Space Exploration Technologies (SPCX +2.83%) made history earlier this month with a record initial public offering (IPO), raising $75 billion before brokers exercised their option to buy additional shares, taking the overall capital raise to $85.7 billion.
Popularly known as SpaceX, the Elon Musk-led company now holds the record for the biggest IPO in history. The stock surged following the listing, but it didn't take long for the hype to fade. SpaceX stock is down 24% from the high it hit on June 16. However, it remains among the largest companies in the world, with a market cap of just over $2 trillion as of this writing.
SpaceX is currently the seventh-largest company in the world by market cap, followed by Broadcom (AVGO 2.47%) with a market cap of $1.8 billion. I won't be surprised to see SpaceX being overtaken by Broadcom by the end of the year. Let's see why that might be the case.
Image source: The Motley Fool.
SpaceX's valuation is going to weigh on the stock
SpaceX's revenue growth wasn't all that impressive in 2025, with its top line jumping by 33% to $18.7 billion. Of course, Musk is confident that the company could achieve a whopping $1 trillion in annual revenue by 2030, but a lot will need to go right for SpaceX to reach that target. It is worth noting that analysts at Morgan Stanley are significantly more conservative about SpaceX's prospects, estimating that its revenue will reach $330 billion by the end of the decade.
NASDAQ: SPCX
Key Data Points
Meanwhile, consensus estimates project SpaceX's revenue will almost double in 2026 to $37 billion. However, the recent volatility suggests that the expensive valuation is likely to weigh on SpaceX stock. After all, it is trading at an expensive 104 times sales, and there are companies with solid growth rates trading at cheaper multiples.
Broadcom is one such example. Analysts are forecasting a 66% spike in Broadcom's revenue in fiscal 2026 to $106 billion. Its earnings growth is poised to be even more impressive at 70%. SpaceX, on the other hand, isn't profitable yet.
What's more, investors can buy Broadcom at a significantly cheaper 23.6 times sales right now. Its forward earnings multiple of 31 is also quite attractive when its robust earnings growth is taken into account. The S&P 500 index, for comparison, has an average forward earnings multiple of 21.5. However, it is worth noting that Broadcom's projected earnings growth for the current fiscal year is thrice that of the S&P 500.
So, Broadcom's valuation can be justified by its accelerating growth. More importantly, Broadcom has a solid pipeline of customers for its custom artificial intelligence (AI) processors and networking chips. That's the reason why its AI revenue has been growing at an incredible pace. The semiconductor specialist reported a 143% year-over-year increase in AI revenue in the second quarter of fiscal 2026 to $10.8 billion.
Even better, it is expecting AI revenue to jump by 200% in the current quarter to $16 billion. Broadcom management remains confident that the company's AI revenue alone will jump to more than $100 billion in fiscal 2027. That explains why analysts are expecting Broadcom's revenue to increase by 62% in fiscal 2027 to $172 billion. SpaceX, for comparison, is expected to deliver an 85% increase in revenue to $68 billion in 2027.
Broadcom, therefore, is on track to clock solid growth despite having a much higher revenue base than SpaceX. Also, given that Broadcom's stock is significantly cheaper, there is a solid chance it will overtake SpaceX's market cap very soon.
Broadcom can easily overtake SpaceX's market cap
Broadcom's market cap is just 16% lower than SpaceX's. Assuming Broadcom's earnings indeed reach $11.62 per share in fiscal 2026 (which ends in October) and it trades at 39 times earnings at that time (in line with the tech-laden Nasdaq Composite index), its stock price could jump to $453.
That's a potential 24% jump from current levels. This potential appreciation should be enough for Broadcom to overtake SpaceX's market cap by the end of the year, especially considering that the Musk-led company needs to work harder to justify its expensive valuation, which is why its shares may continue to remain under pressure despite a record IPO.
