Elon Musk Expects SpaceX to Make $500 Billion to $1 Trillion in Sales Next Year. Here's What That Means for the Stock.

Can Space Exploration Technologies (NASDAQ: SPCX) actually become the first company ever to generate $1 trillion in annual sales? Elon Musk thinks so.

SpaceX is growing fast, and it reported $14.6 billion in third-quarter revenue, a 161% year-over-year increase. However, CEO Elon Musk thinks it can grow much, much faster.

"What this implies for SpaceX's annual recurring revenue by the end of 2027 is somewhere between $500 billion and $1 trillion," he said on the Oct. 20 earnings call, referring to the growth of its newly renamed "super intelligence" business.

Let's consider what this could mean for the stock.

SpaceX is growing like wildfire

SpaceX has certainly started off its era as a publicly traded company with a bang. Revenue increased 92% year over year in the second quarter and 161% in the third quarter, and it posted its first quarterly net profit of $4.4 billion. There was momentum across its three segments: the rocket launch business, its Starlink satellite broadband, and the super intelligence (SI) unit.

SpaceX had its first revenue-generating Starship mission, and it launched three missions from three different launchpads in under 13 hours. It's expanding its deals with three new NASA International Space Station crew missions, 18 national security space launch missions, and three commercial Starfall missions, in addition to a contract for Starship to deliver a payload to the moon. Revenue increased 84% over last year, and it reported a $7 million loss.

Image source: Getty Images.

Starlink added 1.6 million subscribers in the quarter to bring its total to 13.6 million, and average revenue per user increased 5% to $69 monthly. Revenue was up 69% from last year, and its operating income doubled from $1.2 billion to $2.4 billion. Starlink is now installed on more than 3,800 aircraft, and the service has deals with United Airlines, American Airlines, and many other global carriers.

The major growth, though, is coming from SI, which increased its revenue by 830% year over year. That growth was driven by new cloud computing agreements, the company's acquisition of code-writing AI specialist Cursor, and scaling the Grok AI model's enterprise business.

"We're seeing the fastest growth of a product that I've ever seen in my life for Grok Bot," Musk said in reference to the agentic AI product. The SI segment also produced an operating profit of $431 million, up from a $1.7 billion loss last year.

Reaching for the stars

Musk's goals for SpaceX's future added some sheen to its stellar Q3 report.

"The only way that we can extend consciousness beyond Earth on a sustained basis is with a fully reusable orbital launch vehicle," he said. Starship is meant to be the first such platform, and he expects to demonstrate its full reusability as early as Starship flight 15, which is scheduled for November. The company is also building a new launch base in Louisiana to support an increasing cadence of rocket launches.

A large share of SpaceX's launches are dedicated to putting Starlink satellites into orbit, and over the next three years, Musk says he expects to increase the network's bandwidth 100-fold, operating on the order of 100,000 satellites, each one providing more than 10 times the bandwidth of its current models. Five years from now, he expects demand for Starlink's bandwidth to reach 100 times current levels, driven in large part by an explosion in the use of AI agents.

That gets to his biggest goals, which are all in SI. Musk envisions that SI will be faster than all other competitors combined, and he thinks that as Grok Bot continues to scale for enterprises, essentially being able to function as "a virtual human," it will lead to massive growth. That's where his $500 billion to $1 trillion prediction comes in.

Don't discount the risks

If SpaceX reaches even $500 billion in revenue next year, the stock would certainly soar. At today's price, it trades at a lofty 63 times trailing-12-month sales. But if the stock held steady while the top line climbed that far, a year from now, it would be trading at less than 4 times sales. That would be quite a bargain.

But it's necessary to remember that Musk has often set targets and made predictions for his companies that haven't come to fruition. For example, a few years ago, he asserted Tesla was planning to increase its EV deliveries by 50% annually for several years. Last year, deliveries rose by 1%.

There are other risks, too. SpaceX wants to have between 13 and 20 gigawatts of compute power online for the SI business by the end of 2027, and it had less than 2 gigawatts operational as of the end of Q3. Hitting that goal will require heavy spending.SpaceX's capital expenditures in the third quarter came to $19.6 billion -- far exceeding the $14.6 billion in revenue it generated -- and its free cash flow was negative $10 billion.

Following the release of the Q3 report after the close on Oct. 20, SpaceX stock jumped in after-hours trading, but investors should take the company's outlook with a large grain of salt.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.