Space Exploration Technologies Corp. (NASDAQ:SPCX) is moving closer to challenging traditional wireless carriers after agreeing to acquire a nationwide low-band spectrum portfolio from Grain Management. The October 8 transaction reportedly involves approximately $8 billion in cash, although financial terms were not publicly disclosed. The acquisition would strengthen Starlink Mobile’s ability to deliver satellite connectivity directly to conventional smartphones, expanding SpaceX’s ambitions beyond satellite broadband into the much larger mobile communications market.
The announcement pressured shares of major U.S. wireless carriers, reflecting concerns that SpaceX could eventually compete with established terrestrial networks. However, the transaction also raises a valuation question for Space Exploration Technologies Corp. itself. With the company valued at approximately $2.2 trillion and pursuing substantial investments across satellite communications and AI infrastructure, investors must determine whether these expanding opportunities can generate enough earnings to support the stock’s premium valuation.
SpaceX’s ambitious expansion has also fueled speculation about its long-term upside, but how does it rank among the 10 stocks that could go to the moon according to Reddit investors? The ranking offers another perspective on investor enthusiasm as SpaceX faces mounting pressure to justify its $2.2 trillion valuation.
Spectrum Expands the Opportunity, But Commercial Execution Remains Unproven
Space Exploration Technologies Corp. already holds 2 GHz mid-band spectrum that supports higher-capacity satellite communications. The proposed 800 MHz frequencies would complement that infrastructure by improving signal penetration through buildings, trees, and other obstacles, addressing an important limitation of direct-to-device satellite connectivity. The acquisition follows regulatory progress on SpaceX’s second-generation Starlink constellation, including authorization for satellites designed to expand mobile coverage and network capacity.
However, acquiring spectrum does not automatically create a competitive wireless network. Established carriers already operate extensive terrestrial infrastructure capable of delivering high-capacity service across densely populated areas, while satellite connectivity still faces technical and commercial challenges. JPMorgan maintained an Overweight rating on Space Exploration Technologies Corp. following the announcement but cautioned that the company may need terrestrial infrastructure or additional partnerships to offer service comparable with traditional wireless providers.
The distinction matters because the acquisition strengthens SpaceX’s long-term strategic position without necessarily producing immediate revenue growth. Starlink Mobile must demonstrate that improved coverage can translate into paying subscribers, competitive service quality, and attractive returns on the substantial investment required to expand the network.
AI Infrastructure Adds Growth Potential and Capital Requirements
Space Exploration Technologies Corp. is simultaneously pursuing a much larger expansion into artificial intelligence infrastructure. The company is reportedly seeking approximately $40 billion in financing to purchase Nvidia chips for data centers, extending its capital requirements well beyond satellite communications. It had approximately 1.4 gigawatts of nameplate compute power draw at the end of Q2 and has outlined ambitions for a substantial increase through 2027.
The financing plans also raise questions about SpaceX’s capital allocation strategy, particularly why the company is reportedly seeking another $40 billion in borrowing despite holding approximately $100 billion in cash and marketable securities. The additional debt could preserve liquidity for other investments, but it would also increase financing costs at a time when the company’s AI infrastructure spending is already substantial.
Management expects rapid infrastructure deployment to support attractive returns, but the competitive economics of AI computing differ from those of satellite communications. SpaceX benefits from considerable technological advantages in launch services and orbital infrastructure, whereas data centers face growing competition from established hyperscalers and other companies investing aggressively in capacity. Even if early demand supports favorable pricing, additional industry supply could eventually pressure margins and reduce returns on invested capital.
The Valuation Assumes Several Businesses Scale Successfully
Space Exploration Technologies Corp. trades at approximately 200 times forward earnings as of October 9, making its valuation particularly sensitive to execution. Consensus estimates imply that its P/E could decline to 82.27 times 2027 earnings, 35.19 times in 2028, and 21.05 times in 2029. However, that compression depends on extraordinary earnings growth, including projected EPS increases of 133.78% in 2028 and 67.16% in 2029.
The valuation debate also extends to SpaceX’s position relative to other publicly traded space companies. In a recent comparison of SpaceX and Rocket Lab, Jim Cramer favored SpaceX despite the financial risks associated with its expanding operations, highlighting the distinction between the company’s long-term growth opportunities and the substantial expectations already reflected in its share price.
Barclays initiated coverage on October 9 with an Overweight rating and a $254 price target, reflecting optimism about the company’s long-term opportunities. Institutional participation has also been substantial, with 119 hedge funds holding bullish positions in Q2, including stakes established by VY Capital, BAMCO, D1 Capital Partners, Darsana Capital Partners, and A16z Capital Management.
The spectrum acquisition strengthens SpaceX’s potential to enter another major market, while its AI infrastructure expansion creates an additional source of prospective earnings growth. However, both initiatives require substantial capital and face different competitive challenges. Although projected earnings growth could help SpaceX justify its $2.2 trillion valuation, the company must demonstrate that it can convert these opportunities into sustained profits and cash flow. Until then, its premium valuation leaves little room for execution setbacks.
While we acknowledge the risk and potential of SPCX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SPCX and that has 10,000% upside potential, check out our report about this cheapest AI stock.
READ NEXT: SpaceX Comfortably Wins on Scale. Here’s How Rocket Lab Still Competes. and Delta’s (DAL) Amazon Decision Sends Jim Cramer’s Attention Back to SpaceX (SPCX)
Hedge Fund Resource Center