Pivotal Research Group has initiated coverage on SpaceX with a "Buy" rating and a 12-month price target of $220, set for the end of 2027. Based on the stock's closing price of $147.95 on September 4th, this target implies an upside of approximately 49%. The firm's core thesis hinges on whether SpaceX's Starship can achieve low-cost, high-frequency reusability, a breakthrough that could fundamentally alter the cost structure for satellite communications, commercial launches, and even space-based AI infrastructure.
Chief Analyst Jeffrey Wlodarczak stated that the most critical assumption in the investment logic is that SpaceX can prove each Starship can be rapidly refurbished at a low cost and then be quickly redeployed for 20 to 50 flights. If successful, Pivotal estimates that SpaceX's launch costs could drop by over 90%. Such a dramatic reduction in transportation expenses would not only enable the company to expand its Starlink satellite network more cheaply but could also make projects like orbital data centers economically viable. These ventures are currently impractical due to prohibitive launch expenses.
Under this scenario, Pivotal presents aggressive growth projections for SpaceX. The firm forecasts annual revenue to surge from $46.6 billion in 2026 to $118.2 billion in 2027. In parallel, adjusted EBITDA is expected to nearly double, growing from $11.2 billion in 2026 to $22.3 billion in 2027. As Starship assumes a greater share of launch duties, Pivotal projects launches supported by the vehicle to increase from roughly 110 in 2027 to over 3,200 by 2035. Concurrently, the total cargo mass delivered to orbit is forecast to grow from 2,360 tonnes in 2026 to more than 500,000 tonnes by 2035. As economies of scale emerge, the average revenue per tonne of cargo for clients is expected to plummet from $7.5 million to approximately $600,000.
Lower launch costs are also poised to unlock expansive growth for Starlink. Pivotal estimates that the subscriber base for Starlink's self-service connectivity service could reach 170 million by 2037. Meanwhile, as the company lowers prices to broaden its user base, average monthly revenue per user is projected to decline from $74 in 2026 to around $40 by 2035. The analyst believes that in the long term, enterprise and government connectivity services could even outpace the consumer subscription business in scale. Notably, these projections do not assume that SpaceX captures a massive share of the mobile communications market or that the company deploys close to its planned 100,000-satellite constellation, leaving significant upside potential unaccounted for.
Beyond satellite communications, AI infrastructure serves as another critical pillar for Pivotal's high valuation of SpaceX. The firm expects SpaceX's computing capacity to surge from 2.2 gigawatts in 2026 to 110 gigawatts by 2035, with approximately 80% of that capacity ultimately operating in space. Pivotal argues that by reducing launch costs, adopting novel data center designs, and achieving manufacturing efficiencies from the proposed Terafab semiconductor facility, SpaceX could slash capital expenditures for AI computing capacity by roughly 75% per gigawatt. This suggests that if Starship successfully drives down the cost of space transport, SpaceX could evolve from a rocket and satellite internet company into a significant player in AI compute infrastructure.
Achieving this vast commercial blueprint, however, requires enormous capital. Pivotal estimates that SpaceX may need to raise approximately $1 trillion over the next decade, including $75 billion in the second half of 2027 alone. After that, funding requirements could reach roughly $125 billion annually until 2032. Customer prepayments, debt financing, and equity offerings are all potential channels for raising capital. However, Pivotal warns that if the company needs to issue a large volume of new shares during a period of low stock prices, it could pose a significant dilution risk to existing shareholders.
The $220 price target is derived from a discounted cash flow model, utilizing a 13% discount rate and valuing SpaceX at 16 times its projected 2037 adjusted EBITDA. The firm assigns a 65% probability to its base case, which corresponds to the $220 target; a 20% probability to a bear case, resulting in a per-share value of $75; and a 15% probability to a bull case, valuing the company at $420 per share. Nevertheless, Pivotal emphasizes that SpaceX remains a high-risk, long-duration investment. A substantial portion of the current valuation relies on cash flows expected more than a decade out. Consequently, any delays in Starship's development or commercialization, cost overruns, or financing difficulties could significantly impact the company's valuation.
In the near term, investors should monitor upcoming Starship test flights, continued Starlink subscriber growth, new contracts for SpaceX's terrestrial AI computing operations, and technological progress from SpaceX or Tesla. Key risks include potential delays in Starship's timeline, prolonged negative free cash flow, heavy reliance on Elon Musk, competitive pressures, regulatory scrutiny, and the possibility of additional selling pressure as insider lock-up periods expire leading up to a potential IPO.
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