SpaceX Shares Rally on AI Boom

SpaceX shares surged approximately 8 percent in early premarket trading on Tuesday, October 21, following a third-quarter report that significantly outpaced market expectations. The stock had closed at $147.79 the previous day, but the new guidance and financial results sent investors scrambling to reprice the asset.

The core of the bullish reaction stems from a dramatic pivot toward artificial intelligence. The company’s Super Intelligence division generated roughly $7.6 billion in revenue, becoming the largest contributor to the bottom line. This segment grew nearly 830 percent year-over-year, far outpacing other verticals. Total revenue reached $14.6 billion, a 161 percent increase that comfortably exceeded the consensus estimate of $12.7 billion. The company also swung to a net profit of $4.4 billion, reversing a loss from the prior year, with adjusted EBITDA hitting $8.8 billion.

The earnings call provided the catalyst that sent price targets soaring. CEO Elon Musk and CFO Bret Johnsen outlined first-quarter revenue guidance for 2027 of $33 billion to $37 billion. This projection stands well above the roughly $22 billion analysts had previously modeled. Furthermore, the company detailed fourth-quarter capital expenditure plans ranging from $35 billion to $40 billion, primarily focused on AI compute infrastructure in locations such as Memphis and Southaven, Mississippi.

Management is targeting 2.5 to 3 gigawatts of nameplate compute capacity by the end of the current year, with a pathway to 13 gigawatts or more by the end of 2027. Musk noted relentless demand from hyperscalers, stating that current compute pricing supports payback periods of less than a year, potentially as short as six months. This efficiency has convinced many on Wall Street that the aggressive spending is generating immediate returns rather than just burning cash for future growth.

The response from analysts has been swift and uniform in direction. JPMorgan more than doubled its price target to $500 from $240, maintaining an Overweight rating. Cantor Fitzgerald raised its target to $345 from $246, while Barclays lifted its estimate to $300 from $254. Citi increased its target to $240 from $200, and UBS moved to $230 from $210. TD Cowen raised its target to $224 from $200. Other firms, including Wells Fargo and Clear Street, also adjusted their targets higher, citing the strong quarterly print and accelerating AI compute expansion as key drivers.

While the AI division dominated the headlines, the Connectivity segment also performed solidly, delivering $5.2 billion in revenue. Strong subscriber additions lifted the consumer base for Starlink to 13.6 million. Management also highlighted recent orbital successes for Starship, including V3 satellite deployment, and noted rapid adoption of the Grok Bot. Additionally, special committees have been formed to explore a possible combination with Tesla, a development that adds another layer of complexity to the corporate strategy.

Despite the euphoria, open questions remain regarding the sustainability of such high capital expenditures. The jump from a loss to a $4.4 billion profit is notable, but the scale of the upcoming spending on compute infrastructure remains a point of focus for investors. The average analyst price target has moved higher, reflecting greater conviction in SpaceX’s trajectory across launch, connectivity, and AI, yet the market will be watching closely to see if these massive investments translate into consistent long-term earnings power.