Should I buy SpaceX stock after Oppenheimer Outperform rating?
Oppenheimer just became the first Wall Street firm to initiate coverage on SpaceX, one day before the stock starts trading on the Nasdaq. The rating: Outperform. The price target: $190.
That's a 41% upside from the IPO price of $135. And it implies a market capitalization of $2.5 trillion within 12 to 18 months.
But here's what most headlines are missing. Oppenheimer isn't betting on rockets. They're betting on something else entirely.
Analyst Timothy Horan called SpaceX "the only vertically integrated AI company with the required capital, data, LLMs, hardware, manufacturing and engineering talent."
Think about that for a second.
The first major Wall Street research report on SpaceX barely mentions launch vehicles. It's about artificial intelligence, orbital data centers, and cloud computing in space.
That's either visionary or delusional. Let's figure out which.
What You Need to Know About the SpaceX IPO
Before we dig into Oppenheimer's call, here's the baseline.
SpaceX is set to begin trading on the Nasdaq on Friday, June 12, 2026, under the ticker SPCX. The company priced its IPO at $135 per share, raising $75 billion at a valuation of roughly $1.75 trillion, the largest IPO in U.S. history.
The company reported 2025 revenue of $18.67 billion, up 33% year over year, but posted a net loss of $4.9 billion. Starlink, the satellite internet business, generated $11.4 billion of that revenue, about 61% of the total, with operating profits of $4.4 billion.
The rest of the business is a mix of launch services, government contracts, and the newly acquired xAI.
That's the skeleton. Now for the meat.
Oppenheimer's Thesis: The AI Company Disguised as a Rocket Company
Timothy Horan's note, published Thursday, June 11, doesn't read like typical aerospace research. It reads like a venture capital memo about the future of computing.
"We see it as the only vertically integrated AI company with the required capital, data, LLMs, hardware, manufacturing and engineering talent."
Horan argues that SpaceX intends to converge communications and cloud computing using space‑based infrastructure. The Starlink network, with its 9,600+ satellites serving 10.3 million subscribers across 164 countries, is the foundation. The Starship rocket is the delivery mechanism. And the xAI acquisition, completed in early 2026, is the brain.
The total addressable market Oppenheimer sees? $10 trillion by 2035.
That's not a typo. Ten. Trillion. Dollars.
To get there, Horan outlines a staggering ambition: SpaceX targeting 10,000 Starship launches per year — or 27 per day, to deploy one million orbital data centers and 100,000 communications satellites supporting a terawatt of its own manufactured chips.
Even in a sector known for grandiose projections, those numbers are breathtaking. And Oppenheimer knows it. The firm explicitly warns that the technology behind data centers in space "is unproven." Thermal management of AI chips in the space environment "within four years appears challenging."
The Valuation Math: From $135 to $190
Here's how Oppenheimer bridges the gap from the IPO price to that $190 target.
At $135, SpaceX debuted at approximately 95 times 2025 revenue. For context, mature industrial companies trade at 1 to 5 times revenue. Even high-growth software companies rarely exceed 15 to 20 times.
Oppenheimer's $190 target values SpaceX at roughly $2.5 trillion. That's about 133 times 2025 revenue.
The firm's long-term projections envision SpaceX generating around $900 billion in annual revenue and $500 billion in EBITDA by 2035. Achieving those targets would require approximately $1.6 trillion in cumulative capital expenditure and spectrum‑related investments.
In the near term, Oppenheimer expects growth to accelerate in 2027 as Starship enters commercial service. But the firm warns that the rocket "needs to enter commercial service before year-end" for its estimates to hold.
That's a specific, high‑stakes condition. If Starship slips to 2028, the entire valuation framework wobbles.
Three Growth Engines: Starlink, xAI, and Orbital Data Centers
Starlink: The Cash Cow
Starlink remains the profit engine. In 2025, the segment generated $11.4 billion in revenue with operating profits of $4.4 billion, a 38.8% margin. Subscriber growth has been nearly vertical, climbing from 2.3 million in 2023 to 10.3 million by March 2026.
Oppenheimer expects Starlink to remain the primary cash generator in the near term. But the firm also notes that average revenue per user (ARPU) has declined from $99 in 2023 to $66 in Q1 2026. That's not a crisis, it reflects expansion into lower‑income markets, but it's a trend worth watching.
xAI: The Growth Driver
Horan believes SpaceX's AI business, including xAI, will become the largest contributor over time. The company has already signed over $26 billion in annualized data center capacity deals in the past month, including Colossus compute agreements with Anthropic worth $1.25 billion per month and Google worth $920 million per month.
Both deals carry 90‑day termination clauses. Critics have raised concerns about circular financing and the short-term nature of these commitments.
Orbital Data Centers: The Wild Card
This is where Oppenheimer's thesis gets truly speculative.
SpaceX plans to deploy solar‑powered AI data center satellites within the next two to three years. Orbiting clusters can capture solar energy nearly 24 hours a day and use the natural vacuum of space to radiate heat, bypassing the power grid and water cooling crises facing terrestrial data centers.
No company has ever succeeded in proving the viability of orbital data centers. SpaceX is planning to launch its own orbital factory dedicated to manufacturing AI satellites before the end of 2026.
If it works, the competitive advantage is insurmountable. If it doesn't, the capital write‑offs will be enormous.
The Risks Oppenheimer Admits (Read This Part Carefully)
To its credit, Oppenheimer didn't bury the risks. The firm was unusually blunt.
1. The stock is expensive. At more than 100 times trailing revenue, "the stock is expensive", Horan's words.
2. Orbital data center tech is unproven. Thermal management of chips in space "within four years appears challenging." The terrestrial data center business (like Colossus) is the backup plan.
3. Starship must deliver by year‑end. The entire 2027 growth acceleration depends on commercial service beginning on schedule.
4. The float is tiny. Only about 4.3% of shares will trade freely. Oppenheimer expects "high volatility, with shares trading up initially" due to demand‑supply imbalance, followed by a volatile 12‑month period, similar to ARM and Google's early trading patterns.
5. Key‑man risk. SpaceX's own IPO filing warns that the loss of Elon Musk "could disrupt its ability to execute its strategy as well as hurt its reputation and relationships with customers, partners and other stakeholders."
6. Regulatory scrutiny. Senator Elizabeth Warren has called on the SEC to delay the IPO, citing governance concerns, Musk's dual‑class super‑voting shares, and potential conflicts of interest.
What Other Analysts Are Saying
Oppenheimer isn't alone, but it's by far the most bullish.
New Street Research initiated coverage with a 12‑month price target of $165, implying 22% upside. Analyst Pierre Ferragu projects SpaceX will reach $195 billion in revenue by 2030 and turn profitable starting in 2027. He estimates fair value of $2.3 trillion but notes that if the total addressable market grows to his high‑end estimate and SpaceX captures 50% share, fair value would be $330 per share.
Morningstar is the bear. The firm pegs SpaceX's valuation at $780 billion, less than half the IPO target, and assigns a fair value of just $63 per share. Analyst Nicolas Owens puts a 7% probability on the bull case. "The deal as it's priced today essentially is pricing in everything going right all the time."
Jim Chanos called the valuation "built on hopes and dreams." At 90 times sales, he compared it unfavorably to other Musk‑led enterprises.
What to Do With This Information
Here's the honest truth.
Oppenheimer's $190 target is not a prediction. It's a conditional statement. If Starship enters commercial service on schedule, if orbital data centers prove technically feasible, if AI compute demand continues to outstrip supply, and if Musk's attention doesn't become too fractured, then SpaceX could be a $2.5 trillion company within 18 months.
That's a lot of "ifs."
For long‑term investors: The risk‑reward skew is unusual. The downside (valuation collapse to Morningstar's $63) is a 53% loss. The upside (Oppenheimer's $190) is a 41% gain. That's an asymmetric payoff, but the probability weights matter enormously. Horan himself says there is "no assurance investors can buy at the $135 price set by underwriters."
For traders: Oppenheimer explicitly expects high volatility and a first‑day pop due to the small float. Historical precedents (ARM, Google) saw early pops followed by choppy but ultimately strong 12‑month returns. The question is whether you can time the entry.
For everyone else: Watch Starship. Watch the orbital data center FCC filings. Watch the Google and Anthropic deals, if those 90‑day termination clauses get exercised, that's a red flag. And watch the float. The first institutional lock‑up expiration will be a major event.
Oppenheimer threw down the gauntlet first. Now the market gets to vote.
Comments
Post a Comment