Morningstar questioned whether SpaceX’s exclusive Nvidia deal signals a retreat from its Tesla-linked Terafab plans.
Morningstar retained its one-star rating on SPCX and $62 fair value, implying a 51% downside from current levels.SpaceX revenue surged 92% to $7.8 billion, led by 7x growth in AI-computing rentals.Musk sees over $100 billion in annualized revenue by December and potentially $1 trillion in revenue by 2029.
SpaceX shares slid 8% in premarket trading on Tuesday as Morningstar questioned whether its Nvidia deal signals a retreat from Tesla-linked chip plans, even as CEO Elon Musk appeared to endorse a $10 trillion bull case and warned crowded short sellers.
SPCX stock jumped 9% to $125.33 on Tuesday before falling 7.5% in extended trading.
SpaceX’s Nvidia Deal Raises Terafab Questions
Morningstar maintained its one-star rating, “Very High” uncertainty assessment and $62 fair-value estimate for SpaceX, implying a 51% downside from current levels.
SpaceX’s second-quarter (Q2) revenue jumped 92% to $7.8 billion, led by a 7x increase in AI-computing rentals. Starlink revenue grew 67% and launch revenue rose 29%. Morningstar said the stock was “significantly overvalued,” arguing that investors are pricing in overly optimistic outcomes for reusable Starship rockets and orbital data centers. It also said SpaceX’s massive AI investments currently outweighed its neocloud rental income.
The research firm separately questioned SpaceX’s decision to exclusively use Nvidia’s Vera Rubin architecture for future terrestrial data centers and its planned Starmind orbital-computing satellites.
“We’re exclusive to Nvidia,” Musk said during the earnings call, calling it “the best AI computer.” Morningstar said the agreement could represent a retreat from plans to manufacture chips with Tesla through Terafab. Public documents released in May estimated that Terafab’s first phase would cost at least $55 billion, with a full buildout potentially reaching $119 billion. Intel joined the project in April, while Musk previously said SpaceX would lead its initial scaled-up phase.
Musk Cheers $10 Trillion SpaceX Vision
Early SpaceX investor Peter Diamandis said on X that the market was undervaluing five interconnected businesses spanning communications, AI computing, chipmaking, launch and infrastructure. “SpaceX is the only company on the planet that owns the rocket, the satellites, the ground network, and now the AI compute layer,” he said. Diamandis predicted SpaceX could become the world’s first $10 trillion company. Musk responded with two rocket emojis, appearing to endorse the thesis.
Deepwater Asset Management’s Gene Munster offered a similarly bullish view. “They’re the world’s only sovereign AI company and early in building what I believe will be the world’s most valuable company,” Munster said. Clear Street also said SpaceX’s AI unit turned adjusted EBITDA-positive a year earlier than expected and added that investors underestimate the computing capacity already funded ahead of contracted demand.
Musk said SpaceX should exceed $100 billion in annualized revenue by December even if it “basically did nothing” beyond existing plans. He also moved its internal target for reaching $1 trillion in annual revenue from 2031 to 2030, with a “non-zero chance” of reaching it in 2029. Meanwhile, former Tesla director Steve Westly said that SpaceX could compete with Anthropic, OpenAI and Google. “This is not going to be easy,” Westly said. “I think it’s a lot easier to beat GM and Ford in the electric-car sector than it is to tackle Anthropic, OpenAI and Google.”
Musk Warns Crowded SPCX Shorts
S3 data showed SpaceX short interest climbing from 23.3 million shares on June 16 to 219.3 million by July 29, equivalent to 34% of its publicly tradable float. More recent estimates put the position at 206 million shares, or 32.2% of float, worth $23.6 billion, above Tesla’s short book. About 95% of available shares were reportedly out on loan.
“I try to warn them, but they just double down,” Musk said on X in response to the crowded trade. Short sellers now face Thursday’s first lockup expiration, which could make up to 911 million additional shares eligible for sale. Further unlocks are scheduled for Dec.8 and June 14, 2027.
How Do Retail Traders Feel About SPCX?
On Stocktwits, retail sentiment for SPCX improved to ‘bullish’ from ‘neutral’ levels a day ago amid a 264% surge in 24-hour message volumes.
SPCX sentiment and message volume as of August 5 | Source: Stocktwits
One user said, “$TSLA Remember when Elon tweeted he would take Tesla private for $420. I feel strongly $SPCX will merge with Tesla next year at that price.”
Another user said, “$SPCX the problem with Spacex going down this week because of the unlock is it will bring down the rest of the stock market with it.”
SPCX stock has declined 22% so far this year.
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