Shares of SpaceX have declined sharply since their record $86 billion debut in mid-June, reaching levels that suggest investors are largely overlooking the company’s artificial intelligence business, according to analysts at Morgan Stanley. The stock initially surged nearly 50% in its first three trading sessions but has since fallen, trading near $110 as of Monday.
Morgan Stanley analyst Adam Jonas highlighted the disconnect between the market’s bearish sentiment and SpaceX’s underlying fundamentals, describing the current share price as an attractive opportunity for investors. He noted that many market participants anticipate further declines once a lockup period expires next month, allowing insiders to sell shares, potentially pushing the price down toward $100 per share. At that price, Jonas argued, investors are valuing the company’s AI segment, which includes products such as Grok and Cursor, at zero or even negative worth.
Jonas attributed the discount on SpaceX’s AI business to concerns about high capital expenditures compared to its space and connectivity divisions, uncertain economic returns, and the significant management focus required for the AI operations. “Most investors we speak with significantly discount Grok & Cursor,” he wrote, “with many ascribing zero or even negative value for AI given the high capex requirements relative to Space & Connectivity, largely uncertain economics, and the high degree of management time devoted to the business.”
The broader technology sector has seen investors rotate away from firms heavily investing in artificial intelligence and its supporting infrastructure amid a challenging macroeconomic environment. Rising oil prices, fueled by heightened tensions between the United States and Iran, have stoked inflation concerns, dampening appetite for risk assets.
Despite these headwinds, the consensus among Wall Street analysts remains overwhelmingly positive on SpaceX’s prospects. Nearly 80% recommend buying the stock, with an average price target around $232, suggesting the shares could more than double from current levels. Alongside Morgan Stanley, the other banks involved in leading SpaceX’s offering—Goldman Sachs, Bank of America, Citigroup, and JPMorgan Chase—have all issued buy-equivalent ratings.
Jonas is among the most bullish on the stock, with a $300 price target that assigns over half of SpaceX’s valuation to its AI business. Well-known for his prior bullish calls on Tesla Inc. during his tenure as an automotive analyst, Jonas shifted his focus to AI and robotics last year. He reaffirmed his buy rating on SpaceX, emphasizing the company’s unique positioning across launch services, connectivity, and artificial intelligence. “We see the current valuation as an attractive entry point,” he said, underscoring his confidence in the company’s diversified portfolio and potential for growth.