SpaceX has investors excited. Here's why we're looking elsewhere

• SpaceX is not yet profitable, but its leadership in launch services, the growing success of Starlink, and the optionality offered by its AI ambitions make it one of the most promising companies in the market today. 

• At around 56x forward 2026 sales, SpaceX trades at a substantial premium to other mega-cap technology companies, despite many of its key growth drivers—such as Starship and orbital AI data centres—remaining technologically and commercially unproven. 

• Investors should also be mindful of potential selling pressure as lock-up restrictions gradually expire, increasing the supply of tradable shares and potentially weighing on the stock's valuation. 

• For investors seeking exposure to SpaceX, semiconductor and space-focused ETFs offer a more diversified and potentially lower-risk way to participate in the growth of SpaceX and the space economy.

Is SpaceX a good business?

SpaceX has evolved far beyond a traditional rocket launch provider. Today, the company operates across three key segments—space transportation, satellite connectivity, and AI infrastructure—all supported by its ability to launch payloads into orbit at a lower cost than virtually any competitor.

Space: The foundation of the business

SpaceX is the clear leader in the commercial space industry. Since 2023, it has launched more than 80% of the world's mass to orbit annually while maintaining a mission success rate of over 99%. Its key advantage lies in reusable rockets, which have dramatically reduced launch costs compared to traditional providers. These lower costs not only support a thriving launch-services business serving commercial, government, and international customers, but also make many of SpaceX's other ventures economically viable.

The company is currently developing Starship, a next-generation launch vehicle designed to be fully reusable and capable of carrying significantly larger payloads than its Falcon rockets. If successful, Starship could further reduce launch costs per kilogram, reinforcing SpaceX's competitive advantage and unlocking new commercial opportunities.

Connectivity: Turning launch leadership into recurring revenue

SpaceX has successfully leveraged its launch capabilities to build Starlink, a satellite broadband network comprising approximately 9,600 low-Earth-orbit satellites. Starlink provides high-speed internet access across 164 countries and territories, particularly in remote areas where traditional telecommunications infrastructure is limited or unavailable.

The company has also partnered with around 30 telecommunications operators globally to provide connectivity in mobile "dead zones" and during emergencies.

AI: Building the next growth engine

In early 2026, SpaceX expanded into AI through its acquisition of xAI, bringing together the Grok large language model, the X social media platform, and large-scale data centre assets. These facilities are used to train Grok, while excess computing capacity is leased to customers such as Anthropic and Google, creating an additional revenue stream.

Looking further ahead, SpaceX plans to deploy orbital AI data centres as early as 2028. The concept aims to address challenges faced by terrestrial data centres, including rising power consumption, water usage, and land constraints. In theory, orbital facilities could harness uninterrupted solar energy while radiating excess heat into the cold void of space, potentially lowering operating costs. If successful, this could create an entirely new market for space-based AI infrastructure.

In the first quarter of this year, SpaceX generated USD 4.7 billion in revenue and USD1.1 billion in adjusted EBITDA but recorded an operating loss of USD 1.9 billion. While SpaceX is not yet profitable, its leadership in launch services, the growing success of Starlink, and the optionality offered by its AI ambitions make SpaceX one of the most promising companies in the market today.

Figure 1: Connectivity accounts for the bulk of SpaceX’s revenue and is the only profitable business segment

Why investors should not buy SpaceX at current levels

While SpaceX is undoubtedly one of the world's most innovative companies, we believe investors should exercise caution at current valuations for a few reasons.

1. A valuation that leaves little room for error

At a market capitalisation of approximately USD 2.1 trillion, SpaceX trades at around 110x 2025 sales and 55.7x forward 2026 sales. This is substantially higher than it peers with a similar market cap. For instance, SpaceX trades at more than 4 times NVIDIA’s forward price/sales.

Table 1: SpaceX is highly overvalued

	Market Cap (in USD Billions)	2025 Price/Sales	Forward 2026 Price/Sales
SpaceX	2,054.30	110.0	55.7
Broadcom	1,808.60	27.3	17.1
NVIDIA	4,841.00	21.2	12.4
Tesla	1,433.20	15.3	14
Microsoft	2,777.80	13.1	8.4
Alphabet	4,213.70	9.4	10
Apple	4,322.50	9.2	9
Meta	1,427.10	8.3	5.6
Micron	1,186.10	3.6	10.3
Amazon	2,518.30	3.4	3.1
Source: Bloomberg Finance L.P., iFAST Compilations Data as of 23 June 2026

Such a valuation implies investors are not simply paying for SpaceX's current businesses, but also placing significant value on future opportunities that have yet to be proven commercially.

Firstly, much of SpaceX's long-term growth story depends on the successful scaling of Starship and the eventual commercialisation of orbital AI infrastructure. Starship underpins the company's ambition to further reduce launch costs, increase payload capacity, and support the deployment of next-generation Starlink satellites, satellite-to-mobile services, and future orbital data centres. While the company has made impressive progress, Starship still faces significant technical challenges before it can achieve reliable, large-scale reusability.

Meanwhile, orbital AI data centres remain unproven at scale. Although the concept could theoretically benefit from abundant solar energy and lower cooling costs, key engineering challenges—including shielding processors from radiation, dissipating heat in space, and securing sufficient communications bandwidth—have yet to be demonstrated at any meaningful scale. As a result, both the feasibility and commercial timeline of these initiatives remain highly uncertain.

Secondly, investors should not assume SpaceX's current market leadership will remain unchallenged indefinitely. The company is the undisputed leader in launch economics and satellite-based connectivity today, but competitors such as Blue Origin, Rocket Lab, and emerging Chinese launch providers are investing heavily to close the gap. Any meaningful improvement in their technological capabilities could increase competition and put pressure on SpaceX's market share and profitability over time.

Thirdly, the company's AI and social media businesses have yet to demonstrate that they can become meaningful profit contributors. According to AIMultiple, Grok commands only 2.3% market share as of May 2026, well behind ChatGPT's 53.2%, Gemini's 27.8%, and Claude's 9.1%. Furthermore, Grok has yet to establish a clear performance advantage over leading competitors. Meanwhile, X continues to operate in an intensely competitive digital advertising market and has faced challenges monetising its user base effectively.

In short, a lot has to go right for SpaceX to justify its current valuation. While many of these opportunities are plausible, investors are being asked to pay a substantial premium today for businesses whose viability, timelines, and ultimate profitability remain highly uncertain.

2. Potential selling pressure from lock-up expiries

Another risk investors should consider is the increase in share supply following lock-up expiries.

Part of SpaceX's strong share price performance has been driven by a scarcity premium, with only around 4% of shares currently freely tradable. While the company has adopted a staggered lock-up structure rather than a traditional 180-day lock-up, a significant number of shares will gradually enter the market over the coming months.

Following the first quarterly earnings report, 20% of locked-up shares will be released (rising to 30% if the stock remains above USD 175), followed by four separate 7% unlocks between August and October. Another 28% will be released after the second-quarter earnings report, with the remaining shares becoming eligible for sale in December.

History suggests lock-up expiries can weigh on share prices. Shares of Rivian fell sharply following its lock-up expiry in 2022, while Reddit's share price weakened ahead of insider unlocks in 2024 despite employing a more gradual release schedule.

Many early employees and investors have accumulated substantial paper gains over the years and may choose to realise some of those gains as restrictions are lifted. While Elon Musk has stated that he does not intend to sell any SpaceX shares and remains subject to a longer lock-up period, the gradual increase in share supply could still create an overhang on the stock, making it more difficult for SpaceX to sustain its current valuation multiple

SpaceX alternatives

Investors do not necessarily need to own SpaceX directly to benefit from many of the themes underpinning its growth story.

Semiconductor companies

For investors looking to gain exposure to SpaceX's AI and satellite ambitions, semiconductor companies may offer a more attractive risk-reward proposition. Rather than betting on orbital AI data centres—an opportunity that remains years away from commercialisation and faces considerable engineering uncertainty—investors can gain exposure through the companies supplying the critical hardware.

For example, STMicroelectronics provides radio-frequency chips used in Starlink's phased-array antennas, while NVIDIA's GPUs power much of the compute infrastructure behind SpaceX's Colossus AI data centres. Importantly, these companies are not dependent on SpaceX for growth. Demand for semiconductors continues to be driven by hyperscalers, enterprise AI adoption, and broader digitalisation trends, providing investors with multiple avenues for growth.

For diversified semiconductor exposure, investors can consider ETFs such as the VanEck Semiconductor ETF (NASDAQ: SMH) or the Global X Asia Semiconductor ETF (HKEX: 3119). Between the two, we currently prefer 3119 due to its more attractive valuation.

Space ETFs

Investors seeking more direct exposure to the space economy may also consider dedicated space-themed ETFs. These funds provide diversified exposure to a broad range of companies involved in satellite communications, launch services, and related technologies, reducing the single-company risk associated with investing directly in SpaceX.

That said, investors should note that many space ETFs were launched only recently and therefore have limited performance track records. Among the three funds with around four years of history, the VanEck Space Innovators UCITS ETF has delivered the strongest performance, generating an annualised return of 43.7% since June 2022, compared with around 24% for both the Procure Space ETF and ARK Space & Defense Innovation ETF. Expense ratios are also broadly comparable across the category, with most passive ETFs charging around 0.50%, while actively managed funds charge approximately 0.75%.

Table 2: Space ETFs

	Management Style	AUM	Expense Ratio	90D Avg Agg Vol	Inception Date
Global X Space Tech ETF (NASDAQ:ORBX)	Passive	USD 43.9M	0.50%	99.8k	15 April 2026
Procure Space ETF (NASDAQ:UFO)	Passive	USD 784.6M	0.75%	1.1M	11 April 2019
Tema Space Innovators ETF (NYSE: NASA)	Active	USD 1.55B	0.75%	6.3M	31 March 2026
ARK Space & Defense Innovation ETF (BATS:ARKX)	Active	USD 873.1M	0.75%	1.1M	30 March 2021
VanEck Space Innovators UCITS ETF (LSE:JEDI)	Passive	USD 2.0 billion	0.55%	652.9k	29 June 2022
Roundhill Space & Technology ETF (BATS: MARS)	Active	USD 71.7M	0.75%	155.5k	5 March 2026
Source: Bloomberg Finance L.P. Data as of 25 June 2026.

Finally, investors may not need dedicated exposure to SpaceX at all. The company is set to join the Nasdaq-100 on 6 July and could increasingly become a constituent of other technology-focused and even broad-market portfolios over time. While inclusion in the S&P 500 may still be some way off, it remains a possibility if SpaceX eventually meets the index's eligibility requirements. In other words, many investors may end up owning SpaceX in the future—whether they actively choose to or not.

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.