SpaceX Seen With Neocloud Strength on Compute Spot Pricing — Market Talk

What happened

Deutsche Bank analysts say SpaceX's cloud computing rental business could reach more than $200 billion in annual recurring revenue by the end of 2027, and they raised their price target by $15 to $250. SpaceX stock is up 1% at $149.00.

Confirmed

Global impact / market context

If renting computing capacity becomes that large, it would turn SpaceX into a major seller of cloud services, not just a rocket company. Higher recurring revenue would make earnings more predictable and could support a higher valuation over time.

Analyst inference

Strong spot pricing for computing, which means on-demand rental rates, is helping the stock. The analysts also say SpaceX's 10-Q filing, a quarterly financial report, implies one large customer is spending $1.68 billion a month, above their earlier estimate of $1.25 billion.

Analyst inference

What to watch

1. Deutsche Bank says it is unclear how SpaceX will reach its goal of 13 gigawatts of computing capacity by the end of 2027, and the target may include a new data center campus. Confirmed
2. Watch whether SpaceX gives more detail on how it will fund and build the planned computing capacity, since clear plans would make the revenue target easier to judge. Proposed
3. Track spot rental rates and the large customer's monthly spending, because weaker pricing or lower spending would directly reduce the recurring revenue that supports the higher price target. Analyst inference

Evidence

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