SpaceX has secured another major artificial intelligence customer, prompting investors to reassess the company's valuation as it expands beyond its core launch and satellite businesses. The new compute-hosting agreement, disclosed by CFO Bret Johnsen at Goldman Sachs' Communacopia + Technology Conference, is worth $1.11 billion per month starting December 1. Annualized, that amounts to roughly $13.3 billion from a single undisclosed client.
Shares of SpaceX (SPCX) currently trade near $148, about 34% below their all-time high of $225.64. Pivotal Research initiated coverage on September 8 with a Buy rating and a $220 price target, implying nearly 50% upside from current levels. However, the bull case is not simply a matter of adding another $13 billion to recurring revenue.
A growing AI cloud business
The new agreement adds to an AI cloud segment that has quickly become material to SpaceX's financials. Johnsen noted that SpaceX already has a roughly $1.25 billion-per-month deal with Anthropic and a $920 million-per-month agreement with Google. In the second quarter, the company generated about $6.7 billion in cloud-services revenue while spending around $16 billion on AI infrastructure.
These figures make it difficult to dismiss AI compute as a side venture. Oppenheimer analyst Timothy Horan recently raised his price target on SpaceX to $280 from $250, arguing that the company's vertically integrated AI platform—combining access to data, capital, Nvidia GPUs, and rapid infrastructure deployment—provides a competitive edge. SpaceX can monetize scarce compute today while developing its own AI products and orbital data centers. Management now aims to exit 2026 at a $100 billion annualized revenue run rate.
Starship remains the linchpin
Pivotal Research's bullish thesis, however, does not hinge primarily on AI hosting. Analyst Jeffrey Wlodarczak stated that the investment case “rests almost entirely on a single admittedly massive engineering bottleneck: Starship reusability.” Pivotal believes a Starship must complete 20 to 50 flights with inexpensive, rapid refurbishment to justify the economics embedded in SpaceX's valuation.
Solving that problem could slash launch costs, expand Starlink capacity, and make orbital AI infrastructure more practical. AI hosting can boost revenue, but reusable Starship could fundamentally change the cost structure underpinning SpaceX's next generation of businesses. Without reliable reusability, Wlodarczak warned, SpaceX becomes “a different and much smaller company.”
Contract flexibility tempers the headline number
The biggest caveat is contract duration. Johnsen said most SpaceX compute agreements include provisions allowing either party to terminate relatively quickly, and the new $1.11 billion-per-month customer follows that general structure. That means investors should not treat $13.3 billion as guaranteed annual revenue stretching years into the future.
Piper Sandler analyst Alexander Potter has highlighted the same issue. The firm said SpaceX's AI cloud agreements are lucrative, but their “staying power” is difficult to judge. Piper maintains a Neutral rating and a $140 price target. The concern sits alongside heavy spending: Piper estimates fiscal 2027 capital expenditure could reach about $65 billion, while more previously restricted shares are becoming tradable. “As long as the float keeps growing,” Piper warned, “the multiple may not correlate with fundamentals.”
That dynamic changes how investors should value the contracts. SpaceX is spending aggressively to capture extraordinary compute scarcity. If pricing and utilization remain strong, those investments could produce exceptional returns. But if customers cancel, AI capacity becomes less scarce, or financing costs rise, the economics could weaken quickly. For context, recent AI compute picks have been a hot topic among analysts, and the broader market has seen memory prices forecast to surge, underscoring the volatility in the AI infrastructure space.
Investors should also keep an eye on SpaceX's share slide following lockup expirations, which could add further pressure on the stock. As the float grows, the stock's multiple may become less tied to fundamentals, a risk that Piper Sandler emphasizes.
This article is for informational purposes only and does not constitute financial advice.
