SpaceX Wins a Buy Rating While Its Biggest Questions Stay Unanswered

PhillipCapital's decision to flip SpaceX from sell to buy is the loudest signal to come out of the company's third-quarter report — louder, certainly, than anything Elon Musk said this week. The broker lifted its price target to $250 from $75, with analyst Glenn Thum pointing to new cloud contracts signed at higher rates, the revenue contribution from Cursor, and growing demand from enterprise and government clients in the connectivity unit. That is a bet on business already booked, not on applications still over the horizon.

The numbers behind the upgrade are hard to argue with. SpaceX booked $14.58 billion in revenue for the third quarter of 2026, up 161% year on year, and swung to a net profit of $4.4 billion from a $1.1 billion loss a year earlier. Artificial intelligence revenue alone reached $7.6 billion.

A capital-hungry model beneath the headline profit

What the profit line does not capture is the scale of spending required to keep the engine running. SpaceX plowed $19.6 billion into investments during the same quarter, and it has guided to capital expenditure of $35–40 billion for the fourth quarter of 2026. Those two figures — earnings and outlays — measure different things and do not imply a funding shortfall. They do explain why a single strong quarter tells only part of the story.

Leased data-center capacity underpins the AI business, which means the company's expansion now depends on power, cooling and a steady stream of new infrastructure. UBS reckons SpaceX is targeting 13 GW of AI computing capacity by the end of 2027 and puts the investment needed at roughly $350 billion — an estimate, not an invoice. PhillipCapital flags the practical constraint plainly: shortages of electricity and cooling capacity could slow growth. A signed cloud contract does not a working site make.

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Merger talk: still a possibility, not a deal

Alongside the operational story, SpaceX confirmed in a regulatory disclosure published yesterday that no decision has been taken on a potential combination with Tesla. The two companies are examining the idea; they have not reached terms. Any transaction would need sign-off from SpaceX's special committee, its board and controlling shareholder Elon Musk — and Musk has recused himself from the discussions, so his personal enthusiasm does not stand in for the required corporate approvals.

On Tuesday Musk had described a tie-up as a "good idea" and confirmed that both companies had formed special committees to study it, while cautioning against treating the combination as certain. The Wall Street Journal reports that those committees include independent directors. No conditions have been agreed.

Analysts see a larger structure potentially easing AI investment and debt financing — relevant given the capital demands — but Reuters notes the added complications: possible security reviews tied to Tesla's China business and SpaceX's US defense work. Bulk may help with funding without making execution any easier.

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A separate bet on terrestrial mobile

SpaceX is also pursuing a nationwide mobile offering, holding talks with telecom infrastructure firms about access to at least 80,000 US cell sites. That could advance its ambition to become a fourth national carrier. Talks, however, are not secured access rights, and the initiative sits apart from the open Tesla question.

For investors, the distinction that matters is between studying a merger and agreeing to one. Neither the disclosure nor Musk's comments point to a fixed transaction structure or a completed understanding between the two companies. The upgrade reflects confidence in the demand story; the buildout itself still has to deliver the economic proof.

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