The Crowd Is Dumping SpaceX Stock. Here's Why I'd Be Buying It on the Dip.

Space Exploration Technologies (NASDAQ: SPCX) shares have only been trading on public markets for a few weeks. But the ride has already been extreme. After pricing its IPO at $135 per share, SpaceX stock immediately jumped to nearly $226 per share. After a steep correction, however, shares are now down to just $154.60 -- a drop of more than 31% in a matter of days.

The company's market cap remains just above $2 trillion -- a steep price to pay for a company that's still losing money. But if you're bullish on artificial intelligence, SpaceX stock remains a top pick for one clear reason.

SpaceX is a top AI stock for this reason

Many retail investors think of SpaceX as a rocket or satellite stock. Savvy investors, however, realize that the company is really an AI stock.

When SpaceX published its IPO prospectus, the company claimed to have a total addressable market of $28.5 trillion. Only a small minority of that total opportunity dealt with rockets or satellites. More than 90% dealt with a single opportunity: AI.

Perhaps the biggest long-term growth opportunity for SpaceX involves establishing so-called orbital data centers. To be sure, the company is also rapidly building terrestrial data centers to support the continued worldwide adoption of artificial intelligence technologies. But land is expensive and limited. Cooling costs are also onerous, with the current electrical grid unsuited to handle the large amounts of continue energy the global data center buildout will require.

Image source: Getty Images.

On paper, orbital data centers can solve many of these growth constraints.

"Harnessing ... energy in space is considerably more efficient than on land," SpaceX claims. "Space-based solar arrays can generate more than five times the energy per unit area of terrestrial solar due to continuous illumination, lack of atmospheric interference, and optimal orientation." Meanwhile, temperatures in low Earth orbit are also much cooler and more stable than temperatures on Earth.

Convecting heat away from GPUs will be a physics challenge. But the opportunity to greatly reduce cooling and operating costs is clear. And arguably, no other company is as prepared to make orbital data centers a reality as SpaceX, armed with its leading rocket division and proven ability to get payloads into space at surprisingly low costs.

Quantifying the orbital data center opportunity is difficult. And the path toward their realization may be long, rife with challenges -- both expected and unexpected. But terrestrially, more than $7 trillion is expected to be deployed over the next few years alone to scale data center infrastructure worldwide. As McKinsey & Company concludes in a recent report, "Capital is pouring into data center development, but there are real constraints on growth." SpaceX is well positioned to overcome many of these growth constraints by commercializing orbital data centers.

As mentioned, modeling the value of this opportunity is difficult even for experts. But SpaceX should remain at the top of every AI investor's watchlist due to this opportunity alone, especially after the post-IPO correction.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.