Space Exploration Technologies Corp (SPCX): UBS sees SpaceX entering 3Q with strong AI, Starlink and Starship momentum

Overview

This 3Q preview argues that SpaceX is executing across its Space, Connectivity and AI businesses. UBS expects earnings ahead of consensus, supported by cloud-compute demand, Starlink growth and progress toward higher Starship launch capacity.

Core views

UBS expects a strong third quarter after what it describes as a solid 2Q and several operational wins: successful Starship launches, additional cloud-compute deals and adoption of new AI products. Its 3Q forecast is US$13.8B of revenue, 7% above the US$12.9B Street estimate, and US$7.5B of adjusted EBITDA, 9% above the US$6.9B Street estimate. The report also estimates US$19.3B of quarterly capex and US$13.2B of cash burn as the company expands multiple businesses simultaneously. AI is UBS's largest near-term revenue driver. The firm forecasts US$7.6B of AI revenue in 3Q, rising to US$15B in 4Q and US$27B for 2026 as the Anthropic agreement scales, Google begins contributing for a full quarter, and Cursor plus recently announced compute deals ramp. SpaceX reported roughly 1M GPUs across Colossus 1 and Colossus 2, plus another 220,000 GB300 GPUs expected to be operational around quarter-end; UBS equates this to about 1.8GW of compute. Management targets another 220,000-440,000 GB300 GPUs by year-end 2026, or 2.3-2.7GW in total, while UBS models 2.3GW at year-end 2026 and 6GW by year-end 2027. An additional post-earnings compute agreement supports cloud ARR of about US$54B by December 2026. UBS views the supply-demand imbalance for compute as acute and notes Microsoft plans about 26GW of incremental capacity by 2032. It also sees GrokBot's ease of use supporting token demand, while Terafab in Grimes County, Texas is expected to begin producing the company's memory and logic chips by end-2028. In Space, Flight 14 is viewed as a partial derisking event for Starship and future Starlink capacity. The September 28 mission achieved Starship's first orbital insertion, deployed all 26 V3 satellites and completed controlled deorbit, re-entry and splashdown despite an early Raptor-engine shutdown. The approximately three-hour mission was shorter than the planned six-orbit, 10-hour profile, but UBS says all primary objectives were completed. SpaceX completed 113 launches year to date, including 33 Falcon 9 launches in 3Q, while Booster B1067 flew for a record 37th time. The report expects Flight 15 by year-end, including a first attempt to catch the ship. It expects the 125,000-acre Louisiana site to host 10 launch pads by 2029, supporting a steadier cadence in 2027 and a potential ramp to more than 1,000 launches annually in 2030. UBS's own framework assumes two operational Starship launches in 2026, 30 in 2027 and 141 in 2028; longer-term ambitions depend on full, rapid reusability. Connectivity is expected to generate US$4.9B of 3Q revenue, up 59% year on year, while Space revenue is forecast to rise to US$1.3B from about US$1B in 2Q, supported by 35 launches. UBS estimates 2.3M Starlink subscriber net additions in 3Q versus 1.7M in 2Q, taking the total to 14.3M. It expects advertising to support continued growth ahead of V3 constellation operations. Flight 14 strengthens UBS's confidence in scaling V3, which it believes can materially raise capacity and speed and expand SpaceX's consumer-broadband opportunity. UBS expects Starlink to gain share in rural and less-dense suburban areas; globally, outcomes versus cable and fixed wireless will depend on pricing and local competition. In the US, it expects greater pressure on cable, some competition with fixed wireless, and limited impact on fiber operators. UBS reiterates a Buy rating and US$210.00 12-month price target versus US$145.47 on September 28. The target uses a sum-of-the-parts and multiples approach and implies roughly 30x total-company EBITDA on UBS's 2028 estimates. The report identifies dependence on Elon Musk, delays in technological milestones, inability to scale or monetize AI, regulatory, geopolitical and competitive pressures, high capital intensity, supply-chain execution and unproven space-based compute models as risks.

Analysis framework

UBS combines segment forecasts for Space, Connectivity and AI with operating evidence on launches, satellite deployment, subscriber additions, compute capacity and customer agreements. It compares quarterly revenue and EBITDA forecasts with Street estimates, models longer-term launch and compute ramps, and values the company using a sum-of-the-parts and multiples-based framework.

Methodology notes

• Valuation methodsSOTP (Sum-of-the-Parts) Valuation

  Sum-of-the-parts valuation

  UBS values the company's distinct Space, Connectivity and AI businesses separately within a SOTP framework; the resulting target implies about 30x 2028 total-company EBITDA.

• Industry AnalysisSupply-demand framework

  AI compute supply-demand imbalance

  The report uses expanding compute demand and constrained available capacity to explain the expected AI revenue ramp and the strategic importance of additional GPU deployment.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Launch capacity to satellite capacity and broadband growth

  UBS links Starship launch cadence and V3 satellite deployment to greater Starlink capacity, speeds and consumer-broadband expansion.

Asset mapping & comparison

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

• Space Exploration Technologies Corp (SPCX.O)

  Primary covered company; UBS expects AI compute expansion, Starlink growth and Starship progress to support earnings and valuation.

  Strengths

  Growing AI compute capacity and cloud agreements; successful Flight 14; accelerating Starlink subscriber additions; leadership in reusable launch vehicles.

  Weaknesses

  High capital intensity and estimated US$13.2B quarterly cash burn.

  Comparison

  UBS expects Starlink primarily to take US cable share, compete somewhat with fixed wireless, and have limited impact on fiber operators.

  Risks

  Dependence on Elon Musk; technology delays; AI monetization risk; regulatory, geopolitical, competitive, supply-chain and space-based-compute execution risks.

Key data

• 3Q26 revenue forecastUS$13.8B7% above Street estimate of US$12.9B.
• 3Q26 adjusted EBITDA forecastUS$7.5B9% above Street estimate of US$6.9B.
• 3Q26 AI revenue forecastUS$7.6BExpected to lead segment growth; UBS forecasts US$15B in 4Q and US$27B for 2026.
• 3Q26 Connectivity revenue forecastUS$4.9BUp 59% year on year.
• 3Q26 Starlink net additions2.3MVersus 1.7M in 2Q; total subscribers estimated at 14.3M.
• Compute capacity~1.8GWUBS estimate for announced GPU deployment; UBS models 2.3GW at year-end 2026 and 6GW at year-end 2027.
• 3Q26 capexUS$19.3BAssociated with estimated quarterly cash burn of US$13.2B.
• Price targetUS$210.0012-month Buy-rated target; forecast price appreciation is 44.4% from US$145.47.

Impact & implications

UBS believes execution in AI compute, Starlink subscriber growth and Starship development reinforces the company’s multi-segment growth case. It sees V3 deployment as important to broadband expansion and successful Starship progress as a prerequisite for a major increase in launch capacity, while large capex and cash burn remain integral to that buildout.

Risks

• The company depends on Elon Musk as a key decision-maker.
• Technological milestones or full and rapid Starship reusability could be delayed.
• AI initiatives may fail to scale or monetize as expected.
• Regulatory, geopolitical and competitive pressures could affect execution.
• High capital intensity, supply-chain execution and unproven space-based compute models create risks.

What to watch

• Flight 15, expected by year-end, including the planned first attempt to catch the ship.
• Progress toward additional 220,000-440,000 GB300 GPUs by year-end 2026 and UBS's modeled 6GW of compute by year-end 2027.
• The ramp of Google, Anthropic, Cursor and recently announced compute deals toward approximately US$54B cloud ARR by December 2026.
• V3 constellation deployment, Starlink subscriber growth, pricing and competitive outcomes in broadband markets.
• Development of Louisiana launch infrastructure and Starship cadence toward UBS's 2027 and 2028 assumptions.