Key Points

• The quiet period for SpaceX is over, giving some sell-side analysts their first chance to issue equity research on the company.

• The majority of analysts covering SpaceX are bullish, but Raymond James is calling for particularly outsize gains.

• While the bull case for SpaceX is appealing, a lot will have to go right for the company in order for it to turn potential into profits.

• 10 stocks we like better than Space Exploration Technologies ›

After a company completes its initial public offering (IPO), Wall Street analysts who work at the banks that underwrote the offering must refrain from issuing equity research about it for a specific period of time. This is known as the quiet period. For Elon Musk's Space Exploration Technologies (NASDAQ: SPCX), that period just ended.

Unsurprisingly, a flurry of reports from sell-side analysts just dropped. While the consensus across Wall Street is generally bullish for SpaceX, one analyst in particular sees outsized potential for the stock. Brian Gesuale of Raymond James has initiated coverage with an $800 price target. This is the highest forecast among analysts, and points to an upside of about 425% from SpaceX's current trading levels.

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The optimism stems from a glowing view that SpaceX will emerge as a provider of the foundational infrastructure layer of the 21st century. Let's consider what that means, as well as how investors should assess Wall Street analysts' research.

Here's the math behind SpaceX's $800 price target

Raymond James believes that SpaceX's total addressable market will approach $30 trillion in the long run. Of note, this is slightly larger than the $28.5 trillion addressable market that SpaceX asserted that it had in its S-1 filing.

The financial services firm's forecast rests on a number of factors. In particular, to fulfill the bullish forecast, the company would need its Starship rocket to achieve commercial maturity, slash the cost of orbital deliveries by more than 99%, and boost payload capacity by an order of magnitude. By doing so, SpaceX would essentially convert what is now a bespoke orbital launch business into a high-cadence transportation network similar to commercial aviation.

Gesuale anchors his thesis in SpaceX's infrastructure flywheel. His model assumes the company will generate revenue of roughly $38.5 billion and earnings before interest, taxes, depreciation, and amortization (EBITDA) of $17.7 billion this year. By 2031, Gesuale sees a path for SpaceX to scale revenue by more than 20x to more than $837 billion, while EBITDA expands to $696 billion. The firm's valuation forecast follows a discounted cash-flow model that uses a 27x exit multiple applied to the 2031 estimated EBITDA figure.

Progress in AI compute, potential in telecom

While Gesuale's forecast may appear a bit overzealous, some of his modeling can be supported by SpaceX's aggressive expansion into artificial intelligence (AI) infrastructure. Over the last month, SpaceX has signed multiyear, multibillion-dollar capacity-leasing agreements with Google Cloud, Anthropic, and Reflection AI.

By deploying graphics processing unit (GPU) clusters in its Colossus data centers and monetizing them through these agreements, SpaceX swiftly created a recurring revenue stream that complements its rocket-launch and satellite-broadband operations. These deals help validate the convergence narrative: AI training and inference demand massive, reliable power and connectivity -- areas where SpaceX's vertically integrated platform already offers competitive advantages.

This narrative dovetails with an analysis published by investment bank Oppenheimer, which sees Starlink becoming a disruptive force in the $1.6 trillion U.S. communications industry. Starlink's expanding subscriber base could begin to threaten legacy wireless carriers, specifically in rural areas, and it has the potential to extend its business into mobile handsets. Becoming further entrenched in critical applications beyond connectivity could reduce churn and enhance Starlink's pricing power.

Taken together, the AI compute deals and Starlink's potential telecom trajectory reinforce the broader flywheel: Starlink revenue helps fund Starship development, which in turn lowers the unit economics for deploying AI compute infrastructure and satellite constellations at scale.

Should investors buy SpaceX stock right now?

Despite the exciting long-term vision some have for the company, pouring substantial capital into SpaceX stock at current levels carries risk. The $800 price target assumes flawless execution on Starship's development timeline, regulatory approvals for frequent launches, and the successful scale-ups of both its satellite constellations and its data center services. Delays in any of these areas could materially impede SpaceX's growth trajectory and put pressure on its near-term cash flow.

As a recently public company, SpaceX also faces natural post-IPO volatility, governance considerations tied to Musk's concentrated leadership, and the possibility that its optimistic valuation multiples have already priced in aggressive growth assumptions. In addition, macroeconomic shifts such as decelerating AI capital expenditure from the hyperscalers or slower enterprise adoption of new connectivity platforms could drag on the company's financials.

While Raymond James' infrastructure thesis for the company offers a coherent framework, smart investors should also carefully weigh the execution and market risks. By dollar-cost averaging their way into a position gradually, or waiting for the company to hit some more key operational milestones before making a decision on whether or not to buy, investors can gain a more balanced view, and likely find a more reasonable entry point than they'd get by making an all-in financial commitment today. While SpaceX's upside case is compelling, the path to multibagger gains is never guaranteed, and it never comes without significant hurdles.

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Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.