PhillipCapital upgrades SpaceX to buy as AI growth drives a $250 price target

PhillipCapital reversed its bearish position on SpaceX on October 23, upgrading the stock from sell to buy after stronger-than-expected AI revenue. The firm’s new price target implies almost 73% upside from Thursday’s close, CNBC reported. Yet the analyst behind the upgrade still expects power and cooling constraints to delay the computing business’s growth.

The earnings that changed the call

The reversal followed SpaceX’s third-quarter results, released Tuesday. Revenue reached $14.58 billion, and adjusted earnings came to 45 cents per share. Both beat expectations. SpaceX also recorded its first profit as a publicly traded company, giving PhillipCapital a profitable quarter to weigh alongside its forecasts for further growth.

In his Friday note, analyst Glenn Thum identified three drivers of that profit: AI cloud services, connectivity revenue and operating leverage. His explanation tied the earnings improvement both to higher rental prices for computing capacity and to a larger contribution from enterprise and government customers.

Within the AI business, branded “Super Intelligence,” new cloud-services agreements began generating revenue at higher rental prices, Thum wrote. Cursor added $608 million from mid-August. He also credited higher-margin cloud services with turning the AI business profitable, making the mix of revenue—not just its size—part of his explanation.

The improvement was not confined to AI. Aviation installations and Starshield contracts lifted enterprise and government revenue by 91% year over year, according to Thum. Connectivity was therefore a separate contributor to the company’s profit, even though stronger AI revenue drove PhillipCapital’s change in stance.

Higher prices strengthen the investment case

Thum’s revised assessment rests on demand for computing capacity running ahead of supply. He said contracts are renewing at higher prices per watt and that new capacity pays back in under a year. Those are his assessments of the business’s pricing and investment returns, rather than guarantees of future results.

SpaceX shares were up 2% in Friday’s premarket trading. That early move was distinct from the much larger gain implied by PhillipCapital’s target: the almost 73% figure measures the distance from Thursday’s closing price to the analyst’s $250 valuation, not a gain the shares had already delivered.

A bullish rating, a slower expansion forecast

The upgrade did not eliminate Thum’s reservations about expansion. He expects cooling and power constraints to delay the rollout of additional computing capacity. His full-year 2027 revenue forecast remains below the pace suggested by extending SpaceX’s first-quarter guidance across the year, despite his upward forecast revisions.

Thum said the company’s guidance implies first-quarter 2027 revenue more than double the third-quarter 2026 total. His buy recommendation therefore sits alongside a less aggressive view of the year ahead: he sees enough demand and pricing strength to favor the stock, but still expects physical limits to slow capacity growth.