JPMorgan doubles SpaceX target to $500 on AI surge

SpaceX shares surged in early trading on October 21 following a third-quarter report that significantly exceeded market expectations. The company, which closed at $147.79 the previous day, saw its stock jump approximately 8 percent in premarket activity as investors digested the new data and revised analyst forecasts.

The quarter delivered revenue of $14.6 billion, marking a 161 percent increase year over year and comfortably surpassing the consensus estimate of $12.7 billion. Financial performance shifted decisively into the black, with a net profit of $4.4 billion recorded against a loss in the same period last year. Adjusted EBITDA also climbed to $8.8 billion, reflecting improved operational efficiency and scale.

A primary driver of the optimism is the company's Super Intelligence division, which generated roughly $7.6 billion in revenue. This segment became the largest contributor to the top line, expanding nearly 830 percent year over year. The Connectivity segment also performed well, bringing in $5.2 billion as Starlink added subscribers to reach a consumer base of 13.6 million.

Management provided ambitious outlooks for the coming year, with CEO Elon Musk and CFO Bret Johnsen guiding for first-quarter 2027 revenue between $33 billion and $37 billion. This range is substantially higher than the roughly $22 billion previously modeled by analysts. The company plans to spend between $35 billion and $40 billion on capital expenditures in the fourth quarter, focusing on AI compute infrastructure in locations such as Memphis and Southaven.

Analysts responded with a wave of price target increases, citing the strong quarterly results and accelerating AI expansion. JPMorgan more than doubled its target to $500 from $240, while Cantor Fitzgerald raised its view to $345. Barclays and Morgan Stanley both set targets at $300, and Wells Fargo adjusted its target upward to $274. Other firms, including Citi, UBS, and TD Cowen, also raised their estimates, reflecting broader confidence in the company's growth trajectory.

The earnings call highlighted several strategic milestones, including recent Starship orbital successes and the deployment of V3 satellites. Musk noted relentless demand from hyperscalers, stating that compute pricing supports payback periods of less than a year. Management also discussed targets for nameplate compute capacity, aiming for 2.5 to 3 gigawatts by year-end and potentially 13 gigawatts by the end of 2027. While the financials were strong, elevated spending remains a key area of focus for investors.

The stock's reaction underscores a shift in market sentiment toward SpaceX's diversified business model. The combination of robust launch operations, expanding connectivity services, and rapid growth in AI has convinced many on Wall Street that the company's long-term earnings power is stronger than previously thought. The formation of special committees to explore a potential combination with Tesla was also noted as a significant development during the call.