Should You Buy SpaceX Stock Below $120?

It seems like just yesterday, Elon Musk was anointed the world's first trillionaire by capital markets. Now, with Space Exploration Technologies (NASDAQ: SPCX) stock down 43% from highs set in the days following its initial public offering (IPO), Musk's net worth is close to getting cut in half as bearish sentiment sets in.

Are we still far from intrinsic value, or is SpaceX stock a screaming buy at $120 or below? When looking at the numbers, the answer is clear.

Huge growth potential, but at what cost?

Wall Street and the tech community hyped up the SpaceX initial public offering (IPO) because of the immense growth potential at play with this space economy and artificial intelligence (AI) stock. The key word in that statement is "potential."

SpaceX is the leader in commercial rocket launches, but it is a relatively small business, revenue-wise, given its current $1.5 trillion market capitalization. In 2025, the space segment only generated $4 billion in sales and actually lost money. SpaceX's revenue and profit primarily come from its connectivity segment, Starlink satellite internet. This segment is growing 50% year over year and hit $11.4 billion in revenue last year.

Where there is even more growth potential is SpaceX's AI segment, which only did $3.2 billion in revenue last year and is burning a boatload of capital every quarter on infrastructure costs. SpaceX has turned around and sold contracts for this data center infrastructure to AI competitors like Google Cloud, which will lead to strong revenue growth this year.

The question is: At what cost was this revenue generated, given $10 billion in capital expenditures for the consolidated business in the first quarter of 2026?

Image source: Getty Images.

Everything is banking on AI demand growth

With SpaceX, the stock price is not going to be driven by its namesake business, but by its aggressive investments into AI infrastructure. For one, it has a massive terrestrial data center business on Earth that is well over capacity to serve its internal services, such as the Grok chatbot. This is why it is selling its data center capacity to third parties that are competing directly with Grok, such as Anthropic.

Long-term, SpaceX believes it can build data center compute capacity in orbit at a cheaper cost than on Earth. Again, this plan relies on the insatiable demand for AI data center infrastructure to continue for the decade ahead.

SpaceX posted just $18.7 billion in revenue in 2025, most of which came from the Starlink internet business. This segment should continue its strong growth trajectory in the years ahead, but the vast majority of SpaceX's capital expenditures -- which are now larger than quarterly revenue -- are related to AI. If demand materializes, SpaceX may quickly grow its revenue to $100 billion or more. If it doesn't, SpaceX is likely to have spent a boatload of money on AI infrastructure that will be sitting idle.

SPCX data by YCharts

Should you buy SpaceX stock below $120?

The stock may have quickly fallen close to 50%, but that has no bearing on whether shares now trade at a reasonable valuation. We are still sitting at a market value of $1.5 trillion, with a price-to-sales ratio (P/S) of 80 based on 2025 revenue figures. Revenue is going to need to grow into the hundreds of billions in the near future, along with healthy profit generation, for anyone buying SpaceX stock today to expect solid returns going forward.

Investors also need to consider the flood of stock that will be unlocked as post-IPO lock-up periods end throughout the rest of this year. These are shares generally owned by insiders who have held SpaceX stock for years and now want to return capital to their own venture capital investors.

Add both of these factors together, and SpaceX stock still doesn't look like a buy, even as it falls below $120. Shares will need to fall significantly more before reaching an attractive valuation.

Brett Schafer 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.