SpaceX (SPCX) stock investors spent the lion’s share of the post-IPO period questioning if its expensive AI push deserves any value.
Subsequently, the stock’s steep slide sharpened that skepticism. Nevertheless, analysts felt SpaceX was being valued purely on a single revenue engine, while AI was being treated more as a liability given its heavy capex burden.
CEO Elon Musk, though, just complicated that view.
Instead of backing away from a business investors were overlooking, Musk flipped the script, framing it as part of the answer to SpaceX’s valuation conundrum.
That begs the question: Has Wall Street been valuing the company around the wrong business?
Is SpaceX becoming an AI company?
Elon Musk believes SpaceX’s AI endeavors will overtake the businesses that have typically defined the company.
In a 30-minute all-hands meeting with employees, as reported by Business Insider and posted on X (the former Twitter) on Aug. 11, Musk said: “Probably our AI revenue — not probably, definitely — our AI revenue will exceed all other SpaceX revenue probably in September, like next month.”
That claim is particularly striking when pitted against SpaceX’s Q2 numbers.
AI generated $2.56 billion of the company’s $7.81 billion in quarterly sales, while connectivity products raked in an impressive $4.29 billion, and space products another $962 million.
AI was already a booming business, but it is clearly still a tall order for it to go past the company’s established operations.
Musk is suggesting that the gap be closed out almost immediately. He makes the case that AI “will significantly exceed all other SpaceX revenue in the fourth quarter.”
On top of that, the serial entrepreneur talked about how deeply he wants Grok embedded inside SpaceX.
He said he wants to train the model on the “sum total” of SpaceX information.
Musk told employees that, in a sense, Grok would be “trained on you,” explaining that company workers are the “parents of the AI” whose ideas, beliefs, and institutional knowledge could potentially shape the system.
That thought, in many ways, reignites the idea that Microsoft (MSFT) CEO Satya Nadella raised a few weeks ago about companies paying for intelligence twice, a point later echoed by Palantir (PLTR) CEO Alex Karp.
Palantir Chief Revenue Officer Ryan Taylor took that criticism up a few notches at the company earnings call, arguing that businesses are “paying to give away their most important secrets.”
So far Musk hasn’t revealed exactly what the employee data would be used for and how it would be collected. Also, according to Mashable reporting, Meta Platforms (META) faced backlash earlier this year for its AI model training program that used employees’ keystrokes, which it later paused.
Josh Edelson/Getty Images
Has SpaceX stock finally recovered from its IPO slump?
SpaceX shares staged a tremendous comeback after the post-IPO slide.
Through Aug. 11, the stock closed at $133.29, up nearly 23% from its $108.27 close on Aug. 5, when AI spending concerns in its earnings report sent its stock tanking 13.6%.
The reversal was nothing short of dramatic.
SpaceX hit an intraday low of $104.83 on Aug. 3 after surging to $225.64 shortly after its June debut. Its stock then jumped 6.1% on Aug. 6, surged 15.8% on Aug. 7, added 4.2% on Aug. 10, and then dropped 3.9% on Tuesday, Aug. 11.
Interestingly, the Aug. 6 lockup expiration made nearly 911.5 million insider shares eligible for sale, more than doubling its float, yet SpaceX stock rallied instead.
At $133.29, shares are just around 1.3% behind the $135 IPO price, though still about 17% below their $160.95 first-day close and about 41% below the post-IPO peak.
What does Musk’s AI call mean for SpaceX investors?
For SpaceX investors, Musk’s latest comments actually strengthen the case Morgan Stanley analyst Adam Jonas was making before earnings.
He had argued in his note that when SpaceX traded near $100, investors were valuing its business purely on its launch and connectivity businesses, while attaching little to no value to AI.
Jonas went on to say that “many ascribe zero or even negative value for AI,” due to its tremendous capex requirements and uncertain economics.
Consequently, Morgan Stanley’s $300 price target assigned more than 50% of SpaceX’s $300 target to AI, implying over $150 per share of value from that business alone.
Musk’s new sales prediction adds more fuel to that debate.
Nevertheless, AI could become SpaceX’s biggest business while still consuming a ton of capital through Nvidia systems, model training, and data-center infrastructure.
What matters most is whether SpaceX can turn that AI growth into bottom-line strength and stronger cash flow, not just whether AI becomes bigger than Starlink or launches.
And if AI is progressing toward the forefront of SpaceX’s revenue mix, investors might soon have actual operating results to test that thesis.
Naturally, that makes AI the biggest swing factor for investors in assigning a higher multiple to SpaceX stock.
For perspective, according to Seeking Alpha data, SpaceX stock is trading at an eye-popping 355 times non-GAAP forward earnings.
