SpaceX (SPCX) shares climbed roughly 7% on Wednesday after CEO Elon Musk laid out ambitious artificial intelligence revenue targets during an all-hands meeting with employees. The stock rose to $142.62, recovering from Tuesday's 3.9% decline to $133.29 and moving back above its $135 IPO price.
During the meeting, Musk emphasized that AI has become an "extremely important part of SpaceX's future" and projected that the technology could soon become the company's largest revenue source. "Probably our AI revenue — not probably, definitely — our AI revenue will exceed all other SpaceX revenue probably in September, like next month," Musk said. He added that AI revenue "will significantly exceed all other SpaceX revenue in the fourth quarter."
Musk outlines AI ambitions
Musk also discussed plans for training Grok, SpaceX's family of large language models. He said the company would train Grok on "the sum total of all SpaceX information," positioning employees as "the parents of the AI" whose thoughts and ideas would be inherited by the system. However, he did not provide specifics on how employee data would be used, a topic that has drawn scrutiny across the tech industry. Meta faced backlash earlier this year for a similar program that trained AI on employee keystrokes, which was later paused.
Musk further projected that AI-based internet traffic would be 1,000 times human traffic within five years, underscoring his expectations for the technology's growth. He also highlighted Starlink, SpaceX's space-based broadband service, noting it has 22 million mobile subscribers.
These comments reflect Musk's broader vision for SpaceX, which includes making humanity a multi-planetary species while increasingly viewing AI as a major business opportunity alongside its space and satellite operations.
Morgan Stanley bullish on AI potential
SpaceX shares have been volatile since hitting a record high of $201.80 on June 16. The stock dropped more than 30% from that peak ahead of the first lockup period expiration on Thursday, but the expected selling pressure did not materialize, and shares have since recovered above their IPO price. Investors are now watching the next lockup period ending August 20, when additional shares could become eligible for sale.
Morgan Stanley reiterated its Overweight rating and $300 price target on SpaceX, citing the potential for the AI business to significantly increase the company's value. Analyst Adam Jonas wrote that "as investors see more breadcrumbs on the Cursor/Grok story, we see potential for the implied valuation discount on SpaceX's AI business to lift, driving potentially substantial appreciation of the stock." He noted that few investors currently appear bullish on SpaceX's AI business beyond its neocloud operations, creating an upside-skewed catalyst path at current levels.
The stock's recent rebound has been notable, with shares recovering from post-earnings lows. For more context on the recent rally, see our analysis of the 31% rebound. Additionally, the upcoming lockup expiry remains a key event to monitor, as detailed in this breakdown of the share unlock.
Musk's AI projections come amid broader market interest in AI-related investments. The company's AI spending has also been linked to gains in chipmakers like Nvidia, as noted in this report on SpaceX's AI chip choices. Meanwhile, Morgan Stanley's $300 target reflects confidence in the AI growth story, as discussed in their latest note.
As of Wednesday's close, SpaceX shares are up approximately 7% on the day, with trading volume elevated. The company's next earnings report will be closely watched for further details on AI revenue contributions and Starlink subscriber growth.
This article is for informational purposes only and does not constitute financial advice.
