SpaceX’s stock is attracting significant bullish attention after a strong third-quarter earnings report, fueled by its burgeoning AI business. Analyst firm PhillipCapital has upgraded its rating to ‘buy’ and set a $250 price target, anticipating a potential 73% surge.
The company’s AI division, “SI,” along with its connectivity services, has driven impressive revenue growth and profitability, leading to its first profit as a public entity.
SpaceX Soars on AI Boom: Analyst Flips Bearish Stance, Projects 70% Upside
By Michael Bloom
PhillipCapital has shifted from a bearish to a bullish outlook on SpaceX, driven by stronger-than-expected performance in its AI business. The firm upgraded the stock to 'buy' and significantly raised its price target, signaling strong confidence in the company's future growth.
A notable shift in sentiment has occurred on Wall Street regarding SpaceX (SPCX), as PhillipCapital, once a skeptic, has embraced a bullish stance, largely attributed to the robust performance of the company's artificial intelligence business. The financial firm has upgraded SpaceX shares from 'sell' to 'buy' and dramatically increased its price target from $75 to $250, a move that suggests a potential upside of nearly 73% from the previous day's closing price.
SpaceX recently reported its third-quarter financial results, announcing adjusted earnings per share of 45 cents and revenue of $14.58 billion. Both figures surpassed market expectations, marking a significant milestone as the company achieved its first profit as a publicly traded entity. Analyst Glenn Thum identified three key catalysts fueling this success in a recent note.
Key Growth Drivers Identified
Thum highlighted the following drivers:
- SI (Super Intelligence) Business: The company's AI division, referred to as 'SI', has seen substantial growth with new cloud service agreements coming online at higher rental prices. The addition of "Cursor" contributed an impressive US$608 million from mid-August alone.
- Connectivity Segment: Revenue from aviation installations and Starshield contracts significantly boosted enterprise and government revenue, showing a 91% year-over-year increase.
- Operating Leverage: The expansion of higher-margin cloud services has directly contributed to the profitability of the SI business.
Future Outlook and Compute Demand
Despite the positive momentum, Thum anticipates that full-year 2027 revenue might fall short of SpaceX's internal projections, primarily due to potential delays in scaling the company's compute business. Key constraints identified are cooling and power infrastructure. However, this very compute business is a source of increasing confidence for the analyst.
"We like SPCX for compute demand running ahead of supply," Thum stated. "Contracts are renewing at higher prices per watt, new capacity pays back in under a year, and guidance implies 1Q27 revenue more than double 3Q26." This outlook suggests strong future demand for SpaceX's compute services, outpacing its current supply capabilities.
In premarket trading on Friday, SpaceX shares saw a positive uptick, rising by 2% in anticipation of the analyst's revised outlook and the company's strong performance.
