Wall Street on Tuesday revealed hugely bullish calls for Elon Musk’s SpaceX after it started equity research coverage on the space firm, even as the stock largely trades on AI enthusiasm – not actual earnings.
More than a dozen brokers including Morgan Stanley, JPMorgan and Goldman Sachs unveiled emphatic “buy” ratings on the stock, according to data compiled by Bloomberg – estimating it will soar 47% on average from Monday’s closing price of $160.42.
Many of these powerhouse banks bought up SpaceX at $135 a share during its historic IPO last month – and now they’re expecting the price to shoot up to $236 on average.
It’s a stark contrast to the quiet period that newly-public companies typically see after their market debuts.
Financial firm Raymond James has emerged as the biggest SpaceX bull with a price target of $800 – almost 500% higher than its IPO price.
“Just as railroads, electric grids, and the internet reshaped prior economic eras, we believe SpaceX is building the foundational platform for the next generation of industrial capacity,” Raymond James analyst Brian Gesuale wrote in a note Tuesday.
Analysts for Deutsche Bank said SpaceX represents “the apex of civilizational ambition, oftentimes expressed in steel and fire, bending the arc of history.”
Bank of America analysts said SpaceX – which owns satellite giant Starlink – is “paving the superhighway to the stars.”
Yet SpaceX shares fell 6.8% Tuesday – about 25% lower than their June 16 closing price of $201.80 – alongside other tech and chip stocks as investors fear a potential “AI bubble.”
The company has already seen its massive AI spending weigh on profits, as it lost nearly $5 billion last year – but analysts are hopeful it will come out on top in the long term thanks to its AI investments.
Musk’s Tesla, which took years to turn a profit, experienced a much less enthusiastic market in 2010 – but analysts are also optimistic that the stock’s quick entry to the Nasdaq 100 on Tuesday will help reduce volatility.
The average price target for the 10 largest stocks on the Nasdaq 100 shows 28% upside, with Nvidia far in the lead at 55%, according to Bloomberg.
Bloomberg Intelligence analyst Rob Du Boff estimated that SpaceX’s spot in the Nasdaq 100 and FTSE Russell would drive at least $5.4 billion in buying from index-tracking funds.
Morgan Stanley is another significant SpaceX bull, expecting the stock to hit $300 a share as demand for AI services continues to grow.
“While neocloud deals are the bulk of the business near term, we see end-to-end AI services as the longer-term business model,” Morgan Stanley analysts wrote in a note.
Among the 3,000 largest US companies, a whopping 63% of analyst ratings rated SpaceX a “buy” – with only 4.2% of “sell” recommendations, according to Bloomberg.
Yet some analysts have cautioned that investors should be wary, saying that even if SpaceX eventually sees big profits from its investments, a lot of that value has already been priced in.
Ahead of SpaceX’s IPO, which priced the stock at $135 a share, Morningstar Nicolas Owens valued the firm at just $63 per share – calling the stock “overvalued.”