Goldman Sachs projects the global space sector could reach $1.8 trillion by 2035, as falling launch costs and record investment push space from a niche play to a core asset class for institutional investors
Wall Street's attention has shifted from traditional tech stocks to the fast-evolving space sector, as a surge in satellite launches, new contracts, and public offerings draws institutional capital into what was once a government-dominated field. According to a recent report from the Goldman Sachs Global Institute, the space economy is on track to become a $1.8 trillion global market by 2035, driven by sharply lower launch costs and a wave of private and public investment.
Goldman Sachs describes this transformation as the arrival of the "Second Space Age," where space is no longer just a government project but a foundational pillar of the industrial economy. The report highlights how the cost to send one kilogram into low Earth orbit has dropped from $65,400 in 1981 to about $1,500 today-a 98% reduction that has opened the door for commercial ventures and institutional investors. This cost collapse, combined with new funding sources, is reshaping the sector's supply chains, infrastructure, and competitive landscape.
Investment Surge and Market Dynamics
Investment in the space sector has accelerated rapidly. In 2025, more than $55 billion flowed into space-related companies, and the first quarter of 2026 alone saw a record $36 billion in new capital, according to Goldman Sachs. U.S. Department of Defense spending on space is also rising quickly, with annual allocations projected to climb from $11.9 billion in 2020 to $59.7 billion by 2027, reflecting a compound annual growth rate of 26%.
Public markets have responded in kind. Since the start of 2025, aerospace companies have raised $89 billion through initial public offerings (IPOs). Notable listings include Firefly Aerospace, York Space Systems, and HawkEye 360, but SpaceX's June IPO dwarfed them all, raising $75 billion and marking the largest public offering in history. SpaceX shares surged 19% on their first day of trading, though the stock has since experienced significant volatility before stabilizing. The company's recent $1.6 billion contract with the U.S. Space Force for 18 launches through 2027 underscores the growing role of government contracts in the sector's revenue mix.
Institutionalization and Analyst Divergence
Goldman Sachs is not just observing these trends-it is participating directly, with its asset management arm identifying economic security, defense, and critical infrastructure as key investment themes for 2026. The bank argues that the next phase of space industrialization will require massive upfront capital for launch capacity, satellite manufacturing, lunar infrastructure, and resilient communications networks. This shift is pushing investors to treat space as a core portfolio allocation, alongside established themes like artificial intelligence and cloud computing.
Analyst opinions on individual space stocks remain divided. Raymond James has set an $800 price target on SpaceX, while HSBC initiated coverage with a hold rating and a $115 target. Morgan Stanley's outlook ranges from a $75 bear case to a $600 bull case, reflecting the sector's valuation uncertainty even as the broader investment thesis gains traction. The spread in analyst targets highlights the risks and unknowns that still define the space economy, despite its trillion-dollar potential.
Consolidation and Competitive Pressures
As capital concentrates around the largest players, smaller space companies face mounting pressure to merge, partner, or pursue their own public listings. Goldman Sachs contends that firms combining technical execution with public market credibility will be best positioned to scale and consolidate. Access to capital is becoming a competitive advantage in its own right, not just a byproduct of engineering prowess.
Several publicly traded companies, including Rocket Lab, AST SpaceMobile, and Firefly, are emerging as significant participants in the expanding orbital economy, even as SpaceX remains the dominant force. For investors, the challenge is to weigh the sector's long-term trillion-dollar promise against the short-term volatility that has already rattled some of its biggest names. As recent moves to give retail investors pre-IPO access show, the democratization of space investing is also reshaping how capital flows into the sector.
According to the Federal Reserve, the S&P 500 Aerospace & Defense Index rose 18% in 2025, outpacing the broader S&P 500's 12% gain for the same period. This performance reflects both investor enthusiasm for the sector and the risks of rapid repricing as new information and capital flows reshape expectations.
The evolution of the space economy illustrates how falling costs, new technology, and institutional capital can transform a niche sector into a mainstream asset class. For investors, the key distinction is that space is no longer just a speculative bet-it is becoming a structural part of the global economy, with its own supply chains, infrastructure, and competitive dynamics. As with any emerging sector, the path forward will likely be uneven, with periods of volatility and consolidation as the market matures and new leaders emerge.
