SpaceX soars on record Q3 earnings and aggressive AI expansion

SpaceX triggered a wave of optimism on Wall Street following the release of its third-quarter financial results on October 20. The company reported figures that significantly exceeded market expectations, prompting major investment firms to immediately revise their valuation metrics upward. This move has positioned the stock for potential gains as investors reassess the long-term trajectory of the aerospace and technology firm.

The financial performance was driven by a surge in the company’s artificial intelligence division. The Super Intelligence segment generated approximately $7.6 billion in revenue, marking a year-over-year increase of nearly 830 percent. This unit has now become the largest contributor to the company's total income. The Connectivity segment also performed strongly, delivering $5.2 billion in revenue as the consumer subscriber base for Starlink expanded to 13.6 million users.

Overall revenue reached $14.6 billion, representing a 161 percent increase compared to the same period in the previous year. This figure comfortably surpassed the consensus estimate of roughly $12.7 billion. The company also swung to profitability, posting a net profit of $4.4 billion after recording a loss in the prior year. Adjusted EBITDA reached $8.8 billion, highlighting the improving operational efficiency and scale of the business.

During the earnings call, CEO Elon Musk and CFO Bret Johnsen provided forward-looking guidance that further excited the market. They projected first-quarter revenue for 2027 to be between $33 billion and $37 billion. This range is substantially higher than the approximately $22 billion that analysts had previously modeled. The management team also outlined capital expenditure plans of $35 billion to $40 billion for the fourth quarter, with a primary focus on building out AI compute infrastructure.

The infrastructure expansion is centered on specific sites, including locations in Memphis and Southaven. Management stated a goal of achieving 2.5 to 3 gigawatts of nameplate compute capacity by the end of the current year. They discussed pathways to reach 13 gigawatts or more by the end of 2027. Musk noted that demand from hyperscale customers remains relentless, with current pricing structures supporting payback periods of less than a year and potentially as short as six months.

In response to these results, numerous analysts issued upgrades to their price targets. JPMorgan more than doubled its target to $500 from $240 while maintaining an Overweight rating. Cantor Fitzgerald raised its target to $345 from $246, and Barclays lifted its estimate to $300 from $254. Citi increased its target to $240 from $200, while UBS moved its view to $230 from $210.

Other firms joined the upward revision trend. TD Cowen raised its target to $224 from $200, and Morgan Stanley held an Overweight rating with a $300 target. Wells Fargo adjusted its target higher to $274 from $214, and Clear Street moved its estimate to $248 from $217. Analysts broadly cited the strong quarterly performance, accelerating AI compute expansion, and progress in Starlink and Starship programs as key drivers for these changes.

The stock price reflected this positive sentiment immediately. Shares had closed at $147.79 on October 20 before jumping roughly 8 percent in early premarket trading on October 21. The average analyst price target has moved higher, indicating greater conviction in SpaceX’s trajectory across launch, connectivity, and AI. While the elevated spending plans remain a point of focus, the market appears to be prioritizing the company's rapid growth and expanding earnings power.