Why Did SpaceX Stock Soar Today?
Key Points
Revenue rocketed 161% higher year over year.
The AI segment contributed more than half of total revenue.
The company's growth rate is surpassing even optimistic predictions.
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Space Exploration Technologies (NASDAQ:SPCX) released quarterly results for just the second time as a public company last night. While investors expected growth, what SpaceX reported was surprisingly strong in several respects.
Investors reacted by driving the stock sharply higher. As of 10:10 a.m. ET, SpaceX shares were up by 11.9%.
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Image source: SpaceX.
Year-over-year revenue growth of 161% wasn't even the whole story. Most impressive was the source of that revenue. SpaceX's connectivity business is no longer its only profitable segment. Starlink subscriptions did grow impressively, from 12 million in Q2 to 13.6 million in Q3. But the company's artificial intelligence (AI) business -- now dubbed "SI" for superintelligence -- was the real news.
While that business accounted for about one-third of revenue in the second quarter, it remained unprofitable. That has quickly changed, though. SI accounted for more than half of total revenue in the latest quarter and generated about $430 million in net income. Future profits from that business could continue to lift the stock.
Total revenue of $14.6 billion beat analyst expectations by nearly $2 billion. Looking ahead to next year, SpaceX expects Q1 2027 revenue of $33 billion to $37 billion, far more than the $22.2 billion analysts had forecast.
If Starlink continues to grow its subscriber base and SpaceX's SI segment keeps building and leasing compute capacity, future sales and profits could make the recent $2.1 trillion valuation look cheap.
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Howard Smith 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.
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