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Starlink is a high-margin cash cow poised for further growth.
Starship is the ultimate monopoly.
Orbital data centers will solve the data center blowback problem.
SPCX IPO Debuts
Recent IPO SpaceX ((SPCX - Free Report) ) is the largest IPO in history. The company has evolved from a cheaper space launch company to a multi-trillion-dollar company with potential to dominate communications, AI infrastructure, and the modern space economy.
Starlink is a Cash Cow
Armed with key spectrum rights and partnership agreements with roughly 30 global mobile network operators, Starlink is positioned to provide seamless text, data, and voice services directly to standard, unmodified smartphones, tapping into a massive global telecom TAM (Total Addressable Market). Starlink’s connectivity segment generated over $$11.4 billion in revenue and $$4.4 billion in operating income in fiscal 2025.
Starship Success is Within Reach
The ultimate long-term catalyst for SpaceX is the rapid operationalization of Starship, which completed its 12th test flight in May 2026. Falcon 9 can only launch compressed Starlink V2 Mini satellites. Starship will allow SpaceX to mass-deploy full-sized Starlink V2/V3 satellites, vastly increasing bandwidth capacity and dropping the marginal cost per gigabit to a fraction of legacy telecommunications. Starship is designed to carry 100 to 150 metric tons into Low Earth Orbit (LEO) in a fully reusable configuration. Once optimized, it is projected to drop the cost of launching a kilogram into space by orders of magnitude.
AI’s Terrestrial Problems are a Catalyst
Due to job loss concerns and spiking energy prices, AI data centers are about as popular with the American public as sour milk. Politicians on both sides of the aisle and citizens continue to lobby against the unprecedented buildout of AI data centers. Currently, only 40% of proposed data centers get built. This is a huge problem for hyperscalers. SPCX CEO Elon Musk has a solution – data centers in space. Data centers in space mean that there is no protest or regulatory red tape. Additionally, solar energy is abundant and cheap. Better yet, expensive cooling is unnecessary thanks to the space’s frigid temperatures.
SpaceX’s Anthropic Agreement
Although SpaceX is not yet benefitting from orbital data centers, it is already benefitting from the compute it acquired from the XAI acquisition. SpaceX recently signed a multi-year agreement to lease its “Colossus 1” supercomputer capacity to AI leader Anthropic. The deal will bring in a staggering $15 billion annually and is likely being overlooked by investors.
Why SPCX Valuation Concerns Are Overblown
Investors have made the mistake of using traditional valuation metrics to value an Elon Musk company once again. For years, value-oriented investors argued that Elon Musk’s Tesla ((TSLA - Free Report) ) was overvalued. However, these investors overlooked the innovation and forward growth potential of the company. Wall Street tends to “skate to where the puck is going.” While SpaceX is not profitable today, Elon Musk and his team have shown the ability to execute, innovate, and outgrow the competition in the long run. As Starlink scales, margins will increase, and the business will enjoy a network effect. Additionally, once Starship succeeds (which is a matter of when not if in my view), SpaceX will enjoy a multi-year monopoly in the fast-growing global commercial launch market (with competitors currently far behind).
SPCX: Relative Strength & Undercut Reversal
SPCX shares dropped from a high of $225.64 to briefly undercut the IPO day low of $149.34 on Tuesday. However, buyers stepped in Tuesday morning and sent shares higher after the undercut – setting up a classic “bear trap.” Additionally, although the Nasdaq is deep red, shares are up more than 5% - exhibiting a change of character and relative strength. Buying versus Tuesday’s low offers investors a favorable reward-to-risk zone.
Image Source: TradingView
Bottom Line
Ultimately, evaluating SpaceX through a rearview mirror of traditional valuation metrics is the exact same mistake legacy investors made with Tesla for a decade. Elon Musk’s enterprises have consistently proven that execution and innovation eventually swallow the competition whole. With competitors lagging years behind, a massive network effect locking in, and an explosive new revenue stream from AI compute leasing, the long-term thesis for $SPCX is ironclad.
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Image: Bigstock
SPCX: Should you Buy the Dip?
Key Takeaways
SPCX IPO Debuts
Recent IPO SpaceX ((SPCX - Free Report) ) is the largest IPO in history. The company has evolved from a cheaper space launch company to a multi-trillion-dollar company with potential to dominate communications, AI infrastructure, and the modern space economy.
Starlink is a Cash Cow
Armed with key spectrum rights and partnership agreements with roughly 30 global mobile network operators, Starlink is positioned to provide seamless text, data, and voice services directly to standard, unmodified smartphones, tapping into a massive global telecom TAM (Total Addressable Market). Starlink’s connectivity segment generated over $$11.4 billion in revenue and $$4.4 billion in operating income in fiscal 2025.
Starship Success is Within Reach
The ultimate long-term catalyst for SpaceX is the rapid operationalization of Starship, which completed its 12th test flight in May 2026. Falcon 9 can only launch compressed Starlink V2 Mini satellites. Starship will allow SpaceX to mass-deploy full-sized Starlink V2/V3 satellites, vastly increasing bandwidth capacity and dropping the marginal cost per gigabit to a fraction of legacy telecommunications. Starship is designed to carry 100 to 150 metric tons into Low Earth Orbit (LEO) in a fully reusable configuration. Once optimized, it is projected to drop the cost of launching a kilogram into space by orders of magnitude.
AI’s Terrestrial Problems are a Catalyst
Due to job loss concerns and spiking energy prices, AI data centers are about as popular with the American public as sour milk. Politicians on both sides of the aisle and citizens continue to lobby against the unprecedented buildout of AI data centers. Currently, only 40% of proposed data centers get built. This is a huge problem for hyperscalers. SPCX CEO Elon Musk has a solution – data centers in space. Data centers in space mean that there is no protest or regulatory red tape. Additionally, solar energy is abundant and cheap. Better yet, expensive cooling is unnecessary thanks to the space’s frigid temperatures.
SpaceX’s Anthropic Agreement
Although SpaceX is not yet benefitting from orbital data centers, it is already benefitting from the compute it acquired from the XAI acquisition. SpaceX recently signed a multi-year agreement to lease its “Colossus 1” supercomputer capacity to AI leader Anthropic. The deal will bring in a staggering $15 billion annually and is likely being overlooked by investors.
Why SPCX Valuation Concerns Are Overblown
Investors have made the mistake of using traditional valuation metrics to value an Elon Musk company once again. For years, value-oriented investors argued that Elon Musk’s Tesla ((TSLA - Free Report) ) was overvalued. However, these investors overlooked the innovation and forward growth potential of the company. Wall Street tends to “skate to where the puck is going.” While SpaceX is not profitable today, Elon Musk and his team have shown the ability to execute, innovate, and outgrow the competition in the long run. As Starlink scales, margins will increase, and the business will enjoy a network effect. Additionally, once Starship succeeds (which is a matter of when not if in my view), SpaceX will enjoy a multi-year monopoly in the fast-growing global commercial launch market (with competitors currently far behind).
SPCX: Relative Strength & Undercut Reversal
SPCX shares dropped from a high of $225.64 to briefly undercut the IPO day low of $149.34 on Tuesday. However, buyers stepped in Tuesday morning and sent shares higher after the undercut – setting up a classic “bear trap.” Additionally, although the Nasdaq is deep red, shares are up more than 5% - exhibiting a change of character and relative strength. Buying versus Tuesday’s low offers investors a favorable reward-to-risk zone.
Image Source: TradingView
Bottom Line
Ultimately, evaluating SpaceX through a rearview mirror of traditional valuation metrics is the exact same mistake legacy investors made with Tesla for a decade. Elon Musk’s enterprises have consistently proven that execution and innovation eventually swallow the competition whole. With competitors lagging years behind, a massive network effect locking in, and an explosive new revenue stream from AI compute leasing, the long-term thesis for $SPCX is ironclad.