SpaceX IPO: Oppenheimer Sees $2.5T AI Future

Oppenheimer has initiated coverage of SpaceX with an Outperform rating and a $190 price target, suggesting a significant upside from its IPO price. The firm's analysis posits SpaceX as a unique, vertically-integrated AI company poised to converge communications and cloud computing through space-based infrastructure.

This ambitious strategy targets a potential $10 trillion addressable market by 2035. Central to this forecast are plans for orbital data centers and the deployment of one million such facilities, supported by 100,000 communications satellites. These would be facilitated by an aggressive launch cadence of 10,000 Starship missions annually.

Commercial service for Starship is anticipated to accelerate growth starting in 2027. However, the firm cautions that its projections are contingent on Starship entering commercial service before the end of the current year. Near-term momentum includes substantial terrestrial data center capacity deals, though these feature short termination clauses.

Risks associated with owning SpaceX stock include its high valuation, the unproven nature of space-based data center technology, and potential thermal management challenges for chips in orbit. Regulatory and execution risks tied to CEO Elon Musk are also significant concerns. Furthermore, a small public float is expected to contribute to initial volatility.

Historical small-float IPOs have shown initial pops followed by volatile but ultimately strong performance over 12 months. Investors should note that access to shares at the initial IPO price is not guaranteed. The firm's analysis underscores both the immense potential and the notable risks inherent in SpaceX's groundbreaking endeavors.