SpaceX stock price pulled back slightly from this week’s high of $139.8 to $133 as the recent rebound lost steam. SPCX remains 27% above its lowest level this month, and a top analyst from Morgan Stanley believes it may double soon. He joins other top players in Wall Street who believe that it has more room to go.
Morgan Stanley sees SpaceX stock having more upside
SPCX stock has more room to grow in the coming months, according to Morgan Stanley’s Adam Jonas. In his statement, he noted that its AI business, including the recent Cursor acquisition, will be the key driver for this. In a report, he said:
“As investors see more breadcrumbs on the Cursor/Grok story, we see potential for the implied valuation discount on SpaceX’s AI business to lift, driving potentially substantial appreciation of the stock.”
The analyst has a target of $300, representing a 125% upside from the current level. He noted that Cursor’s business continues growing, with 60% of all companies in the Fortune 500 using its coding tools.
The company is seeing strong revenue growth, with its annualized revenue topping $4 billion in June from $3 billion in April. This growth has happened despite the ongoing competition from companies like OpenAI and Anthropic.
While some analysts have scaled back their SpaceX targets, many of them believe that it has more upside to go in the future. Guggenheim initiated its call with a buy rating, while Argus upgraded its target to $160. Bernstein sees the stock rising to $248, while Needham sees it hitting $250.
SpaceX stock has potential catalysts and risks
SPCX stock has some notable catalysts. The most notable one is that its revenue growth is accelerating, helped by its performance in the data center space, where it has become a major competitor to CoreWeave and Nebius. It has already achieved major clients like Google and Anthropic.
The AI business also includes Grok, the chatbot company that competes with top names like Claude and ChatGPT. While the app has a small market share, there is a likelihood that it will keep growing in the long term.
SpaceX’s Starlink business is also continuing its strong momentum. In the last results, the company said that its Starlink business had over 12 million customers around the world. It made over $4.2 billion in the second quarter, up from $3.25 billion in the same period last year.
The space business is also thriving, with its revenue rising to $962 million in the second quarter. It made $1.58 billion in the first six months of the year.
Potential risks to SpaceX as an investment
SpaceX stock faces some potential risks as an investment. One of these risks is that it is burning cash substantially because of its AI investments. Its capital expenditure jumped to $18 billion in the second quarter, and this spending will likely continue in the foreseeable future. The argument, however, is that these investments will ultimately pay off.
The company is also highly overvalued, with its market capitalization rising to over $1.76 trillion. This is a big number for a company that made $18.6 billion in revenue last year. On the positive side, analysts expect the growth to accelerate in the foreseeable future. It is expected to jump to $44.5 billion this year, followed by $95 billion next year.
The other risk is that the company is considering merging with Tesla,an automaker valued at over $1 trillion. According to the WSJ, such a move will be a shortcut for Elon Musk to get his $1 trillion payday. The risk of this combination is that these firms are in different businesses and synergies will not be easy to find.
Further, there is a competition risk as all its businesses are seeing major threats. Grok has a market share of 5%, while Rocket Lab is seeing more customers.
The post Morgan Stanley makes the case for SpaceX stock: Here’s why appeared first on Invezz
