An analyst has shifted from a "bearish" view on SpaceX stock to a "bullish" one. What has changed?

SpaceX’s AI business revenue, which was stronger than the market had expected, prompted PhillipCapital to revise its outlook on the company’s stock. The investment firm raised its rating on the stock by two notches—from “sell” to “buy”—and increased its price target from $75 to $250, according to CNBC. That’s nearly 73% higher than the closing price on October 22. On Friday, shares of Elon Musk’s aerospace and AI company rose 1.3% to $146.6.

On Tuesday, SpaceX reported adjusted earnings per share of $0.45 and revenue of $14.58 billion for the third quarter—both figures exceeded market expectations. The company posted a profit for the first time since going public. According to PhillipCapital analyst Glenn Tuma, several factors contributed to this. “New cloud service agreements with higher subscription rates have taken effect, and Cursor has generated $608 million in revenue for the company since mid-August,”, CNBC quotes the analyst as saying. SpaceX announced the acquisition of Cursor, a software developer specializing in AI, in June.

“[Starlink] installations on aircraft and contracts from [the defense division] Starshield increased revenue from corporate and government customers by 91% year-over-year,” Tum also noted. “Cloud services with higher profit margins brought the AI division into the black.”

That said, Tum believes that SpaceX’s revenue for all of 2027 will be lower than the company might expect if its forecast for the first quarter of 2027 were extrapolated to a full year. During the conference call, Musk stated that by the end of 2027, SpaceX could reach an annual recurring revenue (ARR) of $500 billion to $1 trillion, while CFO Bret Jonsen projected $33 billion to $37 billion in revenue as early as the first quarter of 2027. The analyst attributed his stance to the fact that he expects delays in scaling up SpaceX’s computing business due to power and cooling constraints. However, the prospects for this particular division of the company—despite the risks—prompted Tuma to significantly improve his outlook on SpaceX and raise his own forecasts, according to CNBC.

“We like SpaceX because demand for computing power is outpacing supply,” he wrote. “Contracts are being renewed at higher prices per watt, new capacity pays for itself in less than a year, and the company’s forecast suggests that revenue in the first quarter of 2027 will be more than double that of the third quarter of 2026.”.

Wall Street generally views the stock of Musk’s aerospace and AI company positively: According to MarketWatch, 36 of the 47 analysts tracking SpaceX stock recommend buying it, eight recommend holding it, and three recommend selling it. The analysts’ average price target is $254.2, which is 75.5% higher than the closing price on October 22.

This article was AI-translated and verified by a human editor