SpaceX investors are very focused on one big financial swing factor

The deciding factor in whether SpaceX (SPCX) stock truly lifts off in 2027 may hinge on what’s happening down on Mother Earth — specifically, how much compute power the company sells to a hungry world of AI infrastructure builders.

“Looking forward to next year, the largest swing factor in respect to forecasts will be compute deployment, in our view. Management is targeting >2 GW exiting 4Q26, which we think is doable, and then 5-10 GW exiting 2027. We continue to model toward the low end at ~6 GW and have line of sight into procuring 5-7 GW of power over the next couple of years,” Deutsche Bank analyst Edison Yu said.

Yu estimated that SpaceX’s neocloud business could haul in $70 billion to $90 billion in sales in 2027, depending on timing and pricing dynamics. He modeled third quarter sales from the neocloud business at $6 billion, up from $2.2 billion in the second quarter and $360 million in the first quarter.

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“Taking a step back, we continue to believe the endgame is to build and possess the greatest amount of compute at the lowest cost on the ground and eventually in orbit,” Yu added. “In turn, this should position SpaceX to eventually deliver leading intelligence/inference capabilities which we think investors generally are still quite skeptical about.”

SpaceX reports third quarter earnings after the close on Tuesday. SpaceX stock is down slightly in October and down about 35% from the highs seen in the wake of the company’s IPO in June.

147.79 -0.17 (-0.11%)

At close: October 20 at 4:00:01 PM EDT

161.56 +13.77 (+9.32%)

Overnight: 11:46:36 PM EDT

It has been an eventful few weeks for CEO Elon Musk in the lead-up to the release, to say the least.

Musk said on Monday he would give one share of SpaceX stock to every kid in America in 2027. The shares will reportedly find their way into Trump Accounts.

This came on the heels of Tesla unveiling its flying Roadster last week, which uses SpaceX thrusting power.

“We believe this is a small example of the synergies between Tesla and SpaceX and we believe there is an 80% chance that Tesla and SpaceX merge by the end of 2027 for a number of strategic AI/data driven reasons,” Yorkville Ives partner Dan Ives said.

Brian Sozzi is Yahoo Finance’s Executive Editor, host of the Sozzi Unleashed morning show and the Power Players with Brian Sozzi podcast, and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email [email protected].