SpaceX Analyst Sees an Empire Taking Shape in Orbit

Bank of America Securities analyst Ronald Epstein compared Space Exploration Technologies Corp. (NASDAQ:SPCX) to the 19th-century railroads in a Thursday note, titling one section "Vanderbilt, Carnegie, Rockefeller…Musk." Both, he argued, were built on dramatically lowering the cost of transportation into a frontier.

Epstein reiterated a Buy rating and raised his price objective to $275 from $235, implying roughly 72% upside.

"SpaceX could be very disruptive to telecom, hyperscalers, AI Labs, chip companies and enterprise software," he wrote.

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A Beat, Then a Bigger Guide

SpaceX reported third-quarter revenue of $14.58 billion on Tuesday, above the $12.72 billion analysts expected, and swung to net income of $4.4 billion from a loss of $1.05 billion a year earlier.  

SpaceX’s AI unit, now called Super Intelligence, became its largest business after revenue rose ninefold to $7.56 billion. 

Guidance did the heavy lifting. SpaceX expects first-quarter 2027 revenue of $33 billion to $37 billion, well above the roughly $22 billion consensus, according to the note. Musk now targets $500 billion to $1 trillion in annual recurring revenue by the end of 2027. The prior goal was $1 trillion by 2030.

"Management visions appear closer to reality than initial expectations, pulling forward outyear revenue estimates as close as 2027," Epstein wrote.

He more than doubled his 2027 revenue estimate to $229.7 billion from $100.7 billion. His 2028 forecast jumped to $515.3 billion from $184.8 billion. Earnings-per-share estimates rose to $13.49 from $3.19 for 2027 and to $33.71 from $7.29 for 2028.

Spending is climbing just as fast. "Thought $19bn of capex was a lot? Try 35bn-40bn in Q4," Epstein wrote. SpaceX ended the quarter with 1.7 gigawatts of nameplate compute and plans to add 10 gigawatts in 2027.

Starship and the Tesla Question

SpaceX completed 35 launches in the quarter. Flight 14 marked Starship’s first revenue-generating mission and deployed 26 Starlink V3 satellites. Flight 15, slated for next month, will attempt to recover both the booster and the ship.

"We view Flight 15 as the next major catalyst," Epstein said.

On a possible tie-up with Tesla Inc. (NASDAQ:TSLA), Musk declined to rule out a combination on a July earnings call, pointing to growing overlap between the two companies.

Analysts have flagged his much larger voting stake in SpaceX as a governance complication for Tesla shareholders.

So far, both companies have formed special committees of independent directors to weigh a deal. 

"Musk cannot be involved in these discussions, so a potential mega-merger is out of his hands," Epstein wrote.

A Costly Frontier

Railroads demanded enormous capital before they paid off, and SpaceX looks similar: Bank of America models negative free cash flow of $78.6 billion in 2027 before a swing to positive $18.5 billion in 2028. The railroad precedent suggests that payoffs often arrive later than the models promise.

Although railroads built America, they repeatedly bankrupted their shareholders. About a quarter of U.S. rail mileage went into receivership after the Panic of 1893. Cheap capital fueled overbuilding, and heavy reliance on federal land grants and bonds brought scandal and political risk.

The pricing power that made railroads indispensable also invited backlash, first through state rate laws and then through the Interstate Commerce Commission. Rail spent much of the 20th century as a tightly regulated, low-return business, culminating in Penn Central’s 1970 collapse.

Whether investors will see a similar pattern in the space sector—capex running ahead of demand, exposure to government customers, and, eventually, antitrust and access fights—remains to be seen.

SPCX Stock Price Activity: SpaceX stock was down 5.79% at $150.09 at the time of publication Thursday, according to Benzinga Pro market data.

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