SpaceX surges as JP Morgan says it will be world’s most valuable company
JPMorgan says SpaceX’s bet on AI data centres could propel its value to $US6.6 trillion, but the extraordinary growth forecast is drawing scepticism.
SpaceX’s push into artificial intelligence infrastructure could more than triple the company’s value to $US6.6 trillion ($9.4trn) and make Elon Musk’s rocket and satellite business the world’s most valuable company, according to global finance giant JPMorgan.
Shares in Elon Musk’s $US2 trillion tech business surged 12 per cent to $US165 on Wall Street overnight, after it posted a $US4.4 billion profit for the September quarter.
JPMorgan has raised its price target to $US500 a share, implying a valuation of $US6.6 trillion. The investment bank advised SpaceX on its initial public offering and has previously earned substantial fees from the company.
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The bank’s massive growth forecast and eye-popping valuation is based on assumptions that SpaceX’s data centre business could offer another 10 gigawatts (GW) of additional compute capacity by the end of next year.
Mr Musk made a similar claim on Wednesday, saying SpaceX could reach $US1 trillion in annual recurring revenue by the end of 2027.
“In a nutshell what this implies for SpaceX annual recurring revenue by end of 2027 is somewhere between $US500 billion and $US1 trillion,” Mr Musk said.
JPMorgan’s forecast assumes SpaceX can add as much as 10 gigawatts of data centre capacity by the end of next year, allowing it to capitalise on the surge in demand for computing power needed to run AI models and agents.
The scale of the forecast highlights the size of the bet investors are making on Mr Musk’s expansion beyond rockets, satellites and Starlink into the capital-intensive business of supplying AI computing capacity.
Any eventual combination with his electric vehicle company Tesla could push the theoretical value of the combined empire higher.
Demand for AI compute surges
SpaceX would be entering an increasingly crowded market as data centre operators race to build capacity to meet rapidly rising demand for AI computing.
So-called neocloud operators, including Australian-listed businesses Firmus and IREN, are pursuing large-scale projects designed to supply computing power to AI companies.
Amazon, Google and Meta are also investing heavily in data centres, both for their own requirements and to serve major customers such as OpenAI and Anthropic.
According to JP Morgan, SpaceX’s plans to accelerate data centre construction may have an advantage over rivals by sourcing cheaper power and using innovative pre-fabricated construction techniques.
“SpaceX is looking at utilizing alternative sources of power beyond just natural gas such as wind and solar, and management also discussed modular compute deployments to help scale capacity for inference workloads,” JP Morgan said.
The broker expects demand for AI agents capable of performing everyday tasks from booking appointments to paying bills, to drive further demand for computing capacity, including systems based on Nvidia’s Vera Rubin chips.
“The $US500 billion to $US1 trillion ARR (annualised recurring revenue) target by the end of 2027 depends on accelerated compute build and elevated monetisation for (Nvidia’s) Vera Rubin capacity,” JP Morgan said.
The forecast comes despite growing scepticism about the ability of smaller AI infrastructure companies to deliver the rapid construction and returns promised to investors.
Earlier this month, Australian data centre operator Firmus abandoned plans for a $44 billion stock market listing after failing to convince investors about the credibility of its plans or financial forecasts.
Data centre critics
SpaceX’s valuation has also attracted prominent critics.
US hedge fund manager Jim Chanos has warned the company is being valued on “hopes and dreams” rather than commercially proven businesses.
Chanos argues anyone can imagine all sorts of stories like launching data centres in space or colonising Mars, but there’s little chance of them becoming commercial successes.
The hedge fund manager has also criticised AI data centre businesses arguing their forecasts exaggerate profit margins and falsely represent them as high-growth tech businesses, despite the heavy investment required in property, power infrastructure and computing equipment.
In reality Chanos says they’re capital intensive and will offer low returns on the huge sums they invest in real estate and equipment leasing.
By contrast, Musk has even previously suggested SpaceX could be worth more than $US100 trillion in less than 10 years, barring a major global war.
