1 Green Flag and 1 Red Flag for SpaceX Investors

There's a temptation among investors to lump Space Exploration Technologies (NASDAQ: SPCX) -- aka SpaceX -- into one of two categories.

The first is that CEO Elon Musk is overly ambitious and his goals are unachievable, so the company is doomed to failure and should be avoided at all costs. The second is that Musk is a genius and nearly everything he puts his mind to is a raging success, so buying SpaceX stock while it's just getting started is a wise bet.

The reality is that SpaceX could, eventually, end up somewhere in the middle -- and that means it's important to take a close look at both the good and the bad of the company before jumping to conclusions. Here's one bright green flag, and one dark red one, for the company right now.

Image source: Getty Images.

Green flag: SpaceX's AI business is tapping into a potentially massive market

SpaceX might be known to the general public as a rocket company, but its artificial intelligence (AI) business is one of its largest long-term opportunities.

The company has built two Colossus data centers that it uses for both developing and improving its own AI, including its Grok AI model, and for renting them out to customers. This approach is already working well, with SpaceX inking multi-year deals with Anthropic and Alphabet worth tens of billions of dollars annually.

And that could just be the beginning. A Financial Times report over the summer said that Goldman Sachs underwriters estimated SpaceX's artificial intelligence revenue could be 100 times higher than its $3 billion sales last year -- reaching $322 billion by 2030.

That's just an estimate, of course. Still, there's real momentum in the AI market right now as SpaceX and other companies are investing heavily in creating leading AI models and renting out compute capacity to customers.

Some of the latest estimates show that global AI infrastructure spending could surpass $10 trillion between 2025 and 2032. It's hard to know if that will be money well spent, but it certainly shows that SpaceX and other AI players believe the payoff could be significant.

Red flag: SpaceX's capital expenditures are a runaway train

The flip side to SpaceX's AI opportunity, and the red flag investors should be paying attention to, is that the company's capital expenditures (capex) are speeding up -- with no end in sight.

SpaceX spent just $6.5 billion in capex in the first six months of 2025. But just one year later, that amount had risen by more than 300% to $28.5 billion. Even more concerning is that the vast majority of this spending went -- nearly 83% -- went only to artificial intelligence.

That's a problem for SpaceX because AI only accounts for about one-third of the company's total sales, with the vast majority of revenue coming from its Starlink satellite internet business.

As I mentioned, tech companies are spending huge sums in hopes of long-term benefits, but SpaceX's rapid acceleration of AI capex relative to its sales is a hard pill to swallow for most investors. SpaceX isn't profitable yet, and it's investing in other capital-intensive industries, including its Starship rocket.

SpaceX's spending should already be a red flag for investors. And if AI costs contune to accelerate, then it could be an even bigger warning sign to to steer clear of the company for now.

Don't jump on SpaceX stock just yet

If you're on the fence about buying SpaceX stock, I think it's better to hold off. In addition to SpaceX's rising costs, its shares are also trading at a hefty premium. The company's stock has a price-to-sales (P/S) ratio of about 69, far above the tech sector P/S average of around 8.

While the company is well-positioned to benefit from AI, investors should wait to see if its investments start paying off before considering paying such a high price for SpaceX stock.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Goldman Sachs Group. The Motley Fool has a disclosure policy.