Barely three months after the largest IPO in history, Space Exploration Technologies Corp. (NASDAQ:SPCX) is no longer just viewed as a launch and satellite company. The company, in turn, has been expanding its horizons and is now viewed as an artificial intelligence infrastructure company.
On September 2, Oppenheimer analyst Tim Horan raised the price target on SpaceX to $280 from $250 and maintained its Outperform rating. The firm’s note entirely talks about the economics of SPCX’s AI applications and infrastructure.
Highlighting AI productivity and usage ahead of expectations, the firm has raised its long-term revenue estimates by about 10% on stronger AI compute pricing, compounding to about 20% longer term.
SPCX Benefits through Vertical Integration
According to Oppenheimer, SpaceX could capture around 100% of AI revenue through Cursor/Grok or 50% as an infrastructure wholesaler. The company has been differentiating itself as a vertically integrated AI platform, boasting the data, capital, GPUs, and infrastructure build.
Earlier in the year, SpaceX had purchased Cursor for $60 billion in an all-stock deal after an initial partnership and compute-sharing agreement. The company was acquired to integrate advanced coding and agentic workflows into Grok.
Oppenheimer noted how the Cursor acquisition has been transformative for SPCX, with its agentic coding improving the entire AI platform.
Besides these benefits, the firm also talked about how it believes that next-generation Nvidia Rubin chips could generate an estimated one-year payback. This could make aggressive compute expansion economically attractive.
Enormous Capital Expenditure Required
Oppenheimer believes that while AI usage and productivity are running ahead of expectations, AI infrastructure is acting as a bottleneck for SpaceX. The higher long-term revenue estimates coming from the firm therefore come with even bigger capex requirements.
Obviously, a revenue bump wouldn’t make economic sense if its accompanied by a much larger capex commitment. For Q2, AI segment capital expenditures reached $15.83 billion. A year earlier, this figure stood at $749 million only. The AI segment reported a $1.26 billion operating loss, particularly as R&D and infrastructure remained elevated.
Hedge Funds and Institutional Interest
SpaceX has attracted significant hedge fund interest following its IPO in June. 119 hedge funds held positions in the stock at the end of the second quarter. VY Capital held an estimated 271.8 million shares in SPCX, Darsana Capital Partners held roughly 101.5 million shares, while D1 Capital Partners reported around 126 million shares.
Overall, Oppenheimer’s price target builds upon the premise that SPCX can capture more of the value chain by combining compute infrastructure with products such as Grok and Cursor. The key risk however is that such an expansion requires huge capital expenditure, making the opportunity expensive. SPCX must therefore generate AI demand and pricing power to generate attractive returns on its increasingly massive infrastructure investment.
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