Morgan Stanley is bullish on SpaceX’s expansion from space infrastructure into the "intelligence economy"

Overview

This is a Morgan Stanley North America equity research report on Space Exploration Technologies Corp., titled "SpaceX and the Intelligence Economy: i=er²." The report summarizes SpaceX’s business model as leveraging space infrastructure, AI, and vertically integrated manufacturing to convert energy into intelligence and create value across launch, connectivity, and enterprise AI infrastructure.

Core views

The report’s core view is positive: SpaceX is not just a rocket and satellite internet company, but a platform company with an advantage in "energy-to-intelligence" conversion efficiency. Its value comes from three layers of efficiency: intelligence-per-watt, intelligence-per-watt-per-dollar, and intelligence-per-watt-per-dollar-per-second. Morgan Stanley believes SpaceX’s low launch costs, Starlink network, manufacturing feedback loop, vertical integration, and time efficiency may enable it to create higher long-term value than peers.

Analysis framework

The report uses a sum-of-the-parts valuation and long-term scenario framework, breaking down the $300 target price into four segments: Space, Connectivity, X & Grok, and Enterprise AI; valuation assumptions include a 2040 forecast terminal year, a June 30, 2027 valuation date, 11.1% WACC, 11.9% cost of equity, and a 50% execution-risk discount applied to Enterprise AI valuation.

Methodology notes

• Valuation methodsSum-of-the-Parts

  sum-of-the-parts valuation

  The report breaks SpaceX’s $300 target price into Space $8, Connectivity $128, X & Grok $12, and Enterprise AI $152 to reflect the long-term value contribution of different business segments.

• strategic_frameworki=er²

  energy-to-intelligence conversion efficiency

  The report uses intelligence-per-watt, intelligence-per-watt-per-dollar, and intelligence-per-watt-per-dollar-per-second to measure SpaceX’s potential advantages in energy efficiency, capital efficiency, and time efficiency.

• valuation_assumptionMorgan Stanley ModelWare

  model valuation assumptions

  Unless otherwise noted, the report’s metrics are based on the Morgan Stanley ModelWare framework and use assumptions such as a 2040 forecast period, 11.1% WACC, and 11.9% cost of equity.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Space Exploration Technologies Corp. (SPCX.O)

  core covered asset

  Strengths

  Low-cost launch, Starship reusability potential, Starlink network scale, vertically integrated manufacturing, and an AI and data feedback loop.

  Weaknesses

  Valuation depends heavily on long-term forecasts, Enterprise AI still carries significant execution risk, and capital expenditure and financing needs could be substantial.

  Comparison

  The report believes SpaceX may differentiate itself from traditional aerospace, connectivity services, and AI infrastructure peers through advantages in intelligence-per-watt, capital efficiency, and time-to-power.

  Risks

  Slower Starship reusability progress, slower Starlink user growth, weaker-than-expected enterprise AI monetization, rising compute costs or capex, regulatory delays, and financing dilution.

Key data

• Stock ratingOverweightThe Stock Rating disclosed on the report cover page.
• Industry viewAttractiveThe Industry View disclosed on the report cover page.
• Target price$300.00The target price is derived from the sum-of-the-parts valuation of Space, Connectivity, X & Grok, and Enterprise AI.
• Closing price$135.27Closing price on July 15, 2026.
• Implied upside to target priceapproximately 121.8%Estimated based on the $300.00 target price and the $135.27 closing price.
• SOTP: Space$8Contribution of the Space segment within the $300 target price.
• SOTP: Connectivity$128Contribution of the Connectivity segment within the $300 target price.
• SOTP: X & Grok$12Contribution of the X & Grok segment within the $300 target price.
• SOTP: Enterprise AI$152Contribution of the Enterprise AI segment within the $300 target price, including a 50% execution-risk valuation discount.
• WACC11.1%Valuation assumption disclosed in the report.
• Cost of equity11.9%Valuation assumption disclosed in the report.

Impact & implications

If the report’s judgment proves correct, the market’s understanding of SpaceX may shift from a single aerospace/satellite internet company to a composite platform of "space infrastructure + connectivity + AI computing + data-loop manufacturing," with valuation focus moving more toward the long-term expansion potential of Connectivity and Enterprise AI. For investors, the key is not the standalone launch business, but whether SpaceX can continue to reduce launch $/kg, improve intelligence/watt, and convert Starlink, X/Grok, and enterprise AI infrastructure into monetizable, scalable cash flow.

Risks

• Starship reusability progresses more slowly than expected.
• Starlink subscriber growth is slower than expected.
• Enterprise AI monetization is weaker than expected.
• AI compute infrastructure capex or compute cost per watt is higher than expected.
• Longer time-to-power affects AI infrastructure delivery efficiency.
• Higher financing needs or increased equity dilution risk.
• Regulatory approvals or launch-related processes are delayed.

What to watch

• Whether Starship reusability progress accelerates.
• Whether Starlink capacity growth and subscriber growth continue.
• Whether DTC and enterprise customer adoption exceeds expectations.
• Whether SpaceX secures more neocloud-related business opportunities.
• Whether Cursor ARR or related AI application revenue accelerates.
• Whether AI infrastructure time-to-power and per-watt costs decline.
• Whether the Enterprise AI segment can deliver the long-term contribution implied in the sum-of-the-parts valuation.