Here's What SpaceX Stock Will Be Worth by 2027 if Elon Musk's $1 Trillion Revenue Call Is Correct

Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, has a CEO who is known for making extraordinarily optimistic predictions about his companies' futures. Elon Musk keeps offering these sky-high projections, even though his companies frequently fail to deliver. However, he's not always as far off as people think, and his latest projection is simply jaw-dropping.

During SpaceX's third-quarter earnings call, he claimed that it wasn't out of the question for the company to achieve annual recurring revenue of $500 billion to $1 trillion by the end of 2027. A result like that could easily vault SpaceX's market cap to the world's largest, but what would the stock price be?

SpaceX could become a $10 trillion company if Musk's call is correct

For argument's sake, let's say that SpaceX can somehow generate $1 trillion in annual recurring revenue (ARR). Now, the language that Musk used is important, because hitting that target would not require SpaceX to produce $1 trillion in total revenue in 2027. What it would need to do is achieve annualized recurring revenue of that level in the fourth quarter. So, what investors would be hoping for is for its "super intelligence" (SI) segment (formerly called the artificial intelligence segment) to reach about $250 billion in quarterly revenue by Q4 of next year.

Should SpaceX hit the $1 trillion ARR mark and trade at 10 times sales (that's about average for most big tech companies), that would give it a market cap of 10 trillion. Right now, Nvidia, the world's largest company, has a $5.3 trillion market cap, while SpaceX is a $1.9 trillion company trading for about $138 per share. So, if the $10 trillion market projection came true, SpaceX's stock price would rise from about $138 to about $736. That would be a monster gain in just a year or two, but that implies some pretty incredible growth figures.

Is this even possible?

SpaceX's growth rate must be very quick to hit this level

What's spurring Musk to give this projection is the incredible growth that its SI division delivered in Q3. It grew 830% from $813 million last year to $7.56 billion this year. So, what happens if SpaceX's revenue grows 830% again by this time next year? That would amount to about $70 billion in revenue.

To get to an annual recurring revenue of $1 trillion, SpaceX's overall recurring revenue figure must be around $250 billion each quarter. So, even that optimistic projection for the contribution from the SI segment alone would fall well short of what's necessary. Of course, SpaceX's Starlink service will still contribute to annual recurring revenue, but the result would still be far short of $250 billion.

SPCX Revenue (TTM) data by YCharts.

Even if one looks only at the low end of that projection range, an ARR of $500 billion still requires about $125 billion in quarterly recurring revenue by Q4 2027.

So, I think SpaceX will fall far short of Musk's latest bold prediction. However, I think investors need to understand what his projection is implying. SpaceX is seeing incredible and insatiable demand for AI products. As a result, its revenue growth will likely stay rapid or even accelerate over the next year. Regardless of whether the company falls short of Musk's projection, one thing that is clear is that SpaceX is becoming a powerful force in the AI industry and could be one of the top companies to be reckoned with.

I think that's the major takeaway here, and if you can shift your mindset from thinking about SpaceX as a space stock to thinking about SpaceX as an AI stock, then I think it could be a profitable investment to make.

Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.