SpaceX shares surge as AI revenue explodes and Wall Street resets valuation
A record-breaking quarter driven by artificial intelligence and satellite connectivity has led major banks to significantly raise their stock price forecasts for the aerospace giant.
By Ahmed Mansour ·
SpaceX reported third-quarter revenue of $14.6 billion for 2026, a figure that represents a 161 percent year-over-year increase and far exceeded the $12.7 billion consensus estimate. This massive jump in sales, reported after the market close on October 20, triggered a sharp rise in the company's stock price during after-hours and premarket trading on October 21.
The financial performance was underpinned by a significant shift in the company’s revenue mix. The Super Intelligence division, which focuses on artificial intelligence, generated approximately $7.6 billion in revenue. This segment grew nearly 830 percent compared to the previous year, making it the largest contributor to the company’s total income. Meanwhile, the Connectivity segment, primarily driven by Starlink, delivered $5.2 billion in revenue as the consumer subscriber base expanded to 13.6 million users.
Profitability improved dramatically alongside the top-line growth. SpaceX posted a net profit of $4.4 billion, a stark reversal from a loss in the same period the prior year. Adjusted EBITDA reached $8.8 billion, indicating strong operational efficiency. These results have convinced analysts that the company has moved beyond a growth-at-all-costs phase into a period of substantial earnings power.
A pivotal moment in investor sentiment occurred during the earnings call, where CEO Elon Musk and CFO Bret Johnsen provided forward-looking guidance. They outlined first-quarter 2027 revenue expectations of $33 billion to $37 billion, a range significantly higher than the roughly $22 billion modeled by analysts. To support this growth, management announced fourth-quarter capital expenditure plans of $35 billion to $40 billion, with a heavy focus on AI compute infrastructure at sites in Memphis and Southaven.
The company is scaling its AI capabilities with aggressive targets for compute capacity. Management aims to reach 2.5 to 3 gigawatts of nameplate capacity by the end of this year, with pathways discussed for exceeding 13 gigawatts by the end of 2027. Musk noted that demand from hyperscalers remains relentless, with compute pricing supporting payback periods of less than a year, and potentially as short as six months in some cases.
In response to these disclosures, Wall Street analysts rapidly revised their price targets upward. JPMorgan more than doubled its target to $500 from $240, while maintaining an Overweight rating. Cantor Fitzgerald raised its target to $345, and both Barclays and Morgan Stanley set their targets at $300. Other firms, including Citi, UBS, TD Cowen, Wells Fargo, and Clear Street, also increased their forecasts, citing the strong quarterly results and accelerating AI expansion as key drivers.
Beyond financials, the company highlighted several strategic milestones, including Starship’s recent orbital success and the deployment of V3 satellites. Management also discussed the rapid adoption of Grok Bot, spectrum expansion plans, and the formation of special committees to explore a possible combination with Tesla. These developments suggest a broader integration of SpaceX’s technologies across its portfolio.
As of early premarket trading on October 21, SpaceX shares jumped roughly 8 percent from the $147.79 closing price on October 20. The average analyst price target has moved higher, reflecting greater conviction in the company’s trajectory across launch, connectivity, and AI. While elevated spending remains a point of focus for some investors, the overall sentiment has shifted toward optimism regarding the company's long-term growth potential.
Source: Teslarati
