Why Wall Street Now Sees AI Play, Not Just Space

When SpaceX NASDAQ: SPCX went public more than a month ago, on June 12, doing so as the most anticipated listing in years, and arguably as a space company. Rockets, satellites, and ambitions for Mars were the story. But less than a month into its public market life, a different narrative is unfolding on Wall Street, and it has more to do with artificial intelligence (AI) than space travel.

The timing is interesting because the stock itself has had a rough start. After hitting post-IPO highs in the sessions following its IPO, SpaceX shares have fallen nearly 40% and are now trading below their $135 listing price.

For a company that generated so much excitement coming to market, dipping below the IPO price in the first few weeks is not a very good thing. Yet beneath that disappointing price action, the emerging investment climate may be more compelling than the chart suggests.

Why Narrative AI Is Taking Over

At the heart of this controversy is Starlink, SpaceX's satellite internet network. Above all, it's a communications business, beaming broadband down into homes, cars, and far corners of the world. But increasingly, investors are realizing that a global, low-latency network of communications is the kind of infrastructure the AI ​​era will depend on.

As AI systems become more embedded in everyday machines, vehicles, and industrial systems, the need for reliable communication to move data back and forth is growing exponentially. Starlink is one of the very few networks that can provide that coverage at scale.

Bulls say this could make SpaceX something like a landlord of AI infrastructure, with networking and direct integration allowing it to control the movement of data and be able to support new computing products over time.

This is an idea that Wedbush's Dan Ives has talked about for a long time. He argues that SpaceX should be seen as more of a data and AI play than a traditional space company, pointing to the strategic importance of its network and the growing data needs flowing through it. If that framework gains widespread acceptance, it dramatically changes the lens through which the company makes the top.

Imaginary Highs, and Very Real Dangers

Apart from communication, there is something ambitious in the thesis. There has been growing discussion about the potential of data centers in space, using solar power and natural cooling to run complex AI workloads without the limitations of terrestrial infrastructure.

Tied to this is the Terafab semiconductor project, which Oppenheimer recently described as “critical” to the future analysis of SpaceX, while also warning that it remains speculative and has the risk of actual execution.

That tension lies at the heart of the debate. The case is big, but it depends on ambitious projects that are far from proven, and the company is burning big money to pursue them. The bears make the fair point that current valuations already mean dramatic growth, without any assurance that AI's massive opportunity translates cleanly into long-term, high-quality profits.

What Analysts Say

Despite that bad start, early analyst coverage suggests that the bulls are currently outnumbering the bears. While Piper Sandler debuted this week with a cautious neutral rating, that was a rarity compared to the likes of Evercore, which gave the stock a buy rating, one of many in a run of bullish analyst calls.

The price targets for some of these recent updates are also hard to ignore, with most of them hovering around $250, which, from current levels around $130, represents a 100% upside. Targets like this suggest that at least some analysts believe the recent weakness reflects a greater disconnect between the stock price and the company's long-term potential. Especially if the AI ​​infrastructure narrative takes hold, then the current price may look like an entry point in retrospect.

The First High Level Report is awaited

All of this means that SpaceX's first earnings report, due on Aug. 6, you are important time. As a newly listed company with no public market reporting history, this first look under the radar will weigh heavily in shaping how investors think about the issue.

The key will be any comments that support the AI ​​infrastructure framework, especially regarding Starlink's growth and how management chooses to position the business. Focus on the AI ​​narrative in a convincing way, and the bulls calling for the stock to double will have real bullets.

Go back to the story of the pie-in-the-sky space, and that 40% sales may indicate a small entry point and be a warning. Either way, August 6 should be firmly circled on every investor's calendar.

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