Track market-moving stories before they get noisy

Space Exploration Technologies (SPCX 1.88%) is in the spotlight for all the right reasons. It just completed the largest initial public offering in history, having raised $75 billion by offering 555 million shares at $135 each plus another $10.7 billion from the underwriters that exercised their options to buy more shares. However, the number of shares available for public trading is still tiny relative to SpaceX's over $2 trillion market cap.

The company's float could increase to as much as 37% in late August. But until then, there's a supply-demand crunch on the stock, which is contributing to its volatility. SpaceX is already down big from its intraday high of $225.64, although as of the close of trading Tuesday, it was still up 4% from its initial trading price of $150 per share.

While long-term investors may not appreciate the volatility or the financial engineering of SpaceX's public market debut, they may be intrigued by the company's bold plans to launch millions of artificial intelligence (AI) data center satellites into orbit.

Here's why SpaceX is betting big on orbital data centers, and if the growth stock is a great buy now.

Image source: Getty Images.

A different type of SpaceX satellite SpaceX isn't profitable, but it has multiple levers that it could pull to unlock growth over the next several decades and beyond. It conducted around 80% of U.S. space launches in 2025 and exited that year with 9,600 Starlink broadband and mobile satellites in orbit. It owns xAI, the social media platform X, and could deploy millions of AI compute satellites -- which SpaceX says would actually be easier to manufacture than Starlink satellites because they won't need to have complex antennas.

The company's first AI satellite design features a 70-meter wingspan and a deployed height of 20 meters. By comparison, the majority of Starlink satellites in orbit are second-generation V2 Mini satellites, which are just 4.1 meters by 2.7 meters. The bigger issue is the added payload weight: AI satellites' compute clusters will have a lot of mass, making them significantly more expensive to launch.

Additionally, SpaceX plans to launch its AI compute satellites into a higher-altitude sun-synchronous orbit. This will make solar power generation predictable. However, it will also make the massive AI satellites more visible at night than most Starlink satellites.

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Satellite manufacturing on an unprecedented scale SpaceX says it aims to have 1 gigawatt (GW) of AI compute satellites in orbit by the end of 2027, then scale that by an order of magnitude in the subsequent three years, reaching 10 GW by the end of 2028, 100 GW by the end of 2029, and 1 terawatt (1,000 GW) by the end of 2030. At a peak output of 150 kW per satellite based on its AI1 satellite design, that would mean 6,667 satellites at 1 GW, 66,667 satellites at 10 GW, 666,667 satellites at 100 GW, and then a mind-numbing 6.67 million satellites at 1 terawatt. To describe that as ambitious would be an understatement. 

To get there, SpaceX is building a more than 11-million-square-foot factory it has dubbed "Gigasat" in Bastrop, Texas, which is just outside Austin. Situated on a more than 1,000-acre site, that factory will handle end-to-end production of AI compute satellites, from the solar panels that will power them to the electronic components and satellite assembly.

Tesla (TSLA 0.45%) investors will be familiar with CEO Elon Musk's preference for vertically integrated manufacturing. Expanding beyond its Fremont, California, factory to large-scale production centers (Gigafactories) in Nevada, New York, Texas, Shanghai, and Germany was an integral part of the strategy that allowed Tesla to grow into a major global automaker. However, Tesla was expanding production while facing the scrutiny that all public companies must accept. Plus, it was capital-constrained and relied heavily on scaling up its Model 3 production to boost cash flow and fund its manufacturing expansion.

SpaceX has a massive advantage in that it is already worth more than Tesla and should have no problem turning to capital markets to raise capital, whether by issuing debt or selling more equity. SpaceX reported a net loss in 2025, yet the market doesn't seem to care, given its growth potential.

In sum, Tesla was consistently trying to prove to public markets that electric vehicles could be profitable and disrupt the automotive industry, whereas SpaceX has a first-mover advantage in a new niche of the data center market where it faces virtually no direct competitors.

AI satellite constellations are far from a sure bet Investors are giving SpaceX the green light to think big on a cosmic scale. Investors buying SpaceX today probably care way more about its timeline for launching AI compute satellites into space rather than the costs of its path to profitability.

But SpaceX will undoubtedly run into challenges along the way to deploying its constellation of satellites. And as the quarters tick by, investor patience could be tested -- especially during market sell-offs or if there's a slowdown in AI spending.

All told, there's no rush to buy SpaceX right now, at a time when sentiment is overwhelmingly positive and investor enthusiasm is through the roof. The better approach would be to keep SpaceX on your watch list and monitor its progress on constructing Gigasat and getting its first AI satellites launched into space. If its big idea pays off, SpaceX will deserve to be worth much more than it is today. But at this time, that's a big "if."

Tim Horan, Oppenheimer’s satellite and AI infrastructure analyst, went on CNBC Monday to defend a price target that sounds absurd until you back into the math. He kept his buy rating and $250 price target on SpaceX as the stock fell in its third consecutive session of decline, and floated a five-year valuation of $10 trillion. For context, that would make SpaceX (NASDAQ:SPCX) worth roughly the GDP of Germany and Japan combined.

The stock is having a rough debut. Shares are at $158, down from $192.50 a week earlier, and CNBC noted the average post-IPO buyer is almost underwater after the slide, with the five-day volume-weighted average sitting near $181. Tuesday brought a 5.34% bounce to $162.86, but Reddit has spent the past week dissecting threads with titles like “The math isn’t mathing on the SpaceX IPO” and “SPCX – Beware, institutional money is NOT buying this trash on the open market”. Horan is leaning into that doubt.

The vertical integration thesis What SpaceX is, in Horan’s framing, is no longer a launch company. “The company we think has doubled their valuation in the last six months by entering the AI market,” he told CNBC, “and we think they’re going to continue to do incredibly creative things.” The pivot point was the early-2026 acquisition of xAI, which folded Grok and its X-platform integration into SpaceX as a core business pillar.

That repositioning matters because of what Horan thinks the addressable market looks like. “They think AI is a $25 trillion TAM, and they are the only vertically integrated company that can attack every segment of this and really disrupt an awful lot of industries,” he said. Then the part that sounds like science fiction. “SpaceX is making their own solar panels. They want to make their own chips… build a fab that will create five times the amount of chips that the whole world is producing.”

Take that claim with appropriate skepticism. But the underlying point survives even if the fab is half that size. SpaceX already controls the launch stack. It launched more than 80% of the world’s mass to orbit annually since 2023, with Falcon rockets at over 99% mission success. Owning the rockets, the satellites, the ground network, the AI model, and eventually the chips is exactly the moat the bull case requires.

Starlink as the funding engine The cash to fund all of this is supposed to come from Starlink. “We think Starlink will be worth roughly $1 trillion,” Horan said. “Over the next 5 to 10 years they’re going to increase capacity a hundred fold. They already have about 12 million broadband subscribers globally. We think they could easily support a couple of hundred million.”

Moreover, the constellation is already enormous. As of March 31, 2026, Starlink served customers across 164 countries through roughly 9,600 low-Earth-orbit satellites, with a satellite-to-mobile layer extending coverage to about 30 countries. There is also a quietly compelling tailwind. A recent GAO assessment noted the Department of Energy projects data centers will account for up to 12% of U.S. electrical demand by 2028, driven by AI, and that since January 2026 the FCC has received three applications from U.S. companies for large satellite constellations operating as orbital data centers. If compute migrates toward orbit, the company that owns cheap heavy-lift launch capacity collects rent from everyone.

What can go wrong Horan named the near-term risk himself. “Short term it’s really getting the starship to work. We need the starship to kind of get the new communications satellites up.” Without Starship reaching reliable operational cadence, the hundredfold Starlink capacity expansion does not happen, and the $1 trillion in revenue Musk has targeted stays a slide.

For investors, the gap between Horan’s view and market consensus shows in the price action itself. SpaceX, registered with the SEC, currently trades around $158, well off its 52-week high of $225.64. The Atlantic this week described the stock as “a financial instrument for Musk, a meme, and a testament to the irrationality of the modern stock market.” Horan’s $250 target and $10 trillion long-term call assume the meme grows into the moat. The next twelve Starship launches will settle the argument.