HSBC starts SpaceX at Hold, sees execution risks tempering long-term AI ambitions
Investing.com -- SpaceX's strong position in commercial space launches and satellite connectivity provides a solid foundation for long-term growth, but ambitious plans in artificial intelligence and full vertical integration face significant technological and execution hurdles, HSBC said as it initiated coverage with a Hold rating and a $115 price target, broadly in line with the stock's current trading price.
The brokerage said SpaceX's integrated model—combining launch services, Starlink connectivity and AI—could create a powerful business flywheel over time, but investors are already pricing in technologies that remain unproven, including orbital data centres, AI compute infrastructure in space and semiconductor manufacturing through its Terafab project.
HSBC argued that while SpaceX dominates commercial launch services and Starlink has established a leading position in satellite internet, its AI ambitions face much stiffer competition. The bank believes xAI trails leading AI developers in enterprise adoption and compute scale, requiring substantial capital spending to compete with hyperscalers. It also questioned whether orbital data centres would become economically viable within the next decade and said Starlink's addressable market is likely much smaller than the company's own estimates.
The brokerage forecast revenue to more than double to $38.2 billion in 2026 from $18.7 billion in 2025, driven primarily by AI-related businesses and expanding Starlink operations. However, it expects the company to remain loss-making through 2027 on a GAAP basis as heavy investment weighs on earnings. HSBC estimates free cash flow will not turn positive until 2030 after roughly $106 billion of cumulative cash usage.
HSBC valued SpaceX using a sum-of-the-parts methodology and applied a 2x "innovation premium", arguing the market has historically assigned companies led by Elon Musk a valuation well above conventional fundamentals. The bank estimated a "blue-sky" valuation of $293 per share, assuming successful commercialization of Starship, stronger Starlink adoption and faster AI monetization.
The brokerage also highlighted governance and financial reporting risks, noting Elon Musk would retain effective control of the company through his voting rights, while investors should monitor future share lock-up expirations that could significantly expand the public float after upcoming earnings releases.
HSBC starts SpaceX at Hold, sees execution risks tempering long-term AI ambitions
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