About two and a half months after SpaceX SPCX went public on Nasdaq, the stock has taken investors on a wild ride. Shares were priced at $135 in the IPO and opened at $150. They quickly surged to an intraday high of $225.64 within a couple of days before losing much of those gains. The stock fell to $104.83 in early August but has since recovered to around $144.
That kind of volatility is not unusual for a high-profile IPO. The question is whether the decline reflects weakness in SpaceX’s business or simply a reset in investor expectations. So far, the company’s operating results suggest the latter.
SPCX Stock Takes Initial Hit Despite Q2 Beat
SpaceX delivered a solid second quarter, with revenues coming in more than 16% above the Zacks Consensus Estimate. Loss per share also came in narrower than expected.
Starlink, reported under the company’s connectivity segment, was a major contributor. Revenues reached $4.29 billion, up 66% year over year. The company’s newer AI segment also performed better than expected, generating $2.56 billion, jumping 247.5% year over year. Space revenues increased 29% year over year to $962 million.
While the stock declined over 13% the next day, the reaction was mostly about capital expenditures ($18.4 billion for the quarter, well above Wall Street expectations) rather than any weakness in the business itself. The stock has since recovered most of that drop and seems to be getting back on track.
Starlink Is Doing the Heavy Lifting
Starlink is still the most important part of the SpaceX investment story. The satellite broadband business now serves customers in more than 160 countries and has developed into a profitable business. That gives SpaceX an advantage that many other high-growth companies do not have. Starlink can generate cash while SpaceX continues investing in businesses that may take years to reach their full potential.
Starlink reached 12.0 million subscribers as of June 30, 2026, up from 6 million a year earlier and the segment’s operating income rose 79.4% to $1.66 billion.
On the lastearnings call management highlighted that V3 satellites are expected to provide ten times the broadband capacity of current generations. That would support higher-value service tiers and further subscriber growth as deployment scales.
Starship and the AI Pivot Are the Real Upside Case
Starlink pays the bills, but Starship is where the bigger prize sits. If SpaceX can get its fully reusable next-generation rocket flying reliably at scale, it could significantly reduce the cost of putting payloads into orbit. That could create demand for new types of space missions and strengthen SpaceX’s already dominant position in the launch market.
In July, Starship’s 13th test flight achieved several notable firsts, and the 14th launch— which would be Starship’s first attempt at reaching orbit— is targeted for mid-September, though SpaceX’s launch dates have a history of slipping.
On top of that, the company has been building out a third leg — AI infrastructure. Multi-year computing agreements with major cloud and AI customers are already generating real revenues, and the acquisition of Cursor-maker Anysphere would deepen SpaceX’s footprint in enterprise software.
AI revenues jumped 247.5% year over year to $2.56 billion in the last reported quarter. Top-line growth is being driven by lucrative contracts from AI giants Alphabet GOOGL and Anthropic. Compute revenues reached $2.6 billion (+247% YoY). The segment posted adjusted EBITDA of $1.15 billion in the last reported quarter, reversing from a $276 million loss a year ago. Management expects compute capacity to exceed 2 gigawatts by year-end and 10 gigawatts by 2027 end.
What Does SpaceX’s Valuation Say?
At roughly 22 times forward sales, SPCX stock certainly looks expensive by traditional metrics, even among high-growth tech peers. But judging SpaceX purely on current numbers risks repeating the mistake investors made with Tesla TSLA for years, dismissing it as overvalued while underestimating its execution and innovation.
Image Source: Zacks Investment Research
Our Take
A self-funding cash cow in Starlink, a potential monopoly opportunity in Starship, and a fast-growing AI infrastructure business— and SpaceX’s pullback from the IPO’s euphoric highs looks less like a warning sign and more like an entry point. The business fundamentals have actually strengthened since the debut, even as the stock price cooled off.
SPCX currently carries a Zacks Rank #2 (Buy), reflecting improving earnings estimates and a business trending in the right direction. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Wall Street’s average price target implies roughly 54% upside from current levels.
Image Source: Zacks Investment Research
For investors who missed the IPO pop and have been waiting for a better price, this looks like a reasonable place to start building a position.
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This article originally published on Zacks Investment Research (zacks.com).
