While SpaceX stock is still hovering near its initial public offering price, SpaceX investors must be happy that near $135, the stock is up substantially from $108 per share just a few days ago.
SpaceX’s 23% rally over the past five sessions, including a 16% jump on Aug 7, is because of a boost from better-than-expected revenue in its quarterly earnings release on Aug 4, showing it generated $7.81 billion in revenue compared to the $6.93 billion expected by analysts.
Citi analysts left their $200 price target unchanged, due to the company’s “dependency of out-year forecasts/valuation on successful Starship milestones,” reported CNBC.
One of those out-year forecasts is that SpaceX will generate $100 billion annually in recurring revenue by the end of the year. While the company has a long way to go to reach that goal, analysts at Deutsche Bank believe that mark is achievable for the Elon Musk-led company.
Deutsche Bank lays out SpaceX $100 billion revenue plan
During SpaceX’s earnings conference call, management laid out its plan to reach the $100 billion milestone.
“In the first few weeks of the third quarter, we’ve already contracted an additional $6.7 billion of cloud services revenue over a 6-month period that begins ramping starting in October of this year,” said CFO Bret Johnsen. “We believe this puts us on a trajectory, including contribution from Cursor, to reach $100 billion of ARR or annualized revenue run rate by the end of this year based on our expected revenue in the month of December of this year.”
On August 10, Deutsche Bank analysts examined SpaceX’s claim that it will achieve $100 billion in annual recurring revenue by December 2026.
That would be quite the feat considering the company’s second-quarter run rate was just $31 billion, but DB analysts “see this target as likely very achievable, driven mainly by neocloud and Cursor contribution.”
Neocloud is a leasing program where providers like SpaceX rent out AI computing infrastructure to tech companies like Anthropic and Google. The revenue stream is so lucrative for SpaceX that the company made more money doing that than from space launches.
SpaceX reported second-quarter neocloud revenue of $1.6 billion, all of which came from Anthropic. Deutsche Bank analysts expect that deal alone to ramp up to $3.75 billion in the third quarter.
“In addition, the Google agreement is set to ramp up next month and hit a full $920 million per month rate in October,” Deutsche Bank analyst Edison Yu wrote in a note viewed by TheStreet Monday. “Then most recently, SpaceX signed a $6.7 billion over six month deal which we suspect could possibly be with the U.S. government.”
The firm also expects SpaceX to get at least one more large neocloud deal done before the end of the year.
“Putting it all together, this could generate $45 billion to $50 billion of annual recurring revenue exiting December,” Yu said.
Starlink revenue is expected to reach $13.2 billion by December, up from $9.9 billion in the second quarter, according to DB, while Space revenue, Starshield + enterprise revenue, Grok/X revenue, advertising revenue, and revenue from its recent acquisition of AI coding startup Cursor are expected to add up to $98.1 billion in recurring revenue by December.
SpaceX pivot to neocloud comes with risks
While the neocloud revenue SpaceX is targeting seems like a sweet plum to bolster the company’s bottom line, analysts at Morningstar say there are risks on that revenue route.
The firm notes that the earnings report “explains xAI’s pivot to become an AI neocloud company by renting out access to AI infrastructure,” but there are risks thanks to expenses in the space exploding by 105% in the second quarter.
“Frankly, the only way for xAI to make money right now is in data centers, and they’ve been building very fast,” Morningstar analyst Nicolas Owens said. Owens notes that the company is building out its Colossus II data center in Tennessee and Mississippi, and expanding its Colossus 1 center in Memphis.
“Right now, it’s a gold rush for compute capacity, and they’ve said as long as there’s demand, they’re going to keep building,” Owens says, but that building is coming at a high cost to SpaceX, which spent more on AI in the second quarter alone than it did in all of 2025.
SpaceX’s capex doubled to $15.8 bilion from $7.7 billion in the second quarter a year ago, and the company’s capex for the entire 2025 was just $12.7 billion.
xAI spend accounted for $23.5 billion, or nearly 83% of SpaceX’s expected $28.4 billion in capital expenditures this year.
“It’s still really early days for [SpaceX’s] AI business,” Owens said. “I think it’s going to be a decade before they turn a profit on this, because they’re building as fast as they can and spending hand over fist for data centers.”
However, despite the added costs, xAI swung to a profit on an adjusted EBITDA basis from a loss of $609 million last year to a gain of $1.1 billion. Nearly all that growth came from neocloud.
Related: SpaceX investors have a new, unexpected liability to worry about
