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Beyond Space: AI Compute & Starlink Drive SpaceX Growth
The Average IPO Corrects Roughly 50%
Earlier this year, Space Exploration Technologies became the largest initial public offering (IPO) in history with a valuation near $2 trillion. Despite SpaceX's size, its near-monopoly in its industry, and being one of the most hyped IPOs ever, shares fell from a high of $225.78 to a low of $105.62. History teaches investors that such corrections are the norm. In fact, within one year of its debut, the average tech IPO sees a drawdown of 55% from its peak. SpaceX just witnessed a 53% drawdown.
Whether it was due to psychology or mispricing, the correction in SpaceX shares is no surprise to seasoned investors. In fact, long-term market winners like Meta Platforms, Palantir and Snowflake all suffered 50% drawdowns early on before beginning their uptrends.
SpaceX Earnings & Guidance Impress
Last week, SpaceX delivered earnings that beat Wall Street expectations. Revenue jumped 92% year-over-year to $7.8 billion while net losses narrowed to $143 million versus $541 million. EPS of -$0.09 beat Zacks Consensus Estimates by a juicy 65.38%.
However, SpaceX CEO Elon Musk's guidance was even more intriguing. Musk now expects SpaceX to reach $1 trillion in revenue by 2030 with a "non-zero" chance of reaching it in 2029. Additionally, Musk expects annual recurring revenue (ARR) to explode to $100 billion by year-end (up from a $10.4 billion run rate in June).
xAI Segment is on Fire
Although SpaceX is known for being a space company, its fastest-growing business segment is AI hardware. Top-line growth is being driven by lucrative contracts from AI giants Alphabet and Anthropic. Compute revenue reached $2.6 billion (+247% YoY). Meanwhile, in the earnings call, management projected that SpaceX is now targeting 10 gigawatts (GW) of compute for 2027. Currently, SpaceX has ~1GW of compute.
Starlink is Disrupting the Telecom Space
Starlink, SpaceX's satellite internet service, is also experiencing rapid growth. Connectivity revenue reached $4.3 billion, up 66% year-over-year, while subscribers doubled year-over-year to 12 million. On the earnings call, Musk highlighted the company's V3 satellite, saying:
"Starlink V3 satellite is about an order of magnitude more capable than the Starlink V2...even if our monetization per bit dropped by a factor of 10, that would still mean a 10x increase in the revenue of Starlink."
Meanwhile, Starlink is expanding beyond remote home broadband to higher average revenue per user (ARPU) businesses like enterprise, aviation, maritime, and defense. Also, Starlink will be unveiling a direct-to-cell mobile connectivity service to take on legacy telecom companies like AT&T and T-Mobile.
Starship is a Massive Catalyst
Starship is SpaceX's game-changing rocket, currently in testing, and the largest flying manmade object. In July, Starship's 13th test flight achieved several monumental firsts including:
· Heatshield Success: Starship's heat shield survived atmospheric reentry entirely intact for the first time.
· Reusability: The Super Heavy booster achieved a controlled descent (although it had a hard splashdown), getting the Starship one step closer to reusability.
Starship will have its next test soon. Once Starship is up and running it will be able to deliver up to 300 metric tons to space (~5x more than its Falcon 9 rocket).
CAPEX Normalization
Like many big tech companies, SpaceX's capital expenditures soared. CAPEX grew more than 600% to $18.37 billion. However, as the hyper-aggressive CAPEX cycle (driven by AI buildouts and Starship R&D) normalizes, free cash flow generation will explode.
Bottom line
Driven by explosive growth in non-traditional segments like AI compute hardware and Starlink, SpaceX is laying the groundwork for unprecedented scale.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
View the Zacks #1 Rank List
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Zacks Investment Ideas feature highlights: SpaceX, Meta, Palantir, Snowflake, Alphabet, AT&T and T-Mobile
For Immediate Release
Chicago, IL – August 12, 2026 – Today, Zacks Investment Ideas feature highlights Space Exploration Technologies (SPCX - Free Report) , Meta Platforms (META - Free Report) , Palantir (PLTR - Free Report) , Snowflake (SNOW - Free Report) , Alphabet (GOOGL - Free Report) , AT&T (T - Free Report) and T-Mobile (TMUS - Free Report) .
Beyond Space: AI Compute & Starlink Drive SpaceX Growth
The Average IPO Corrects Roughly 50%
Earlier this year, Space Exploration Technologies became the largest initial public offering (IPO) in history with a valuation near $2 trillion. Despite SpaceX's size, its near-monopoly in its industry, and being one of the most hyped IPOs ever, shares fell from a high of $225.78 to a low of $105.62. History teaches investors that such corrections are the norm. In fact, within one year of its debut, the average tech IPO sees a drawdown of 55% from its peak. SpaceX just witnessed a 53% drawdown.
Whether it was due to psychology or mispricing, the correction in SpaceX shares is no surprise to seasoned investors. In fact, long-term market winners like Meta Platforms, Palantir and Snowflake all suffered 50% drawdowns early on before beginning their uptrends.
SpaceX Earnings & Guidance Impress
Last week, SpaceX delivered earnings that beat Wall Street expectations. Revenue jumped 92% year-over-year to $7.8 billion while net losses narrowed to $143 million versus $541 million. EPS of -$0.09 beat Zacks Consensus Estimates by a juicy 65.38%.
However, SpaceX CEO Elon Musk's guidance was even more intriguing. Musk now expects SpaceX to reach $1 trillion in revenue by 2030 with a "non-zero" chance of reaching it in 2029. Additionally, Musk expects annual recurring revenue (ARR) to explode to $100 billion by year-end (up from a $10.4 billion run rate in June).
xAI Segment is on Fire
Although SpaceX is known for being a space company, its fastest-growing business segment is AI hardware. Top-line growth is being driven by lucrative contracts from AI giants Alphabet and Anthropic. Compute revenue reached $2.6 billion (+247% YoY). Meanwhile, in the earnings call, management projected that SpaceX is now targeting 10 gigawatts (GW) of compute for 2027. Currently, SpaceX has ~1GW of compute.
Starlink is Disrupting the Telecom Space
Starlink, SpaceX's satellite internet service, is also experiencing rapid growth. Connectivity revenue reached $4.3 billion, up 66% year-over-year, while subscribers doubled year-over-year to 12 million. On the earnings call, Musk highlighted the company's V3 satellite, saying:
"Starlink V3 satellite is about an order of magnitude more capable than the Starlink V2...even if our monetization per bit dropped by a factor of 10, that would still mean a 10x increase in the revenue of Starlink."
Meanwhile, Starlink is expanding beyond remote home broadband to higher average revenue per user (ARPU) businesses like enterprise, aviation, maritime, and defense. Also, Starlink will be unveiling a direct-to-cell mobile connectivity service to take on legacy telecom companies like AT&T and T-Mobile.
Starship is a Massive Catalyst
Starship is SpaceX's game-changing rocket, currently in testing, and the largest flying manmade object. In July, Starship's 13th test flight achieved several monumental firsts including:
· Heatshield Success: Starship's heat shield survived atmospheric reentry entirely intact for the first time.
· Satellite Deployment: Starship successfully deployed 20 next-gen Starlink V3 satellites in orbit.
· Reusability: The Super Heavy booster achieved a controlled descent (although it had a hard splashdown), getting the Starship one step closer to reusability.
Starship will have its next test soon. Once Starship is up and running it will be able to deliver up to 300 metric tons to space (~5x more than its Falcon 9 rocket).
CAPEX Normalization
Like many big tech companies, SpaceX's capital expenditures soared. CAPEX grew more than 600% to $18.37 billion. However, as the hyper-aggressive CAPEX cycle (driven by AI buildouts and Starship R&D) normalizes, free cash flow generation will explode.
Bottom line
Driven by explosive growth in non-traditional segments like AI compute hardware and Starlink, SpaceX is laying the groundwork for unprecedented scale.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.