How Buying SpaceX Today Could 10X Your Investment

The many opinions on Space Exploration Technologies (NASDAQ: SPCX) include this one: Rockets, artificial intelligence, internet access, and orbital data centers are an exciting combination! But that valuation? More than 100 times sales!

SpaceX is indeed expensive. The stock, as I write this on June 26, trades at roughly 103 times sales and 58 times book value. That means investors are paying about $103 for every $1 of annual revenue SpaceX generates, and about $58 for every $1 of net assets on the balance sheet. Those are extraordinarily rich multiples even for a company growing as quickly as SpaceX.

The stock isn't just expensive; it's priced like a new Rolls-Royce. And if the history of blockbuster IPOs like Meta Platforms (then Facebook) and Rivian tells us anything about the near-term future of SpaceX, it's that enormous expectations can deflate a highly anticipated stock just as quickly as they can inflate one.

I don't own shares of SpaceX, and I don't plan to buy any soon. That said, my risk tolerance isn't the same as others', and, with an open mind, I can envision a future in which SpaceX grows tenfold from today's seemingly outlandish valuation. Here's how.

Image source: Getty Images.

SpaceX is a 3-in-1 play on the future of humanity

How could a $2 trillion company with a pricy valuation grow into a $20 trillion company that inspires less market volatility and more confidence?

Before I answer that, let me point out what makes SpaceX different than other growth stocks. I'm not talking about Elon Musk at the helm, or Martian colonization on the horizon. I'm referring to its three-in-one business: space, connectivity, and AI.

What's easy to miss is how different these businesses are, or rather how loosely connected they are. They operate under the same company strategy and brand, but they make money differently, address different audiences, and carry different margins. Indeed, each one could be treated as its own separate growth stock. In that sense, an investment in SpaceX is like getting three premium growth stocks in one.

Which brings me here: The differences in these growth businesses is how SpaceX, as the conglomeration, can self-fund its trail-blazing research. Starlink -- providing internet via satellites -- for example, is highly profitable right now, bringing in about $4.4 billion in 2025, while xAI is deeply negative, with a loss of about $6.4 billion last year.

The three-part business structure can help SpaceX hedge its losses, but to reach a $20 trillion valuation, it really needs its AI segment to fire on all cylinders. SpaceX itself believes AI could unlock a $26.5 trillion market opportunity, which is probably exaggerated. But even realizing half of that opportunity would create massive upside for SpaceX stockholders.

Should you buy SpaceX today?

If SpaceX's AI segment conquers this $26.5 trillion market and converts it into revenue, a tenfold gain in its stock is very likely. However, don't treat that as gospel. Even if AI proves to be as profitable as the most optimistic speculators surmise, a tenfold gain could take a decade or more to surface.

If you're patient enough, you might want to wait before opening a position. The stock has long-term potential to tenfold your net worth, but a more favorable buying window might be on the horizon.

Steven Porrello has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.