Why SpaceX's stock is surging - and lifting the broader AI universe along with it

An earlier version of this story misspelled the name of SpaceX CFO Bret Johnsen. By Christine Ji and Nora Redmond

SpaceX just gave Wall Street a big reason to believe in the AI boom as demand for its computing power is off the charts

CEO Elon Musk said SpaceX could have up to 20 gigawatts of data-center capacity by the end of 2027.

Shares of SpaceX are staging big gains on Wednesday after the company's results and investor presentation put its artificial-intelligence momentum on full display.

SpaceX's (SPCX) third-quarter revenue grew 161% from the year before to $14.6 billion - and the star of the show was its superintelligence division, which has grown nearly 830% over that span. For the first time in a quarter, SpaceX had more than half of its sales come from this unit, which includes business functions like selling artificial-intelligence computing power.

Analysts at RBC Capital Markets, led by Ken Herbert, called the unit the "standout" in what was another positive quarter for SpaceX.

The earnings call was also packed full of optimistic signals for the broader AI landscape, sending shares of companies like Nvidia (NVDA) rising in morning trading on Wednesday. The PHLX Semiconductor Index is up 1.3%.

SpaceX shares were up more than 11% and on track for their largest one-day gain since Aug. 7, according to Dow Jones Market Data.

Tesla's stock (TSLA) advanced almost 4% after CEO Elon Musk said both companies had formed special committees to discuss the possibility of a merger - a move that the world's wealthiest man said he would support.

Cantor Fitzgerald analysts headed by Colin Canfield called out management's "materially higher-than-expected revenue commentary" for the following year, solidified semiconductor supply-chain timelines and a better-than-anticipated cash-flow trajectory.

Musk laid out ambitious targets of scaling the company's data-center capacity to potentially 20 gigawatts by the end of 2027, or at least 13 gigawatts, up from just 1.7 gigawatts at the end of the third quarter. And while investors have recently been concerned about the sustainability of demand for compute, or AI processing power, SpaceX's earnings call showed that the company is not seeing any slowdown.

Musk said that SpaceX is "hounded relentlessly by every hyperscaler and by dozens of smaller companies to rent more of our compute." The computing-power pricing is extremely favorable for SpaceX, allowing it to generate a payback in less than a year, with the possibility of a six-month payback next year, the company said.

Analysts at Morgan Stanley, led by Adam Jonas, said they weren't completely incorporating Musk's comments into their valuation model just yet.

"For 2027, we are being conservative relative to guidance at this time while still modeling a notable acceleration on the compute ramp given lack of clarity on securing power, steep execution risks, and financing overhang," they wrote, adding they forecast AI computing power of 8.3 gigawatts at the end of 2027.

Outsize demand for both SpaceX's AI software and hardware rental offerings gave investors confidence that SpaceX can handle its elevated spending plans. For the quarter that ends in December, SpaceX forecasts it will spend $35 billion to $40 billion on physical infrastructure - a significant jump from the $19.6 billion spent this quarter.

Investors were also pleased by the company's forecast for the coming quarters. SpaceX confirmed that it is on track to reach an annual recurring revenue run rate of $100 billion by December. That metric could be between $500 billion and $1 trillion by the end of 2027, thanks to strong adoption of Grok Bot, Musk said on the earnings call.

For the first quarter of 2027, the company is aiming for revenue between $33 billion and $37 billion, with CFO Bret Johnsen saying the company has clearer visibility in its pipeline of computing contracts over the next six months.

That early first-quarter outlook is vastly ahead of the $22 billion that analysts tracked by FactSet expected for the period.

-Christine Ji -Nora Redmond

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10-21-26 1010ET