SpaceX rally signals stronger growth ahead with Starlink and AI

SpaceX shares extended their rebound on Monday, closing at $138.74, up 4.23%. The stock moved back above its $135 IPO price for the first time since July 15, marking a sharp recovery from its recent lows. (Sources: Investing.com, TradingView)

The latest gain extended SpaceX’s three-session rally, with shares rebounding strongly from a recent low of $108.27. Despite some overnight weakness after Monday’s rally, investor interest in the newly listed stock remains elevated.

SpaceX’s first post-IPO lockup expiration made more than 911 million shares held by early investors eligible for sale. The event increased trading volatility and contributed to a sharp sell-off before the recent rebound.

Longtime SpaceX investor Ron Baron remains extremely bullish on the company’s long-term prospects. Baron Capital has invested about $3 billion in SpaceX since 2017, and Baron believes the stock could potentially deliver 20x, 30x or even 40x returns over the long term.

Baron sees Starlink as one of SpaceX’s biggest future growth engines. He expects Starlink’s annual revenue to potentially rise from around $15 billion-$17 billion currently to $1 trillion within a decade, with the satellite business alone potentially reaching a valuation of about $14 trillion.

Baron believes SpaceX could eventually build AI data centres in orbit, powered by solar energy and operating outside many of the electricity, water and permitting constraints faced by terrestrial data centres. He sees orbital AI as potentially worth several times more than Starlink.

SpaceX’s Starship program is central to the long-term bullish thesis. Baron expects Starship technology to potentially reduce launch costs from roughly $1,500 per kilogram to $150 per kilogram, creating a significant cost advantage for SpaceX.

SpaceX reported $7.81 billion in second-quarter revenue, beating the Wall Street estimate of $6.93 billion. The company is also targeting a $100 billion annualised recurring revenue run rate by the end of 2026, supported by businesses including its AI-focused cloud operations.

Around 270 million SpaceX shares were reportedly sold short within several weeks of the IPO. Baron believes a sustained recovery could force short sellers to buy shares back, potentially adding further upward pressure to the stock.

The recent recovery highlights the gap between SpaceX’s short-term stock volatility and its ambitious long-term growth narrative. With Starlink, AI infrastructure, Starship and launch services all part of the strategy, investors are increasingly viewing SpaceX as more than just a rocket company.