SpaceX Stock Nears $100: Is the Market Undervaluing Its AI Business?

Key Takeaways: Morgan Stanley argues that if SpaceX stock falls toward $100, the market would effectively be assigning little to no value to its AI business. According to the bank, the company's core **launch and Starlink operations alone could justify the current valuation, leaving investors with what it describes as "free" upside from SpaceX's AI initiatives.

Morgan Stanley Sees Buying Opportunity as SpaceX Stock Slides

SpaceX shares have come under heavy selling pressure ahead of the expiration of insider lock-up restrictions, with investors concerned that additional share supply could weigh further on the stock.

During Monday's session, SpaceX shares fell to an intraday low of $108.66, marking the weakest level since the company's public listing and leaving the stock down more than 50% from its all-time high of $225.64.

Some market participants believe the stock could retreat toward $100, but Morgan Stanley says that level would represent a significant disconnect between market sentiment and the company's underlying fundamentals.

The investment bank maintained its Overweight rating and $300 price target, arguing that the recent decline has created an attractive entry point for long-term investors.

Why Morgan Stanley Thinks $100 Is Too Cheap

According to analyst Adam Jonas, a $100 share price would imply that investors are assigning virtually zero—or even negative—value to SpaceX's artificial intelligence business.

Morgan Stanley believes the company's established launch services and Starlink satellite internet business would already justify the stock's valuation at that level, effectively allowing investors to gain exposure to future AI growth without paying for it.

The bank also estimates that a $100 share price would imply expectations for the company's 2028 EBITDA from its launch and connectivity businesses that are roughly 30% below its own base-case forecast.

From Morgan Stanley's perspective, such assumptions appear excessively pessimistic given SpaceX's market leadership and long-term growth prospects.

Investors Remain Divided Over AI Valuation

Although SpaceX's operating fundamentals have remained relatively stable in recent weeks, investor sentiment has become increasingly cautious.

One of the biggest points of disagreement is how much value should be attributed to the company's expanding AI initiatives.

Some investors argue that projects including Grok, Cursor, and enterprise AI services remain difficult to monetize and therefore deserve only limited valuation.

Concerns include high capital spending requirements, uncertain business models, and management's growing focus on AI investment.

Some bearish investors even believe those AI initiatives could reduce shareholder value by increasing spending without generating sufficient returns.

Morgan Stanley disagrees with that view, arguing that the market is overlooking multiple potential revenue opportunities that could emerge as AI infrastructure and software adoption accelerate.

Core Businesses Continue to Support Valuation

Even excluding any contribution from artificial intelligence, Morgan Stanley believes SpaceX's launch and Starlink operations remain highly valuable businesses.

Using a long-term discounted cash flow model, the bank estimates those businesses alone are worth approximately $136 per share.

At a hypothetical $100 share price, investors would effectively be purchasing SpaceX's dominant satellite launch and connectivity operations at a discount while receiving any future AI upside at little additional cost.

The firm notes that SpaceX currently accounts for more than three-quarters of the world's active launch capacity and maneuverable satellites in orbit, reinforcing its leadership position in the global space industry.

Meanwhile, its connectivity business continues to expand rapidly, with annual growth approaching 50% and EBITDA margins around 40%.

Strong Growth Outlook Supports Bullish View

Morgan Stanley's long-term forecasts remain optimistic.

The bank projects SpaceX could generate approximately $157 billion in revenue by 2028, supported by continued expansion of Starlink, growing launch demand, enterprise connectivity services, and AI-related infrastructure.

Under its base-case scenario, operating profit could reach approximately $69 billion by fiscal 2028.

At a $100 share price, Morgan Stanley estimates SpaceX would trade at roughly 18 times 2028 enterprise value to EBIT, a valuation similar to mature industrial companies despite significantly faster expected growth.

The bank forecasts SpaceX's revenue to expand at a 76% compound annual growth rate between 2025 and 2030, nearly three times the median growth rate of comparable companies.

Upcoming Catalysts Could Shift Sentiment

Morgan Stanley believes several upcoming developments could improve investor confidence over the coming months.

On the aerospace side, the company is expected to conduct additional Starship test flights later this year, including milestones related to booster recovery and orbital missions.

For its AI business, investors are awaiting future releases of Grok 4.6 and Grok 5, while the planned acquisition of Cursor could provide additional insight into recurring revenue growth and enterprise AI adoption.

The bank also expects SpaceX to significantly expand computing capacity by year-end, potentially supporting larger cloud AI contracts and accelerating commercialization efforts.

Because current market pricing appears to assign minimal value to these AI initiatives, Morgan Stanley believes positive execution on any of these fronts could lead to a meaningful re-rating of the stock.

Risks Remain Elevated

Despite its bullish outlook, Morgan Stanley acknowledges several near-term risks.

The upcoming expiration of lock-up restrictions could increase selling pressure as additional shares become available to the market.

Investors are also watching the company's upcoming earnings report for greater clarity on AI monetization, Starlink subscriber growth, and future capital spending.

Under the bank's bearish scenario, slower progress in Starship development, weaker-than-expected AI commercialization, delayed infrastructure expansion, or additional equity financing could push the stock toward $75.

Conversely, successful execution across launch operations, AI infrastructure, and enterprise services could support Morgan Stanley's long-term $300 price target, with an even more optimistic scenario pointing to substantially higher upside if AI becomes a much larger contributor to the company's overall valuation.