【SPCX Investment-Bank Report】Morgan Stanley initiates coverage on SpaceX with a target price of $300, with the most optimistic estimate at $600

Morgan Stanley initiates coverage of SpaceX (US: SPCX) with a “Buy” rating, setting a target price of $300, implying more than 80% upside potential from the current price. Morgan Stanley believes SpaceX has near-monopoly advantages in launch economics, the world’s largest low-Earth satellite network, and a rapidly expanding AI infrastructure business—making it one of the few platforms able to integrate orbital space, global interconnectivity, and compute capabilities into a single infrastructure framework.

“We believe SpaceX can convert energy into intelligence at scale, and can flexibly monetize through a range of consumer- and enterprise-oriented solutions, as it heads into the next AI era.”

Based on Morgan Stanley’s base-case forecasts, SpaceX revenue is expected to rise from $45 billion this year to $319 billion in 2030, and to reach $3.3 trillion in 2040. The main growth potential comes from Starship, Starlink capacity, ground computing, and in-orbit computing.

SpaceX is likely unable to achieve positive free cash flow before 2035

However, due to high spending requirements, Morgan Stanley estimates SpaceX’s annual capital expenditures will be $300 billion by 2031, so it expects free cash flow to remain negative before 2035. The firm estimates that from 2027 to 2034, SpaceX will need external capital averaging about $84 billion per year, and whether the company can secure the needed funding is the biggest risk to its forecast.

Morgan Stanley says it is optimistic about SpaceX in the long term, and in the near term it will focus on this month’s Starship Flight 13 mission, the Starship Flight 14 mission by the end of the third quarter, and the first batch of Starship payloads in the fourth quarter—these are key launch milestones.

On the other hand, the firm expects investors to focus on recurring new cloud transactions, Starlink broadband updates every few months, end-user information for direct-to-consumer (DTC) users, government contract status, and new enterprise connectivity agreements for markets related to aerospace, maritime, enterprises, mobility, and government.

Morgan Stanley’s base target for SpaceX is $300, with valuation of the space and connectivity business accounting for about half, and the AI business valuation accounting for about half. In the most optimistic scenario, it is $600, based on assumptions that Starship, orbital computing, and the Terafab project push forward at a faster pace, and that the AI business’s valuation share exceeds 60%. In the most pessimistic scenario, it is $75, mainly based on assumptions that the Starship program is delayed to 2029, AI commercialization and deployment speed are below expectations, and that the valuation share of the space and interconnect business is about 90%.

Morgan Stanley says SpaceX’s outlook depends on several technologies that have not yet been validated at commercial scale, including fully reusable Starship rockets capable of thousands of launches per year, orbital AI computing, direct network transmission, and large-scale AI infrastructure. Space exploration is full of challenges, and abnormal situations are hard to avoid.

At the same time, funding needs are also a major risk, and limited market depth could delay deployment timelines. Other risks include dependence on Musk, conflicts related to Tesla, and regulatory or geopolitical risks in areas such as launch, spectrum, orbital debris, export controls, network risks, anti-space-threat measures, and AI regulation.