SpaceX analysts double price targets after AI revenue surge

JPMorgan doubled its price target on SpaceX to $500 on Tuesday, a move that triggered a rapid cascade of upward revisions across Wall Street following the company's third-quarter earnings release on October 20. The most consequential shift in the financial narrative was not the launch of new rockets, but the emergence of the Super Intelligence division as the primary revenue engine. This segment generated approximately $7.6 billion, representing a nearly 830 percent year-over-year increase and surpassing all other business units in contribution to the total $14.6 billion in quarterly revenue. That total figure marked a 161 percent jump from the prior year, comfortably exceeding consensus estimates which had clustered around $12.7 billion.

The financial performance also marked a significant turn in profitability. SpaceX reported a net profit of $4.4 billion, reversing a loss recorded in the same period a year earlier. Adjusted EBITDA reached $8.8 billion, a figure that likely prompted the immediate reassessment of the company's valuation multiples by major investment banks. The Connectivity segment also performed strongly, delivering $5.2 billion in revenue and expanding the Starlink consumer base to 13.6 million subscribers.

However, the most striking element for equity analysts was the forward-looking guidance provided by CEO Elon Musk and CFO Bret Johnsen during the earnings call. Management outlined first-quarter 2027 revenue expectations of $33 billion to $37 billion, a range that stood in stark contrast to the roughly $22 billion modeled by the analyst community. This aggressive outlook was underpinned by capital expenditure plans of $35 billion to $40 billion for the fourth quarter, focused heavily on AI compute infrastructure in Memphis and Southaven.

The scale of this infrastructure buildout is substantial. Management aims for 2.5 to 3 gigawatts of nameplate compute capacity by the end of the year, with pathways discussed toward 13 gigawatts or more by late 2027. Musk cited relentless demand from hyperscalers, noting that current compute pricing supports payback periods of less than a year, and in some cases as short as six months. While these figures suggest high margins, the sheer volume of spending required to achieve these capacity targets remains a focal point for investors assessing long-term risk.

Other firms followed JPMorgan's lead with significant adjustments. Cantor Fitzgerald raised its target to $345 from $246, while Barclays and Morgan Stanley both set targets at $300. Citi, UBS, TD Cowen, Wells Fargo, and Clear Street also issued higher targets, ranging from $224 to $274. Analysts broadly cited the acceleration in AI compute, Starlink's subscriber growth, and recent Starship orbital milestones as key drivers for these increases.

SpaceX shares closed at $147.79 on Monday but jumped approximately 8 percent in early premarket trading on Tuesday. The average analyst price target has moved sharply higher, reflecting a consensus that the company's trajectory in launch, connectivity, and AI now warrants a premium, even as the elevated spending levels continue to draw scrutiny.

Beyond the financials, the earnings call included discussions on spectrum expansion plans and the rapid adoption of the Grok Bot. Perhaps most notably, special committees were formed to explore a potential combination with Tesla, adding a layer of corporate complexity to the investment thesis as the market digests the new valuation benchmarks.