SpaceX's future value hinges far less on launching rockets than on building artificial intelligence infrastructure in space. Morgan Stanley analyst Adam Jonas set a base case price target of $300 per share for SpaceX stock, signaling more than double the current share price. But that ambitious valuation depends almost entirely on the company succeeding in a market that barely exists yet: orbital AI data centers.

Why Is Wall Street So Bullish on SpaceX's AI Ambitions?

The numbers tell the story. Morgan Stanley projects SpaceX's revenue will grow from $18.7 billion in 2025 to $319 billion by 2030 and reach $3.3 trillion by 2040. The bulk of that growth, according to the research, comes not from launching satellites or government contracts, but from artificial intelligence infrastructure. SpaceX itself pegged its total addressable market at approximately $28.5 trillion, with all but $2 trillion of that tied to AI.

The company plans to launch a massive constellation of AI satellites called Starmind, essentially building data centers in orbit. SpaceX intends to launch its first AI satellites on Starship sometime next year. From this perspective, rockets are simply the means to an end: delivering computing power to space where it can serve global AI workloads without the land-use and cooling constraints that plague Earth-based data centers.

What Computing Capacity Is SpaceX Actually Building Right Now?

SpaceX is already moving aggressively into the cloud computing business. In June, the company reached computing arrangements with Google and Anthropic. The Google deal provided access to approximately 110,000 Nvidia chips, while Anthropic secured capacity at SpaceX's Colossus 1 data center in Memphis. Additionally, SpaceX is in discussions with the U.S. Department of Defense about supplying data-center capacity worth several billion dollars for military artificial intelligence workloads, though those talks are still ongoing and could fail to produce an agreement.

SpaceX employees have reportedly discussed selling computing capacity at prices designed to compete with established cloud providers such as CoreWeave. The Pentagon, meanwhile, is seeking funding for a new AI Arsenal initiative centered on access to high-end chips and computing resources. The military has already approved multiple tech companies, including SpaceX, Amazon, Google, Microsoft, and Oracle, for classified AI-related work.

How to Understand SpaceX's Valuation Risk

• Execution Risk: SpaceX is trading at approximately 94 times last year's revenue, even after its recent stock decline to a $1.7 trillion market cap. The company will need to live up to Morgan Stanley's aggressive growth projections for the stock to sustain its current valuation, let alone double in value.
• Bull and Bear Cases: Morgan Stanley's research reflects the uncertainty, with a bull case as high as $600 per share and a bear case as low as $75. This wide range signals that investors won't know for years whether SpaceX will succeed in its orbital AI ambitions, making the stock likely to remain volatile.
• Competitive Pressure: No company currently seems close to replicating SpaceX's model of orbital AI infrastructure, but the space is truly the next frontier for artificial intelligence. Data centers have become controversial in the United States, with New York recently becoming the first state to impose a moratorium on new hyperscale data center builds, making orbital alternatives potentially attractive.

"There is still significant scope for further cost reductions going forward," stated Alessio Terzi, an assistant professor of public policy at the University of Cambridge.

Alessio Terzi, Assistant Professor of Public Policy at the University of Cambridge

How Does SpaceX's Rocket Reusability Enable This Strategy?

SpaceX's ability to execute its AI ambitions depends critically on reducing launch costs. A comprehensive study covering 4,405 rocket launches from 1960 to 2025 found that the average cost of sending one kilogram to orbit dropped 96 percent over that period, from $87,023 in 1960 to $3,868 in 2025. The researchers identified two major drivers of this cost reduction: the end of the Cold War and the shift to commercial space, and crucially, the advent of reusable rockets at scale, exemplified by SpaceX's Falcon 9.

Assuming this trend continues, researchers estimate the average cost of space launch will fall to $1,600 per kilogram by 2030 and $300 by 2040. This learning rate, where costs drop 21.2 percent each time cumulative industry payload doubles, exceeds that of solar panels, a technology frequently cited as the benchmark for cost reduction.

However, three major factors could slow or reverse this trajectory. First, space debris poses a growing problem, with collisions potentially triggering a cascade of debris known as Kessler syndrome. Second, SpaceX currently accounts for roughly 75 percent of total payload sent to orbit globally, creating potential monopoly dynamics where a single company could charge higher prices and reduce overall market growth. Third, geopolitical tensions may push governments to develop independent launch capabilities rather than rely on a single U.S. company, potentially bringing back Cold War-era inefficiencies.

Despite recent stock volatility, including a 5 percent decline on Friday and a 15 percent weekly drop, SpaceX shares rose 1 percent overnight as investors digested conflicting signals. CEO Elon Musk dismissed a report claiming SpaceX had placed a $52 billion order with Foxconn for Nvidia-powered AI servers, calling it "fake news." Yet the company continues expanding its cloud capacity through arrangements with major technology partners, signaling serious commitment to the AI infrastructure business.

The reality is that SpaceX's stock valuation reflects success that hasn't happened yet. Whether the company can transform from a rocket company into a dominant player in orbital AI infrastructure will determine whether Morgan Stanley's $300 price target proves prescient or wildly optimistic.