JPMorgan raised its SpaceX price target to $240 after the company's first public earnings, even as heavy AI spending and a major lockup expiration sent shares sliding and analysts debated the long-term outlook
Wall Street's focus turned sharply to SpaceX after its first earnings report as a public company, with investors questioning whether the company's aggressive spending would pay off. The answer arrived in the form of a capital expenditure figure that immediately shifted sentiment: SpaceX reported $18.4 billion in Q2 capex, with $15.83 billion allocated to artificial intelligence infrastructure. This far exceeded analyst expectations, which had modeled around $13 billion for the quarter, and signaled that full-year spending could reach $65 billion-well above the $50 billion Wall Street consensus.
Shares, which had been trading near $125 before the report, dropped toward $110 as investors digested the scale of the investment. Yet JPMorgan's Doug Anmuth responded by raising his price target to $240 from $225, maintaining an Overweight rating. With the stock near $117 after the sell-off, the new target implied more than 100% upside. Anmuth's thesis centers on SpaceX's extreme vertical integration, arguing that the company's control over launch, satellite, and computing layers gives it a durable competitive edge, even as spending outpaces forecasts. He also projected that SpaceX's AI revenue could reach $100 billion by 2027 if infrastructure monetization continues at its current pace.
Mixed Analyst Reactions
Other major banks weighed in with their own assessments. Bank of America reiterated a Buy rating and a $235 price target, citing improved positioning across SpaceX's core markets despite the capex surprise. William Blair and Mizuho also maintained bullish stances, with Mizuho holding a $200 target. UBS initiated coverage with a Buy rating. On the other hand, Wells Fargo trimmed its target to $215 from $230, expressing concern about the pace of AI investment. Piper Sandler took a more cautious approach, lowering its target to $140 and keeping a Neutral rating, citing valuation, the upcoming lockup expiration, and uncertainty around long-term AI cloud demand. Across 31 analysts, the average 12-month price target stands at $233.71, with 23 recommending buy, six hold, and two sell.
SpaceX's Q2 results showed revenue of $7.81 billion, up 92% year over year and beating consensus estimates. Net losses narrowed to $541 million from $1.01 billion a year earlier. The company signed $14.1 billion in new cloud services contracts and reported roughly $100 billion in cash and marketable securities. Starlink, its satellite internet business, posted an operating profit of $1.66 billion, while the AI segment recorded an operating loss of $1.26 billion despite a 247% jump in revenue to $2.56 billion. Management highlighted that some AI compute investments are seeing payback in less than a year, helping to justify the continued spending even as it weighs on free cash flow.
Lockup Expiration Adds Volatility
Beyond earnings, SpaceX faced additional pressure as its post-IPO lockup expired on August 6, releasing 911.5 million shares held by employees and early investors. This move increased the public float from 4.9% to 11.8% of shares outstanding, with the newly available shares valued at about $101 billion at recent prices. The lockup expiration is the first of nine scheduled tranches, and analysts warn that selling pressure could persist through December as more shares become eligible for trading. A second unlock tied to future earnings could release up to 1.3 billion additional shares, depending on stock performance. The IPO, priced at $135 per share in June, raised $85.7 billion and saw the stock surge to $225 before retreating.
For investors, the combination of heavy capital spending and a swelling public float has created a challenging environment. While some analysts remain optimistic about SpaceX's long-term prospects, others are wary of the near-term risks. The company's ability to monetize its AI infrastructure and maintain growth in its core businesses will be critical to justifying the elevated price targets. As recent analysis of August market headwinds suggests, even strong companies can face structural pressures that test investor confidence.
What SpaceX Must Prove
SpaceX's operational scale is significant: Starlink now serves 12 million subscribers in over 160 markets, and the company has completed more than 670 orbital launches with a success rate above 99%. Its launch operations now account for more than 80% of all mass sent to orbit since 2023. JPMorgan's bullish case depends on the company's ability to layer AI-driven cloud services on top of these established businesses, creating a diversified revenue stream that includes launch services, satellite internet, and alternative cloud computing for major tech clients.
Yet the risks are substantial. JPMorgan projects that capital expenditures could approach $200 billion annually in 2027 and 2028, which would further pressure free cash flow and delay the path to sustained profitability. CEO Elon Musk has moved his $1 trillion annual revenue target up to 2030, but execution remains a key question. For the $240 price target to be realized, SpaceX must demonstrate that its vertical integration strategy delivers accelerating AI revenue, that lockup-related selling pressure does not permanently damage the stock, and that spending growth does not consistently outpace revenue growth. The next several quarters will be critical in determining whether these conditions can be met.
SpaceX's approach highlights the trade-offs companies face when investing heavily in new technology. While large-scale capital expenditures can position a firm for future growth, they also introduce significant short-term risks, including cash flow constraints and heightened market volatility. Investors evaluating high-growth stocks should consider not only the potential upside but also the timing and sustainability of returns, the impact of share unlocks, and the company's ability to convert investment into lasting competitive advantage.
