UBS Raises SpaceX Price Target to $230

UBS analyst John Hodulik raised the price target on SpaceX (NASDAQ: SPCX) to $230 (from $210) while maintaining a Buy rating.

“SpaceX handily beat our estimates with a significant acceleration in growth largely on strength in AI compute leasing.

On the call, Elon suggested he was “hounded by every hyperscaler” to lease more compute and that demand was so strong it could sell out several times the capacity it has.

He expects upward pricing in spot rental rates to continue, potentially lowering the payback period to ~6 months next year.

On the back of this, the company now targets 13GW of compute by YE27, or an incremental ~10GW from the 2.5-3.0GW expected by YE27 (vs 1.7GW for 3Q and 2.2GW in Oct).

Elon suggested there was upside to as much as 20GW in 2027 based on visibility on power generation.

This infrastructure and a broad brush 50:50 ratio of held to leased capacity would support ARR of $0.5-1.0T by year end, up from an expected $100B in ARR at YE26.

Elon also addressed the topic of combining SpaceX and Tesla and said special committees had been formed to evaluate a transaction but he is recused from discussions and limited in what he can say.

He stated there was a lot of merit in combining the two companies but that it was by no means inevitable.

Management also provided some new guidance including 4Q capex of $35-40B (prev UBSe $19B), up from $19.6B in 3Q as the buildout accelerates.

We estimate the company will need to spend ~$350B to hit its target for 13GW, putting it right in the ballpark of the other major hyperscalers (compares to GOOG ~$380B, MSFT ~$230B, etc).

Following Starship Flight 14, management suggested it will attempt to catch the ship and booster on the next flight planned for next month.

Our Take: SpaceX continues to deliver on high expectations and we see the trend continuing as new compute deals come online in 4Q, Starship progresses towards a ship and booster catch and Grok performance and product enhancements continue.

We believe the collection of assets is unique and will create value over time as management executes on each of these goals.”

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