SpaceX Valuation Hinges on Future Bets Being Met

SpaceX's valuation has drawn scrutiny, but its potential for growth is undeniable. With a total addressable market (TAM) of $28.5 trillion and a focus on artificial intelligence (AI), the company's stock price may see significant returns in the long term. The AI side of SpaceX's business, which involves renting out compute power and AI infrastructure, has been seeing great returns with a payback period of less than a year.

This is significantly better than other major players like Amazon and Alphabet, which have reported payback periods of two to three years. However, the surge economics that drive this growth won't last forever, and investors are not placing a $2 trillion valuation on SpaceX as a neocloud company.

For the stock to work over the long term, some of SpaceX's big future bets will need to pay off. This starts with Starship and finding a way to recapture both the super-heavy booster and upper stage of the rocket for rapid reuse. Achieving this at scale could help justify SpaceX's current valuation and push its shares significantly higher.