SpaceX and Nvidia Each Forecast $1 Trillion in Revenue. Which Stock is the Better Buy?

Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, and Nvidia (NASDAQ: NVDA) have a few things in common. They operate in the area of artificial intelligence (AI), they are trillion-dollar companies, and their leaders, Elon Musk at the former and Jensen Huang at the latter, have big ambitions.

These companies also have seen their stock prices soar, though Nvidia's has happened over a longer period of time since it's been publicly traded for decades, while SpaceX just completed its record IPO a week ago. Nvidia stock has climbed more than 300% over the past three years as AI demand accelerated; SpaceX saw its stock soar 40% in its first three days of trading from the opening price.

And now, these companies have yet another thing in common. Both Musk and Huang have announced forecasts for $1 trillion in revenue. Let's check out the details and consider which of these tech stocks is a better buy.

Image source: Getty Images.

The AI chip leader

We'll start with Nvidia. The company is the leader in the AI chip space, selling the graphics processing units (GPUs) that power the most crucial of AI tasks. Nvidia has greatly expanded these GPUs into complete systems and offers many related products and services. All of this has generated mammoth earnings growth, with revenue soaring 65% in the latest full year to a record of more than $215 billion.

The company's focus on innovation has helped it maintain market leadership and also has served to supercharge growth; each time it releases a new update, and this happens about once a year, customers flock to get in on it. And this brings me to Jensen Huang's forecast. Nvidia predicted earlier this year that revenue from the Blackwell platform, as well as the upcoming Vera Rubin system, through 2027 would total $1 trillion.

Considering the company's performance so far, demand for its GPUs, and details regarding the Rubin rollout later this year, I wouldn't be surprised to see Nvidia reach that goal.

Now, let's take a look at SpaceX. The company operates three business units -- space, connectivity, and AI -- and the strength of the space business should help in the growth of the other two. SpaceX may use its own rockets to help the connectivity business, Starlink, and the AI business transport materials into space, for example. This could build an interesting platform over time.

Starlink drives revenue

But, for the moment, SpaceX's ambitions require significant capital expenditures, specifically in the AI business. That unit's capex totaled $12 billion last year. And the company's total revenue of $18 billion looks small considering that level of capex and compared to the hundreds of billions in annual revenue generated by other trillion-dollar companies. Right now, Starlink is driving SpaceX's growth as it accounted for more than 60% of total revenue last year.

Meanwhile, in a recent post on X, Elon Musk said SpaceX may deliver $1 trillion in revenue by 2030, and he would be surprised if revenue didn't surpass that level the following year.

Considering this forecast and that of Nvidia, which of these two AI stocks is the better buy right now? SpaceX has seen growth in subscribers at Starlink, has made important progress in reusable rockets in the space business, and the AI business has signed valuable compute capacity contracts with Anthropic and Alphabet. The two deals combined represent $26 billion in annual revenue for SpaceX. All of this is positive, but, as mentioned, SpaceX is involved in a phase of heavy investment -- and it's difficult to see the path to $1 trillion in a period of less than five years. And at the same time, the stock price has skyrocketed right out of the gate.

Meanwhile, Nvidia's path to $1 trillion in revenue is much clearer, and the stock looks very reasonably priced at 23x forward earnings estimates. All of this makes Nvidia a much better buy right now.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.