An analyst identified SpaceX's largest source of revenue. This could boost the stock by 30%

Providing computing power to competitors could become the main driver of SpaceX’s revenue growth in the near term, according to analysts at TD Cowen. They initiated coverage of Elon Musk’s company with a “buy” rating and a price target of $200, which implies 34% upside potential relative to the September 29 closing price. At the close of that trading session, SpaceX shares rose 2.6%.

The data center business will become SpaceX’s “largest source of revenue in the near term,” according to analysts at TD Cowen led by John Blackledge, MarketWatch reports. They estimate that by 2026, businesses related to providing computing power to AI companies could account for 35% of SpaceX’s sales. TD Cowen expects this segment to surpass Starlink in the first quarter of 2027. And by 2028, analysts forecast that leasing computing power for AI will account for 65% of SpaceX’s total revenue.

Elon Musk's company has become a major supplier of this resource, which AI giants need to develop their models, according to MarketWatch. According to documents filed with the regulator ahead of SpaceX’s IPO and other disclosures, Anthropic and Alphabet, among others, have signed multibillion-dollar agreements with the company.

TD Cowen estimates that about half of SpaceX’s planned computing capacity over the next few years will be leased to other players. The company plans to use the rest for its own projects, including the development of new models and products, such as AI agents.

It is difficult to gauge the scale of SpaceX’s computing business, however, MarketWatch warns. At this point, contracts with three companies are known—in addition to Anthropic and Alphabet, there is also the startup Reflection AI. Some analysts consider the U.S. Department of Defense to be another client, with which a $6.7 billion agreement has likely been signed, MarketWatch reported in August. SpaceX CFO Bret Johnson mentioned another unnamed client in early September.

Deutsche Bank analyst Edison Yu estimates the potential annual revenue from SpaceX’s five customers at $54.5 billion, assuming the current pace of revenue from these contracts continues. SpaceX aims to reach $100 billion in annual recurring revenue by the end of 2026, Johnson said.

"As new capacity comes online, we expect several more major deals to be concluded, given the limited supply the industry is facing," MarketWatch quotes the Deutsche Bank analyst as saying.

Investment firm CLSA also views SpaceX’s prospects optimistically and has initiated coverage with a “buy” recommendation on the aerospace giant’s stock, CNBC reported. Analysts view the Starship rocket as the cornerstone of the company’s business model. In their view, launch costs ultimately contribute to the development of satellite communications and AI, creating a self-sustaining cycle of revenue, cash flow, and investment. CLSA called SpaceX’s AI offering “the most unique in the world” and expects it to help revive American manufacturing.

The Wall Street consensus target implies that SpaceX shares have the potential to rise by nearly 50%. Thirty-five out of 46 analysts recommend buying the stock, while four recommend selling it.

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