Shares of Space Exploration Technologies (SPCX +7.63%), aka SpaceX, took flight early on Monday, climbing as much as 6.4% in early trading. As of 11:47 a.m. ET, the stock was still up 4.9%.
Two catalysts sent the space stock higher: Bullish commentary from a Wall Street analyst and the potential for an exclusive deal with Taiwan Semiconductor Manufacturing (TSM +2.75%), commonly called TSMC.
Image source: The Motley Fool.
On a roll
Kicking off the week on a positive note, Morgan Stanley analyst Adam Jonas maintained his overweight (buy) rating and reiterated his $300 price target on SpaceX. For those keeping score at home, that suggests potential upside of 89% compared to Friday's closing price. The analyst goes on to say that the stock is "cheap and getting cheaper" when viewed in the context of its growth, despite its otherwise lofty valuation.
Dividing SpaceX's 2028 estimated enterprise value by its earnings before interest and taxes (EBIT) yields a multiple of 30, making it appear nearly twice as expensive as a basket of mega-cap artificial intelligence (AI) stocks, according to the analyst. However, factoring in the company's growth yields a valuation of 0.3, lower than the multiple of 0.5 for the AI-centric basket, which includes Amazon, Alphabet, and Meta Platforms. The analyst posits that investors are underestimating the growth potential of SpaceX's xAI segment.
NASDAQ: SPCX
Key Data Points
Also fueling today's gains was confirmation from SpaceX CEO Elon Musk that talks with TSMC are ongoing regarding a potential partnership. If it were to come to fruition, TSMC would build and operate a semiconductor manufacturing facility that would supply chips exclusively to Tesla, SpaceX, and xAI. Musk noted that while it's "Just discussions, but something may come of it."
It's easy to see why investors are excited. That said, it's also important to remember that, despite the potential, SpaceX will still have to execute on its vision for AI data centers in space -- which is by no means a given.
