Prediction: This Will Be SpaceX's Stock Price by the End of 2027

This has been an exciting year for stock market investors, and few companies exemplify this more than Space Exploration Technologies (NASDAQ: SPCX). The diversified technology giant went public at a record valuation of $1.77 trillion, driven by optimism about its space and generative artificial intelligence (AI) businesses. Recent results haven't disappointed.

But will SpaceX's booming operational growth reward investors? Let's dig into the pros and cons of the stock to decide if it can maintain its momentum and try to project what the company might be worth by the end of next year.

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Business is booming

SpaceX has been around since 2002. And at the time of its initial public offering (IPO) 24 years later, many investors were justifiably worried that the company's best days of growth were behind it. However, recent earnings results are helping put these concerns to rest.

Third-quarter revenue skyrocketed 161% year over year to $14.1 billion, driven by the company's artificial intelligence segment, which it now calls "super intelligence" (SI). This business has been formed by assets SpaceX acquired with its purchase of xAI earlier this year. It includes the Grok large language model (LLM) along with vast quantities of data center hardware designed to run and train AI algorithms.

With a market share of just 7%, Grok has fallen behind frontier models like ChatGPT and Claude in enterprise adoption. However, instead of betting all its chips in the risky and expensive LLM arms race, SpaceX has decided to focus on AI infrastructure.

The company is now renting out its unused AI compute capacity to former rivals like Alphabet, which is now paying SpaceX $920 million per month, and Anthropic, which is paying $1.25 billion per month. These huge deals are causing SpaceX's revenue to skyrocket, with Chief Executive Officer Elon Musk claiming the company could earn $500 billion to $1 trillion in recurring revenue by the end of 2027 because of soaring demand for AI compute.

Is a potential Tesla merger good or bad news?

Musk's long-term vision for SpaceX may involve a combination with his other public company, Tesla, which specializes in electric vehicles (EVs), autonomous driving, and hardware production. On the surface, this combination could benefit both companies by unifying Musk's attention and leadership and allowing the two companies to work together on projects (such as hardware production) without potential conflicts of interest.

The combination would also give SpaceX investors access to some of Tesla's most exciting projects, such as robotaxis and humanoid robots. That said, both of those businesses remain highly speculative.

In the meantime, Tesla is arguably a stagnating EV business (third-quarter revenue was little changed at $281 billion) with an extremely high valuation of almost 14 times sales. With numbers like that, it's hard to see the merger creating real value for SpaceX investors anytime soon.

Where will SpaceX stock be by the end of 2027?

If SpaceX lives up to Musk's lofty projections and earns $1 trillion in annual revenue by the end of 2027, the company would need a market capitalization of $3.8 trillion to hit the S&P 500's average price-to-sales (P/S) multiple of 3.8. And with a current valuation of $1.85 trillion, that would represent a gain of more than 105%, or a stock price of $281.

Unfortunately, however, Elon Musk has a track record of overpromising and underdelivering. And investors shouldn't expect his SpaceX projections to be an exception.

Musk is assuming that current levels of AI compute demand will continue to accelerate, which is far from guaranteed. In fact, the current situation shows signs of being a bubble. And it's just as likely that AI companies will slow their spending to avoid spiraling losses. While there will probably be ups and downs, it wouldn't surprise me if SpaceX stock continues to trade at about $150 by the end of 2027.

Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool has a disclosure policy.