PhillipCapital upgrades SpaceX on AI revenue strength

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SpaceX AI revenue upgrade

Highlights

PhillipCapital upgraded SpaceX to buy from sell and raised its price target to $250 from $75, citing strong AI-driven revenue growth.
SpaceX reported Q3 adjusted earnings of 45 cents per share and $14.58 billion revenue, marking its first profit since going public and beating expectations.
Analyst Glenn Thum notes compute demand is outpacing supply with contract renewals at higher prices and new capacity paying back within a year.

Analyst turns positive after earnings beat

As reported by CNBC, PhillipCapital upgraded SpaceX to buy from sell in a Friday note, citing stronger-than-expected revenue from the company's AI business and improved confidence in its growth outlook. Analyst Glenn Thum also raised his price target to $250 from $75, implying nearly 73% upside from Thursday's close.

SpaceX reported adjusted third-quarter earnings of 45 cents per share and revenue of $14.58 billion on Tuesday, both ahead of expectations. The company said the quarter marked its first profit since becoming publicly traded.

Thum said three factors drove the result: higher-priced cloud services agreements in the group's "super intelligence" unit, stronger connectivity revenue from aviation installs and Starshield contracts, and operating leverage as higher-margin cloud services made the AI segment profitable. He added that Cursor contributed $608 million from mid-August.

Compute demand underpins outlook

Even so, Thum said he still sees full-year 2027 revenue below what SpaceX could indicate based on annualizing guidance for the first quarter of next year. He said expected delays in scaling the company's compute business, with cooling and power constraints, remain the main reason for that more cautious stance.

At the same time, those compute operations are also supporting his more bullish call on the stock. Thum wrote that demand is running ahead of supply, contract renewals are coming at higher prices per watt, new capacity pays back in less than a year, and guidance implies first-quarter 2027 revenue is more than double the level reported in the third quarter of 2026.

SpaceX shares are up 2% in premarket trading on Friday, reflecting a more constructive market response to the earnings report and the improved broker view.

The challenges facing the U.S. AI data-center buildout have been mounting, as soaring financing costs, construction delays, and grid constraints make it harder to bring new compute capacity online. Our earlier coverage noted that only a minority of planned projects look truly credible, while power limitations and local opposition add further pressure on timelines and investor confidence.

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