SpaceX Stock Surges on AI Growth

A significant disconnect emerged between Wall Street expectations and SpaceX reality late last week. After the company closed its trading session on October 20, a rapid wave of price target upgrades sent shares higher in the premarket hours of October 21. The core tension lies in the company's massive capital expenditure plans for artificial intelligence infrastructure, which are now being viewed not as a risk, but as a primary engine for profitability. This shift in sentiment has forced analysts to fundamentally rethink their long-term valuations for the firm.

SpaceX reported third-quarter revenue of $14.6 billion, a 161 percent jump year over year. This figure significantly exceeded the consensus estimate of approximately $12.7 billion. The company swung to a net profit of $4.4 billion, reversing a loss in the same period of the prior year. Adjusted EBITDA reached $8.8 billion. These numbers suggest that the company has successfully transitioned from a growth-focused entity with heavy losses to a business with substantial earnings power.

The Super Intelligence division was the primary driver of this performance. It generated roughly $7.6 billion in revenue, growing nearly 830 percent year over year. This made it the largest revenue contributor for the company. The Connectivity segment, which includes Starlink, delivered $5.2 billion in revenue. Subscriber additions lifted the consumer base to 13.6 million users. Analysts cited these specific metrics, alongside Starship milestones, as the reasons for their increased conviction in the stock's future.

Management provided guidance that surprised the market. CEO Elon Musk and CFO Bret Johnsen outlined first-quarter 2027 revenue guidance of $33 billion to $37 billion. This range far exceeded the approximately $22 billion that analysts had previously modeled. They also detailed fourth-quarter capital expenditure plans of $35 billion to $40 billion. These funds are earmarked for AI compute infrastructure at sites including Memphis and Southaven. Management targets 2.5 to 3 gigawatts of nameplate compute capacity by year-end, with pathways to 13 gigawatts or more by the end of 2027.

Musk described relentless demand from hyperscalers and other customers. He noted that current compute pricing supports payback periods of less than a year, potentially as short as six months. This rapid return on investment is a key argument for the continued heavy spending. The earnings call also touched on Starship’s recent orbital success and V3 satellite deployment. Other highlights included Starlink pricing momentum, rapid Grok Bot adoption, and spectrum expansion plans. Notably, special committees have been formed to explore a possible combination with Tesla.

The market reaction was immediate and decisive. JPMorgan more than doubled its price target to $500 from $240 while maintaining an Overweight rating. Cantor Fitzgerald lifted its target to $345 from $246. Barclays raised its target to $300 from $254. Citi increased its target to $240 from $200. UBS moved to $230 from $210, and TD Cowen raised its target to $224 from $200. Morgan Stanley held an Overweight rating with a $300 target.

Other firms also adjusted their views. Wells Fargo raised its target to $274 from $214. Clear Street moved its target to $248 from $217. These moves reflect a broader consensus that the company's trajectory across launch, connectivity, and AI is stronger than previously thought. However, the elevated spending remains a point of focus for skeptics who worry about capital intensity.

Shares of SpaceX closed at $147.79 on October 20. By early premarket trading on October 21, the stock had jumped roughly 8 percent. Investors are digesting the results and the newly elevated street targets. The average analyst price target has moved higher, indicating greater conviction in the company's direction. Yet, the question remains whether the current growth rate in AI revenue can sustain the massive infrastructure investments planned for the coming year.