SpaceX Is Down 30% From Its Peak. These 3 Stocks Let You Play the Same Themes.

Space Exploration Technologies (NASDAQ: SPCX), also known as SpaceX, was one of the most hotly anticipated IPOs of the year. But while the stock got off to a strong start, it is now trading about 30% off its highs and faces numerous future stock lock-up expirations that will release more shares into the market. Meanwhile, the company's $2 trillion valuation is based on potential future endeavors that are largely unproven, such as launching data centers in space.

Let's look at three stocks that play on the same themes that could be better buys.

Image source: Getty Images.

1. Amazon

One of the companies pursuing a similar path to SpaceX is Amazon (NASDAQ: AMZN). The company's satellite internet service, Leo, will be offered later this year, directly competing with SpaceX's current main profit-driver, Starlink. Its pending acquisition of Globalstar will also give it critical spectrum and device-to-device capabilities. This should let it not only offer high-speed internet, but also act as a fallback layer for cellular carriers for voice, text, and data when their customers hit dead zones while traveling. It already has a deal in place with Apple to provide satellite services for future iPhones and Apple Watches.

SpaceX is also very much a cloud computing company at this point, and Amazon remains the largest cloud provider in the world. This business has been seeing revenue growth accelerate, and Amazon has a nice cost advantage through its own chips. Amazon is also a leading robotics company, something SpaceX-affiliated Tesla is aggressively pursuing.

2. Alphabet

One of SpaceX's big bets is on artificial intelligence (AI), which it views as its largest opportunity. Before its IPO, it merged with xAI, the maker of Grok, and, after its IPO, it acquired Anysphere, the parent company of the AI code-generation platform Cursor. However, SpaceX is widely considered behind in this area compared to Anthropic, OpenAI, and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG).

Of the three, Alphabet is the only one that is publicly traded, and it has strong advantages in the space. Its Gemini model is consistently considered one of the best foundational AI models, while its top-tier Tensor Processing Units (TPUs) give it a cost advantage in both training and inference. And while SpaceX uses the social media platform X as a distribution platform for Grok, Alphabet has Google Search.

Plus, in a bit of an under-the-radar project, Alphabet is also looking to create a constellation of solar-powered satellites powered by TPUs through its Project Suncatcher. It is looking to develop TPUs that can withstand cosmic radiation and has projected that the cost of a space-based data center could be similar to land-based data centers by the mid-2030s.

3. AST SpaceMobile

Another company competing with SpaceX in the satellite internet realm is AST SpaceMobile (NASDAQ: ASTS), which Alphabet holds a stake in. However, the two companies are taking different approaches. While SpaceX is trying to win with the sheer scale of its cheaper, low-orbit satellite constellation, AST is using more expensive satellites with higher bandwidth per satellite and larger antennas that can potentially support faster data rates.

Its business model is built around direct-to-cell services, and it has formed partnerships with many of the world's top mobile providers, including AT&T, Verizon, and Vodafone. This allows it to provide both high-bandwidth internet and voice calls directly on unmodified phones.

Image source: Getty Images.

Better options than SpaceX

SpaceX has captured the minds of investors, as Elon Musk-backed companies often do. However, it is not the only company pursuing space-based ventures. With Amazon and Alphabet, investors are getting two megacap companies that produce tremendous operating cash flow that they can use to pursue these projects, while their current valuations don't reflect any potential upside from these ventures. Meanwhile, with a $33 billion market cap, AST could have more upside potential given its smaller size and the significant operating leverage it could see as revenue scales.

SpaceX is not the only game in town, and these three stocks look like better options in my view.

Geoffrey Seiler has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends AST SpaceMobile, Alphabet, Amazon, Apple, and Tesla. The Motley Fool recommends Verizon Communications and Vodafone Group Public. The Motley Fool has a disclosure policy.