Is Rocket Lab the Smartest Investment You Can Make Today?
Key Points
It already offers small-lift launches and is eyeing the medium-lift category that SpaceX dominates.
In addition, the company builds satellites and has won a major missile defense contract.
Despite its steep stock valuation, Rocket Lab has an enormous growth runway ahead of it.
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Elon Musk's SpaceX receives most of the publicity and attention for space exploration and the economic opportunities associated with launching rockets into orbit. However, you can't currently trade SpaceX stock on the open market.
Enter Rocket Lab (NASDAQ: RKLB), which has been a huge winner, rocketing 1,600% higher over the past three years. Rocket Lab refers to itself as an end-to-end space company, providing launch services, components, and in-orbit management solutions.
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The stock has popped as Rocket Lab has positioned itself as a viable competitor to SpaceX, the industry giant. But is Rocket Lab stock the smartest investment you can make today?
Image source: Getty Images.
Why the stock's hype is legitimate
Countless stocks have surged on market hype, only to fizzle out when the companies behind the ticker symbols failed to deliver the business results to justify that hype. Rocket Lab looks like the real deal. It specializes in small launches, which are a class below the medium launch category that SpaceX's Falcon 9 rocket dominates.
Rocket Lab performed 21 launches in 2025, including seven in the fourth quarter -- both records. The company generated $602 million in revenue in 2025, so this is a fully functioning business, not some pre-revenue pipe dream. Importantly, Rocket Lab has won a mix of commercial and government contracts, including a $816 million contract to build 18 advanced missile-warning satellites for the Space Development Agency.
The company will soon challenge SpaceX in its core medium launch category once it completes testing of its Neutron reusable medium-lift rocket. Rocket Lab currently anticipates conducting its inaugural launch in the fourth quarter of this year, after a manufacturing defect caused delays.
Bringing Neutron to market would help unlock a new growth frontier for the company, adding to complementary dealings in satellites and solar arrays.
But is it still smart to buy Rocket Lab stock now?
Rocket Lab currently has a market capitalization of $38 billion, a hefty valuation for a business with only $602 million in annual revenue. In that light, Rocket Lab is probably not the smartest investment you could make right now, not after its epic run these past several years.
That said, it still looks like a smart long-term investment. Wall Street estimates have Rocket Lab generating $850 million in revenue this year and $1.2 billion next year. As the company builds its reputation, Rocket Lab could continue to grow for decades to come in a global space industry that, according to estimates noted by the American Foreign Policy Council, could reach $10 trillion by 2050.
The immense regulatory hurdles to launching rockets, let alone earning the government's trust, create a meaningful competitive advantage that companies other than SpaceX and incumbent aerospace companies won't easily be able to encroach upon. Buy-and-hold growth investors should eye Rocket Lab as a strong buy on any notable pullbacks.
Should you buy stock in Rocket Lab right now?
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.
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