Morgan Stanley believes the recent decline in SpaceX shares created an attractive buying opportunity, arguing that the market is assigning little or no value to the company’s artificial intelligence operations.
The Morgan Stanley SpaceX AI valuation assessment comes after the company’s share price experienced a sustained pullback after its mid-June stock market debut. SpaceX raised $86 billion through its initial public offering, with shares climbing almost 50% during the first three trading sessions before reversing course.
SpaceX stock price (Source: Google Finance)
The stock subsequently fell to a low of approximately $110.85, placing it around 18% below its IPO price. Despite the decline, Morgan Stanley analyst Adam Jonas said the company’s underlying fundamentals have not materially weakened.
Morgan Stanley Sees Significant Upside for SpaceX Shares
Jonas maintained a “buy” rating on SpaceX and assigned the stock a price target of $300. More than half of that valuation is reportedly linked to SpaceX’s AI business.
According to the analyst, the market is heavily discounting AI-related assets associated with the company, including Grok and Cursor. Investors have raised concerns about the high cost of developing AI infrastructure, uncertain revenue models and the possibility that artificial intelligence projects could distract management from SpaceX’s aerospace and satellite communications businesses.
Jonas argued that these concerns have become excessive. He said that a decline toward $100 per share would effectively suggest that investors are placing no value, or even a negative value, on SpaceX’s AI operations.
Some investors expect additional selling pressure when early shareholder lock-up agreements begin expiring. The expiry could allow employees, insiders and other early investors to sell shares, which could potentially increase the available supply in the market.
Market Pressures Weigh on AI Stocks
SpaceX’s share-price decline has also occurred during a broader retreat from technology companies making large investments in AI infrastructure. Investors are concerned about the hundreds of billions of dollars required to build data centers, computing systems and energy infrastructure for artificial intelligence. Rising oil prices, inflation fears and geopolitical tensions only added more pressure to risk-sensitive assets.
However, Wall Street analysts are reportedly still mostly positive on SpaceX. Goldman Sachs, Bank of America, Citi and JPMorgan have all assigned the company a “buy” rating after its IPO.
Jonas is among the most bullish analysts covering the stock. He believes SpaceX possesses many competitive advantages in rocket launches, satellite communications and artificial intelligence.
