SpaceX Extends Post-IPO Surge by 6% as Investors Bet on Musk’s AI Ambitions, but...

SpaceX shares climbed again in premarket trading Monday, extending the momentum from what has already become the largest initial public offering in history. The stock rose about 6% before the opening bell, trading near $170, after surging 19% on its Nasdaq debut Friday and closing at $161, well above its IPO price of $135.

The rally has propelled SpaceX's market capitalization beyond $2 trillion, placing Elon Musk's company among the most valuable technology firms in the world and underscoring investors' appetite for artificial intelligence-linked stocks.

Yet the strong debut has also sharpened a debate on Wall Street: whether SpaceX's valuation is supported by fundamentals or reflects the latest phase of the AI investment frenzy sweeping global markets.

SpaceX entered public markets carrying a unique combination of businesses. The company remains the operator of the Starlink satellite internet network and one of the world's leading reusable rocket manufacturers. However, investor attention has increasingly shifted toward its artificial intelligence ambitions following Musk's decision to merge the company with AI startup xAI earlier this year.

The merger transformed the investment narrative around SpaceX from a pure-play space and satellite communications company into a broader AI infrastructure and computing platform.

That positioning comes at a time when capital markets are aggressively rewarding companies seen as beneficiaries of the AI revolution. Investors have poured billions into AI-related stocks, driving valuations higher across the semiconductor, cloud computing, data center, and software sectors.

The successful IPO also arrives amid an unprecedented wave of AI-related listings and fundraising activity. OpenAI recently confidentially filed for an IPO, Anthropic has begun preparations for its own public offering, while major technology companies continue to increase spending on AI infrastructure.

Against that backdrop, SpaceX's market debut has become a key test of how much investors are willing to pay for companies positioned at the center of the AI ecosystem.

Capital Spending Raises Questions

While investors have embraced the growth story, analysts remain divided on whether the valuation can be justified. One of the primary concerns centers on the company's rapidly rising capital expenditures.

SpaceX spent $10.1 billion on capital expenditures during the three months ended March, more than doubling the $4.1 billion recorded during the same period a year earlier. A substantial portion of that spending has been directed toward artificial intelligence infrastructure.

The scale of those investments has prompted concerns among some analysts and investors that SpaceX is becoming increasingly dependent on a business model that requires enormous amounts of capital while offering uncertain long-term returns.

The issue echoes concerns voiced across the broader technology sector. Major AI companies are spending tens of billions of dollars on data centers, chips, networking equipment, and energy infrastructure as they race to build more powerful AI systems. Some believe that the industry is moving from a traditionally asset-light software model toward a much more capital-intensive structure, raising questions about future profitability and returns on investment.

Bears See Significant Downside

Research firm CFRA initiated coverage of SpaceX on Friday with a "sell" rating and a 12-month price target of $115 per share. That target implies a decline of nearly 29% from Friday's closing level.

CFRA cited what it described as SpaceX's "extremely ambitious growth strategy, elevated valuation expectations, and significant capital intensity."

The firm's concerns reflect a growing view among some market observers that current valuations may already price in years of future growth and execution success. Morningstar analyst Nicolas Owens has expressed an even more cautious stance. In a June 8 research note, Morningstar estimated SpaceX's fair value at just $63 per share and described the stock as significantly overvalued.

Such assessments highlight the widening gap between bullish market sentiment and more conservative valuation models.

Bulls Point To Strategic Advantages

Not all analysts share the pessimistic outlook. New Street Research initiated coverage with a $165 price target, broadly in line with current trading levels, suggesting that the firm sees room for continued growth. Supporters of the stock argue that SpaceX possesses a combination of assets that few competitors can match.

The company controls one of the world's largest satellite communications networks through Starlink, maintains a dominant position in commercial launch services, and now has a direct pathway into the rapidly expanding AI infrastructure market through xAI. They also note that Musk has repeatedly succeeded in building businesses that initially appeared overvalued but ultimately grew into their market capitalizations.

For bullish investors, the company's appeal lies not in its current earnings but in its ability to dominate several transformative industries simultaneously, including space transportation, satellite connectivity, artificial intelligence, and advanced computing infrastructure.

SpaceX's IPO is being closely watched by investors evaluating upcoming public offerings from other AI leaders, including OpenAI and Anthropic. A strong aftermarket performance could strengthen confidence in high-growth AI listings and encourage more technology firms to tap public markets.

Conversely, any sharp reversal could trigger questions about whether AI-related valuations have become detached from business fundamentals.

The timing is noteworthy because investors are already grappling with concerns about rising capital expenditures across the technology sector. Companies from Google and Microsoft to Amazon and Meta are spending unprecedented sums to build AI infrastructure, while profitability remains an open question for many AI initiatives.