Ahead of Space Exploration Technologies Corp’s (NASDAQ:SPCX) first quarterly earnings release on August 4, analysts at Bernstein said investors should focus less on the financial results themselves and more on management’s confidence in the company’s long-term growth strategy. According to the brokerage, several strategic milestones will ultimately determine whether SpaceX can justify its current valuation.
Bernstein recently initiated coverage of SPCX with an Outperform rating and a $239 price target.
1. Fully Reusable Starship Rockets Remain the Biggest Catalyst
Bernstein believes the single most important factor supporting SpaceX’s valuation is the successful reuse of both stages of its Starship rocket.
Under the firm’s projections, SpaceX could complete approximately 3,600 launches during 2031, a target that would only be achievable if Starship becomes fully reusable.
Although the company has successfully landed Starship V2 boosters, analysts noted that V3 boosters have yet to achieve a successful landing. They also pointed out that several engines failed to ignite during Launch 13 on July 20, although they continue to expect reusable booster operations to become a reality over time.
The brokerage estimates that meeting its launch assumptions would require at least one launch every day.
“Frequency of launches will also be tied to the number of launchpads. Today there are two, with the addition of two more coming. The company is in negotiations with state governments to determine where the next five or six will be located,” the analysts added.
2. Semiconductor Supply Could Become a Major Challenge
Another issue attracting investor attention is whether sufficient semiconductor manufacturing capacity will be available to support SpaceX’s long-term plans.
Bernstein believes there is a realistic path to securing the necessary chip production, although doing so would require enormous investment over several years.
Its projections estimate that approximately 20 gigawatts of additional orbital capacity could be deployed during 2031. Achieving that objective would require roughly 170,000 satellites, assuming each satellite operates with approximately 120 kilowatts of power and consumes around 2.8 million semiconductor wafers annually.
To support that level of production, SpaceX would need approximately 50,000 wafer starts every month, equivalent to around five semiconductor fabrication plants dedicated exclusively to the company.
Bernstein estimates that building this manufacturing capacity would require investment exceeding $160 billion.
3. Regulatory Approval Remains a Critical Hurdle
Bernstein also highlighted regulation as one of the biggest uncertainties surrounding SpaceX’s expansion strategy.
Many investors remain unconvinced that the company will be able to accelerate its launch schedule while continuing to satisfy increasingly complex regulatory requirements.
The analysts noted that SpaceX has not yet received approval for orbital Starship flights.
Although environmental regulations remain significant, the Federal Aviation Administration (FAA) has already indicated that some restrictions will be relaxed to support a higher frequency of launches.
Bernstein believes those measures should benefit launch activity in the near term. However, the firm also warned that regulatory oversight could become more demanding if annual launches eventually number in the thousands, particularly under a future administration with a different policy approach.
The analysts also noted that telecommunications regulations differ widely across international markets, creating additional complexity as SpaceX expands globally.
4. Massive Computing Capacity Will Be Essential
Bernstein’s fourth major consideration centres on computing infrastructure.
Although Elon Musk has previously suggested that SpaceX could eventually deploy one terawatt of computing capacity into orbit each year, Bernstein believes current plans remain relatively limited.
“Making the orbital data centre program a success still depends on having a huge volume of compute power,” the analysts said.
The firm added that there is little historical precedent for maintaining large amounts of unused computing capacity. If SpaceX intends to build a successful orbital data centre business, securing enormous computing resources will be essential.
At the same time, Bernstein cautioned that the current race to expand AI computing infrastructure may be moving too quickly. The analysts suggested that lower-cost alternatives for delivering computing capacity could eventually prove more attractive than the current investment trajectory.