Prediction: Here's What a $1,000 Investment in SpaceX Stock Could Be Worth in 2031

Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, has had a bumpy takeoff since its IPO. After rocketing higher to $225 per share within days of its $135 initial public offering, the stock fell more than 50% over the following weeks. It now trades around $150 per share, but still exhibits considerable volatility.

In the near term, the stock could face significant pressure as insiders and early investors sell additional shares. Most shares, except those owned by Elon Musk, will unlock by the end of the year, but some will remain locked until next summer. Musk's shares unlock a year after the IPO, but the CEO has said he has no intention of selling any of his stake.

In the long run, the stock price will be determined by the company's ability to generate revenue and profits. And the potential is high. That's why the stock currently garners a price-to-sales ratio close to 100.

The next five years could prove critical for SpaceX bulls. Here's how much a $1,000 investment in the stock today could be worth by 2031.

Image source: The Motley Fool.

Can SpaceX reach $1 trillion in revenue within five years?

During SpaceX's second-quarter earnings call, Musk said the company updated its revenue growth timeline. It now expects to reach $1 trillion in annual revenue by 2030. Considering the business generated just over $20 billion in revenue over the past four quarters, that would be absolutely remarkable growth.

Driving that growth is SpaceX's AI segment, and most of the revenue growth there stems from renting out compute capacity. It's signed deals with Anthropic, Alphabet, Reflection AI, and an additional undisclosed customer. Management expects to sign many more of these deals over time as it expands its compute capacity.

To that end, management says it can stand up new data centers and servers extremely quickly. It expects to end the year with 2 gigawatts of capacity and to end next year with "closer to 10 gigawatts of compute than 5 gigawatts of compute," Musk told investors.

CFO Bret Johnsen also shared, "The current economics have translated into a less than one-year payback on our new capital deployments for compute." Whether that refers to total capital (including structures) or just the cost of new servers, it's still an incredibly high rate of return.

Google Cloud CEO Thomas Kurian said Alphabet is only able to achieve that payback rate on its custom TPU servers, and its average server has a payback period of two years. Considering SpaceX exclusively uses Nvidia GPUs, that's a massive improvement relative to its larger peer.

It's unclear whether SpaceX has a true economic advantage, but one clear advantage would be the successful deployment of low Earth orbit data centers. That requires the successful launch of Starship, its super-heavy, fully reusable rocket that can decrease the cost of launching satellites by an order of magnitude. On top of that, it has to prove that operating data centers in space is more cost-effective than terrestrial data centers.

Most importantly, SpaceX's biggest growth driver, selling compute to third parties, requires the industry to remain in a supply shortage. Selling bare infrastructure doesn't provide any differentiating factors that would make its cloud platform more attractive than the big hyperscalers, which offer fully fleshed-out cloud platforms and have been used by enterprises for years.

Wall Street is discounting Musk's $1 trillion claim, but analysts still see a lot of revenue coming SpaceX's way. The consensus calls for $530 billion in AI-related revenue by 2031. Adding in a successful Starlink communications business and launch services to the mix could push revenue closer to $600 billion or $650 billion.

How much will SpaceX be worth in 2031?

If SpaceX can continue deploying cash with payback periods of less than one year while signing new contracts to support its compute build-out, it could become an extremely valuable company. The question is whether both are sustainable, and that seems to hinge on its ability to launch orbital data centers economically.

Perhaps the best comparable stocks for SpaceX are CoreWeave and Oracle. Both are leading infrastructure-as-a-service cloud computing stocks, trading at around 6 times sales. At 6 times 2031 sales of $600 billion, SpaceX would be worth $3.6 trillion. That's a 77% increase from today's valuation, meaning $1,000 would turn into $1,770, a 12% compound annual return over five years.

That's a reasonable return, but there's a huge level of risk and uncertainty in that outlook, and, at least for me, a bit of doubt as well. Investors need to significantly discount those numbers to maintain a reasonable margin of safety to buy the stock today. Even then, you have to have a lot of confidence in SpaceX and the AI market to justify the price paid.

There are many better opportunities to invest $1,000 with a higher degree of confidence in a solid return.

Adam Levy has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Oracle. The Motley Fool has a disclosure policy.