• SpaceX (SPCX)'s third-quarter revenue surged 161% to $14.6 billion, and it swung to a $4.4 billion profit, fueled by AI computing and Starlink growth.
  • Analysts are turning more bullish, with several banks reportedly lifting price targets; however, not all increases have been independently confirmed.
  • The company's capital intensity remains a concern, with quarterly capex of $19.6 billion exceeding revenue.

A Quarter to Remember

SpaceX delivered a stunning third-quarter earnings report, with revenue jumping 161% year-over-year to approximately $14.6 billion, well ahead of consensus estimates of $12.7 billion to $13 billion. The company posted a net profit of $4.4 billion, reversing a $1.05 billion loss in the same period last year. Operating income came in at roughly $2.8 billion, while adjusted EBITDA reached $8.8 billion. The results were driven by the explosive growth of its AI computing business and the continued expansion of its Starlink satellite internet service.

The AI segment generated $7.56 billion in revenue, surpassing expectations of $6.47 billion, and has become SpaceX's largest revenue source. Connectivity, primarily Starlink, brought in $5.25 billion, up 69% year-over-year, and contributed the bulk of operating profit at approximately $2.37 billion. Space revenue, which includes launch services, rose about 6% to $1.77 billion. The company's transformation from a pure-play rocket maker to a diversified technology giant is now unmistakable.

Analysts Play Catch-Up

In the wake of the earnings beat, several Wall Street banks have reportedly raised their price targets on SpaceX. According to sources familiar with the matter, Morgan Stanley (MS) maintains an Overweight rating with a $300 target, Wells Fargo (WFC) lifted its target to $274 from $214, Citi (C) raised its to $240 from $200, UBS (UBS) increased its to $230 from $210, and Mizuho (MFG) nudged its target to $205 from $200. However, the precise timing and magnitude of some of these revisions could not be independently verified. Morgan Stanley's $300 target was already in place before the earnings release, so it may not reflect a fresh post-earnings increase. Similarly, Mizuho's previous target of $200 was confirmed in pre-earnings coverage, but the subsequent $5 increase was not corroborated. Representatives for the banks did not respond to requests for comment.

The bullish sentiment is underpinned by SpaceX's ability to scale its AI infrastructure and Starlink network, but the company's massive capital expenditures are a double-edged sword. Quarterly capex reached $19.6 billion, exceeding revenue, underscoring the enormous investment required to sustain growth. While the income statement looks robust, the cash flow implications of such heavy spending remain a key concern for some analysts.

Strategic Moves and Regulatory Hurdles

SpaceX has been actively expanding its ecosystem. The company recently agreed to acquire 800 MHz spectrum from Grain Management for approximately $8 billion, a deal that awaits FCC approval and is intended to support its Starlink Mobile strategy. Additionally, SpaceX announced FCC authorization for a 15,000-satellite Starlink Mobile constellation, though this approval is separate from the spectrum transaction. These moves position SpaceX to compete more directly with traditional telecom operators.

On the governance front, the company's acquisition of xAI in February and its subsequent public listing in June have broadened its investor base. Musk has also hinted that independent director committees at SpaceX and Tesla (TSLA) are exploring a potential merger, though he cautioned against treating it as certain. Such a combination would raise complex cross-border considerations, particularly given Tesla's significant operations in China.

What's Next

Investors will look for confirmation that AI computing contracts translate into sustained revenue and that Starlink maintains its profitability. The company's ability to manage its hefty capital spending while delivering returns will be critical. With Tesla's earnings due on October 21, the spotlight on Musk-led ventures remains intense. For now, Wall Street's enthusiasm is palpable, but the devil is in the details—and the details of some target hikes are still murky.

Update: This article was updated to clarify that Morgan Stanley's $300 target was pre-existing and that some target increases could not be independently verified.