I’m sure you know the old saying “What goes up must come down.” And when you hear the quote, you think to yourself, “Yes, that is certainly true.” If I throw a ball into the air, it will come back down. But if you think about anything long enough, you may start to think of exceptions to the “rule.” What if you have tons of fuel and you launch a rocket towards space with enough speed and force to escape Earth’s gravitational pull? The rocket went up…but is it going to come back down? See what I mean?
Or better yet, how about a new version of the question? If you own the stock of the most exciting company that is going to revolutionize the world as we know it by launching rockets, providing satellite internet, and developing the most advanced AI models, and it goes up, will it ever come down?
Well, as it turns out, we didn’t have to wait too long to get the answer to that question. And if you haven’t figured it out yet, yes, I’m talking about SpaceX (SPCX). After its IPO in mid-June, the stock rapidly ran from its market opening price of $150 to an intraday high of $225 in just a few days. For the record, a 50% return in a few days is quite good. However, over the past few weeks, the stock dropped to $148.30 at the close of trading this past Wednesday. And for the record, a 35% decline over three weeks is not good.
So, I guess even SpaceX is susceptible to the old saying, as the stock went up, but it’s all the way back down. But where does it go from here? If you know us and our philosophy, you know we don’t believe anyone can tell you with any certainty. But that doesn’t mean it’s not worth understanding the details, whether or not you ever want to own the stock. Let’s blast off.
Understanding the Business
Before we can talk about where the stock goes, we need to understand what you’re actually buying. To be clear, SpaceX is not a rocket company with a couple of side projects. It’s three different businesses stapled together, operating on three different timelines, with three completely different profit profiles. We’ll take a quick peek at each of them.
The first is Space, the part everyone pictures when they hear the name. This is the launch business, and it’s the crown jewel from an engineering standpoint, and it’s genuinely dominant. SpaceX has launched more than 80% of all the mass humanity has put into orbit each year since 2023, with a mission success rate north of 99%. And nobody else is close. Reusable boosters that land themselves upright, a feat that looked like science fiction a decade ago, are now so routine they barely make the news.
The second is Connectivity, which is really just Starlink. This is the constellation of over 10,000 satellites in low Earth orbit beaming internet to about 10 million subscribers across 164 countries. If you know anyone who lives in a very rural area, there’s a good chance they’re using this for high-speed internet.
The third is AI, and this is the one that changes the whole story. In February (pre-IPO), SpaceX acquired xAI (Elon Musk’s artificial intelligence venture, which also owns the platform formerly known as Twitter) in an all-stock deal. This is the home of the Grok language model and a set of enormous, power-hungry data centers.
Following the Money
In 2025, SpaceX generated about $19 billion in total revenue. That’s great, but dig into where that money came from and, more importantly, where it went, and a very specific picture emerges because the segment that gets all the headlines is not the segment that pays the bills.
As you may have guessed, Connectivity is the engine. Starlink alone brought in $11 billion in 2025, roughly 61% of the company’s total revenue, and did so while growing nearly 50% YoY. Better yet, it’s the only segment that cleanly makes money, throwing off almost $4.5 billion in operating income. This is the business quietly funding everyone else’s dreams.
But Space, believe it or not, is not a profit center. The launch business booked around $4 billion in revenue but ran a small operating loss in 2025, because the eye-watering cost of developing their flagship Starship gets run through this segment’s books (about $3 billion in R&D last year alone). And to make matters worse (just from a reporting perspective), when SpaceX uses its own rockets to launch Starlink and AI satellites, that activity doesn’t show up as Space revenue. So the launch business looks slower and less profitable than the underlying rocket cadence actually is.
Finally, there’s AI, which is a financial black hole (yes, that’s a space dad joke). In 2025, the AI segment generated about $3 billion in revenue while posting an operating loss of $6 billion. Read that again. It lost roughly twice as much as it made. And the spending is accelerating, at rocket speed. In the first quarter of 2026 alone, capital expenditures for the AI segment hit nearly $8 billion. That’s not a typo, and it’s not annual, that’s one quarter.
Put it together, and you get a company that, on a consolidated basis, is deeply unprofitable. SpaceX posted a net loss of nearly $5 billion for 2025 and a $4 billion loss in the first quarter of 2026, as AI spending kicked into overdrive. The cash-flowing, dominant rocket-and-internet company is being used as a piggy bank to fund a massive bet on artificial intelligence.
An AI-Based Valuation
And finally we arrive at the part that should make any disciplined investor raise their eyebrows. At its peak, SpaceX was valued at nearly $3 trillion. Even after the recent slide, it’s still hovering around $2 trillion. Against roughly $19 billion in trailing revenue, that works out to about 100 times sales. For context, Nvidia, the poster child of the AI boom and the most valuable megacap on the planet, trades at a fraction of that multiple, around 20x. A “normal” software company might fetch 10 or 15 times sales and still be considered pricey. SpaceX is trading at a multiple that assumes not just growth, but a total rewriting of what the company is.
The crucial part is that valuation is not being driven by rockets or Starlink. If you valued SpaceX purely on those businesses, you would arrive at a number dramatically smaller than $2 trillion. So that clearly means the AI segment, the money-losing, capex-spending side, is what’s driving the valuation. Investors are paying for a version of the future that doesn’t quite exist yet, which brings us to the story that justifies it all.
The Growth Story
Every stratospheric valuation needs an equally bold story, and SpaceX has one of the most ambitious ever committed to an SEC filing. In its IPO prospectus, the company claimed it had identified “the largest actionable total addressable market in human history,” and then put a $28.5 trillion number on it. To give you a sense of scale, that’s only slightly less than the entire annual output of the United States economy.
And the breakdown tells you everything about where the company thinks its future lies. Of that $28.5 trillion, only $370 billion is attributed to Space and $1.6 trillion to Connectivity. The overwhelming remainder, $26.5 trillion, is AI. Within that, a staggering $23 trillion is pinned to “enterprise applications.”
The genuinely wild vision tying it together is data centers in space. SpaceX has floated plans to begin deploying orbital AI compute satellites as early as 2028, using cheap Starship launches and abundant solar power to build server farms in orbit, where cooling and energy are, in theory, easier problems to solve than on Earth. But this is the logic that gets you from “profitable internet company” to “$2 trillion.” The bull case is that SpaceX owns the cheapest path to orbit, orbit becomes the next frontier for AI infrastructure, and SpaceX becomes the toll booth on that multi-trillion-dollar highway.
Where Does It Go From Here?
So we’re back to the question the stock chart already tried to answer. It went up, it came down, and now everyone wants to know what’s next.
Like we said earlier, the honest response is nobody knows, and anyone who tells you otherwise is selling something. The professionals can’t even agree on the order of magnitude. Morningstar’s disciplined models have a price target of $63 per share, roughly 40% of its market price. Meanwhile, the very banks that ran the IPO see something entirely different. Morgan Stanley has a price target of $300, while Raymond James went all the way to $800!
When the serious, credentialed forecasts range from “worth 40% of today’s price” to “five times its current value,” that isn’t a rounding error. That’s a coin flip dressed up in spreadsheets. And when a company’s value rests almost entirely on a future that hasn’t happened, on Starship achieving full reusability, on AI demand exploding, on data centers actually working in orbit, the range of outcomes is enormous, and so is the range of prices the market will pay along the way.
Which is really the only thing you can say with confidence. Not where it lands, but that the ride will be violent. A stock priced for a version of the future this specific will lurch every time that future comes into slightly better or worse focus. Up 50% in a few days, down 35% in a few weeks, and we’re only a month in.
So does it ever come down? It already did, and then it’ll go up again, and then who knows. Gravity, it turns out, still applies to stocks even when it stops applying to the rockets. Just be sure you’re strapped in for the ride.
Markets / Economy
- Even as the ceasefire with Iran was declared “over,” markets shrugged off the news, as has been the trend this year. The S&P finished the week up 1.2%, the Nasdaq up 1.7%, and the small-cap Russell 2000 down -0.6%.
- The ISM Services PMI in the U.S. fell to 54.0 in June, down from 54.5 in May, matching market expectations. The reading still indicates solid expansion in U.S. services activity, though at a softer pace.
Stocks
- U.S. equities were in positive territory. Energy and Technology were the top performers, while Materials and Healthcare lagged. Growth stocks led value stocks, and large caps beat small caps.
- International equities closed lower for the week. Emerging markets fared better than developed markets.
Bonds
- The 10-year Treasury bond yield increased seven basis points to 4.56% during the week.
- Global bond markets were in negative territory this week.
- High-yield bonds led for the week, followed by government bonds and corporate bonds.
