Morgan Stanley maintained its overweight rating on SpaceX (SPCX.US) in its latest research report, with a price target of $300.
The firm believes the market still views SpaceX as a new type of cloud service provider with space capabilities, and has not yet fully recognized that the company is transforming toward "Manufacturing, Autonomy, Robots, and Space" (MARS) and the "Physical Intelligence Economy" (PIE). At the same time, the 15th flight of Starship, which is planned to simultaneously capture both the booster and the spacecraft for the first time, is regarded by Morgan Stanley as one of the most important catalysts in SpaceX's more than 20-year history.
The Research Question Shifts from "Why" to "What"
The report opens with a quote from Musk: "If you ask the wrong question, the right answer becomes impossible to find." Morgan Stanley said its previous SpaceX report focused on "why," while this one has shifted to "what." The report noted that client inquiries about SpaceX were unexpectedly subdued over the past two to three months, and the few questions asked were usually not about SpaceX itself, but about how SpaceX might affect industries such as turbines, data centers, or telecommunications. However, after the third-quarter results and conference call, client interest picked up again. The report argues that the market still sees SpaceX as a new type of cloud service provider with space capabilities, while the company is undergoing a transformation that the market has not yet fully recognized.
Four Key Terms: Proentropic, MARS, PIE, DVFS
Morgan Stanley said in the report that SpaceX is a "proentropic" company, meaning it is one of the few enterprises whose value rises during periods of chaos and uncertainty. The report states that SpaceX's mission is to use physical intelligence agents, namely robots, and infrastructure from Earth to space to convert energy (e) into intelligence (i) at scale, accelerating economic growth and avoiding stagnation. MARS stands for Manufacturing, Autonomy, Robots, and Space. The report asks: how many other companies can bring these four attributes together under one roof? It suggests investors think more in terms of the MARS framework. PIE stands for "Physical Intelligence Economy." The report notes that market attention is mostly focused on digital assistants that negotiate prices with online agents, summarize emails, and plan vacations, but a small number of companies are focused on "moving atoms." The report emphasizes that atoms matter: drones, humanoid robots, or surgical robots cannot be conjured out of thin air through "vibe coding"—they must be manufactured, and only the manufacturers can share in PIE. DVFS stands for Dimensionality, Verticality, Flexibility, and Speed. The report specifically cautions that speed does not necessarily mean "fastest," and that speed can also be fatal.
In a Year, Data Centers and the New Cloud May No Longer Be the Focus
The report predicts that in a year, SpaceX investors may no longer be discussing data centers and the new cloud business. It argues that new cloud buildout is more like a "financing strategy": SpaceX can leverage its comparative advantage to maximize "intelligence per watt, per dollar, per second." Getting others to pay for the computing infrastructure that SpaceX will ultimately use to train its own robots is, in Morgan Stanley's view, a good idea.
SpaceX and Tesla: A Flywheel of Data and Manufacturing
The report says Tesla can be regarded as a world-class frontier robot manufacturer, with products including cars and humanoid robots, and it collects data from the physical world. Tesla FSD is widely seen as the world's largest physical superintelligence deployment. The report argues that this rapid recursive loop in which data feeds back into manufacturing and process knowledge is unique, while SpaceX provides the infrastructure, computing power, and connectivity layer to further accelerate this flywheel.
Implications for the Economy and the AI Narrative
The report expects developments over the coming weeks and months to prompt the market to pay more timely attention to AI's ability to change the physical world, and to the possibility that the next industrial revolution could create millions or even tens of millions of jobs in the United States and globally. Morgan Stanley agrees with Musk's view that PIE has a significant economic multiplier effect, even if it is not exponential. The firm also believes that the AI/SI trade currently faces considerable public skepticism, and that SpaceX can help improve this situation, with its role clearly underestimated by the market. The report suggests that investors who want exposure to the MARS and PIE themes can start with SpaceX or also look at "space shovel sellers."
The 15th Starship Flight: A Key Catalyst
The report says the 15th flight of Starship is expected to take place in early November, when it will attempt to simultaneously capture both the booster and the spacecraft. Management has confirmed on a conference call that it will attempt the "double catch," and Musk said success is "more likely than not." The report views this as both the greatest test of Starship's reusability and a potential reduction in the market space (TAM) risk for the broader business, making it one of the most important catalysts in SpaceX's more than 20-year history. The report also says that because fundamentals across all major business lines are accelerating, investors have an opportunity to reassess SpaceX before the flight.
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