of a potential merger between SpaceX and Tesla (TSLA.US) during an earnings call. He said that the two companies have set up a special committee to evaluate the relevant transaction, and the integration of the two parties has some value, but the deal is not inevitable; it still requires relevant approval and shareholders' consent. Musk himself has shied away from related discussions.

In terms of performance expectations, all three agencies raised SpaceX's future revenue forecasts due to the expansion of the AI business, but there is a clear difference in judging the rate of growth.

Morgan Stanley raised SpaceX's 2027 revenue forecast from about 113 billion US dollars to 178 billion US dollars, of which the AI business revenue forecast was raised sharply from about 81 billion US dollars to about 146 billion US dollars.

UBS, on the other hand, raised its 2027 revenue forecast from about US$120.8 billion to US$172.7 billion. It is expected that the AI computing power leasing business will continue to be the most important growth driver.

J.P. Morgan Chase's forecast is the most optimistic, raising the 2027 revenue forecast to approximately US$254.1 billion, and anticipating further revenue growth in 2028 to approximately US$616.5 billion. The bank also sharply raised its 2027 adjusted earnings per share forecast from $3.45 to $9.88, an increase of 186%.

In contrast, Morgan Stanley expects SpaceX to earn $3.78 per share in 2027, while UBS expects $2.00. The huge difference in predictions between different agencies shows that the market still has large differences over SpaceX's future computing power construction progress, revenue monetization capacity, and profit model.

In terms of valuation, J.P. Morgan Chase has now drastically raised SpaceX's target price for the end of 2027 from 240 US dollars to 500 US dollars, mainly based on its latest forecast of profitability in 2028. The bank believes that SpaceX is gradually transforming from a traditional space and satellite communications enterprise to a comprehensive technology platform with AI computing power infrastructure, AI models and applications, satellite networks, and space transportation capabilities.

Morgan Stanley also emphasized that the market may not have fully understood the value of SpaceX's AI business. The bank believes that investors still view SpaceX according to the valuation method of ordinary AI cloud computing infrastructure vendors, without fully considering its vertical integration advantages in computing power, models, applications, and infrastructure.

However, Morgan Stanley also warned that SpaceX will lift sales restrictions on about 1.3 billion shares this Thursday. By the end of the year, a total of about 2.4 billion shares will be lifted, which may put some pressure on stock price performance in the short term.