Is SpaceX Outrageously Overvalued or a Long-Term Investment With Unmatched Potential?

Space Exploration Technologies (NASDAQ: SPCX), also known as SpaceX, is currently being valued for three major opportunities. These are Starlink's broadband and mobile connectivity business; Starship, its large reusable rocket system; and artificial intelligence (AI) infrastructure, which includes data center capacity on Earth and possible AI computing in space.

SpaceX priced its IPO at $135 per share and raised $85.7 billion after selling additional shares to meet strong investor demand. The company has a market capitalization of more than $2 trillion and is still trading over the IPO price, despite the stock falling 10% on June 22.

SpaceX generated $18.67 billion in revenue and posted a net loss of $4.94 billion in fiscal 2025. Hence, Wall Street seems to be pricing the stock not only on current financials but on the possibility that SpaceX can turn launch dominance, satellite internet, mobile connectivity, and AI compute into one integrated infrastructure platform.

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The valuation already assumes near-perfect execution

SpaceX expects Starship to carry 100 metric tons into orbit around Earth, potentially enabling the launch of larger Starlink and AI compute satellites. Starship is also important to NASA's moon program, but SpaceX must still prove it can transfer extremely cold rocket fuel between spacecraft in space. If Starship is delayed or fails to become reliable, a major part of the valuation case becomes weaker.

There are already warning signs. NASA's inspector general has said SpaceX's moon lander, the vehicle meant to carry astronauts from orbit around the moon down to the lunar surface, will not be ready for a June 2027 landing. This has further added pressure on NASA's 2028 moon landing target.

Reuters has reported that SpaceX may pursue a bond offering of at least $20 billion to fund its AI expansion plans. The expansion of Starlink Mobile also depends on spectrum approvals and regulatory decisions. Additionally, Amazon Leo, Amazon's satellite internet network and Starlink rival, is becoming a more credible competitor as it adds hundreds of satellites ahead of service rollout.

SpaceX trades at nearly 137.7 times trailing-12-month sales, which is very expensive. At this valuation, even modest setbacks could meaningfully dent SpaceX's bull case.

Robust growth catalysts

SpaceX had about 10.3 million Starlink subscribers, service across 164 markets, and more than 9,600 satellites in orbit at the end of the first quarter of fiscal 2026 (ending March 31, 2026). The Starlink-powered connectivity segment generated $11.4 billion in revenue and $4.4 billion in operating income in fiscal 2025.

SpaceX also has relationships with about 30 mobile network operators and spectrum rights for 65 megahertz, meaning radio frequencies that help ordinary phones connect to Starlink satellites. The company's mobile coverage can reach about 1.9 billion people. SpaceX has put more than 650 satellites around Earth for its first satellite-to-phone network. This could help Starlink move beyond dish-based internet and into the much larger market for connecting ordinary mobile phones by satellite.

Starlink is also expanding in the enterprise segment. In 2025, around 1,400 commercial aircraft had Starlink installed, more than 21 million airline passengers used the service, and over 150,000 boats and ships connected through Starlink. This gives SpaceX exposure to high-value airline and sea-based customers, not just residential broadband users.

Hence, while SpaceX is expensive, very few companies have SpaceX's launch scale, satellite network, mobile connectivity opportunity, and AI infrastructure ambitions. Long-term investors may still be rewarded, but only if these opportunities become durable, cash-generating businesses.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.