47 mins ago
Barron’s Reassesses SpaceX After Surging AI Revenue Forecasts
Barron’s previously thought SpaceX shares were worth about $90 each.
It now says the company may be worth more because its AI business is growing faster than expected.
Analysts have raised their estimates for SpaceX’s future sales and profits.
They also now expect the company to generate positive free cash flow sooner than previously forecast.
Much of the projected AI revenue comes from renting computing power to companies such as Google and Anthropic.
Professor Aswath Damodaran says this may be less valuable than earning money from SpaceX’s own AI products.
Barron’s agrees that this is an important risk for investors to watch.
The publication still is not calling SpaceX stock a buy.
It says the valuation no longer looks as unusually high as it once did.
Barron’s acknowledged that its earlier $90-per-share SpaceX valuation was too low.
Wall Street’s 2027 SpaceX revenue forecast rose from $70 billion to $100 billion.
Projected 2027 Ebitda increased from $28 billion to $59 billion, while expected 2030 cash use shifted to positive free cash flow.
Analysts now estimate SpaceX’s AI business could generate $60 billion in 2027 revenue and $530 billion by 2031.
Aswath Damodaran remains cautious because much of the AI growth comes from computing rentals rather than SpaceX-created AI applications.
- Who
- Barron’s, SpaceX shareholders, Wall Street analysts, and valuation professor Aswath Damodaran.
- What
- Barron’s revised its view that SpaceX is worth more than its earlier $90-per-share estimate.
- Where
- The article discusses SpaceX’s valuation and its AI business, including computing services used by Google and Anthropic.
- When
- The reassessment followed SpaceX’s IPO and updated forecasts for 2027, 2030, 2031, and 2036.
- Why
- AI revenue projections accelerated sharply, improving expected earnings, cash flow, and long-term valuation.
Barron’s More Optimistic View
Damodaran’s Cautious View
AI growth and valuation
Barron’s More Optimistic View
Faster-than-expected AI revenue growth has significantly improved SpaceX’s earnings and cash-flow outlook, making the company worth more than $90 per share.
Damodaran’s Cautious View
The valuation depends on uncertain assumptions about AI growth, margins, and SpaceX’s other businesses, so the higher estimates may not be reliable.
Source of AI revenue
Barron’s More Optimistic View
The size of the AI opportunity is much larger than Barron’s previously expected, and computing demand has already lifted forecasts.
Damodaran’s Cautious View
Renting computing capacity to companies such as Google and Anthropic may weaken SpaceX’s AI story because it is not the same as creating AI agents and collecting application revenues.
Investment conclusion
Barron’s More Optimistic View
SpaceX’s current valuation no longer appears extraordinarily high relative to some faster-growing companies, although Barron’s is not yet calling the stock a buy.
Damodaran’s Cautious View
SpaceX needs to develop its own AI applications or risk losing rental revenue if computing capacity becomes less constrained.
Key facts
- Earlier Barron’s estimate
- SpaceX was valued at $90 per share shortly before its IPO.
- Updated 2027 revenue forecast
- Wall Street’s estimate increased from $70 billion to $100 billion.
- Updated 2027 Ebitda forecast
- The estimate increased from $28 billion to $59 billion.
- AI revenue forecast
- SpaceX’s AI business is expected to generate $60 billion in 2027 revenue and $530 billion by 2031.
- Cash-flow outlook
- Wall Street shifted from expecting $24 billion in 2030 cash use to expecting positive free cash flow.
- Current valuation comparison
- SpaceX trades at about 34 times estimated 2027 Ebitda, compared with roughly 25 times for GE Aerospace and GE Vernova.
- Damodaran’s concern
- Much of SpaceX’s current AI growth comes from renting computing capacity to companies including Google and Anthropic.
Quotes
Aswath Damodaran
NYU professor and valuation analyst who remains cautious about SpaceX’s AI valuation
“The analogy I would offer would be to a young, manufacturing business that is building a large factory for what it contends will be a huge growth business, but then chooses to lease out three quarters of the factory to their biggest competitors.”
livemint.com
“That actually takes away from their AI story, since to win in that story, you have to be generating revenues from creating AI agents and collecting subscription or usage revenues.”
livemint.com
Sources
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