Two days before Argus Research spoke, investors were heavily selling SpaceX (SPCX) stock.
The company had just posted its first earnings report as a public firm, and the market focused on one number: how much SpaceX is spending on artificial intelligence.
The stock fell. Then Argus looked at the same report and reached the opposite conclusion.
On August 7, the firm upgraded SpaceX to Buy from hold. The market had been treating AI spending as a problem. Argus decided it was the reason to own the stock.
Shares responded fast. SPCX rose 15.8% in a single session, closing at $133.11.
For investors, the difference in views raises a practical question. When a stock drops on the same news that makes one firm bullish, who is reading it correctly, and what should you do about it?
What the Argus upgrade actually says about SpaceX stock
Argus analyst Steven Silver moved SpaceX to Buy and set a $160 price target, according to CNBC.
That target sits well above where the stock trades now. From the $133.11 close on August 7, $160 implies room to rise further.
Silver’s reasoning is direct. He said he is encouraged by the fast payback on SpaceX’s AI spending, because the company is adding computing capacity quickly.
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The $160 target values SpaceX at about 20 times its estimated 2027 revenue, TipRanks reported. Argus expects that revenue to reach $110 billion in 2027.
That is a high multiple. It only holds if SpaceX keeps growing at the pace it just showed.
Why SpaceX’s AI spending scared the market first
SpaceX spent $18.4 billion on capital projects in the second quarter. About $15.83 billion of that went to AI infrastructure, far above what analysts had modeled, CNBC reported.
Wall Street had estimated roughly $13 billion. The real figure was much larger, and management signaled similar spending ahead.
SpaceX is pouring cash into data centers and computing power now, and the payoff comes later.
When a company spends that far ahead of its earnings, investors worry the returns may never catch up. That fear drove the sell-off.
The AI segment still lost money in the quarter. Its operating loss was about $1.3 billion.
How Argus reads the same numbers differently
Argus did not get new data. It weighed the numbers already released and judged the spending as an investment that is working.
The key figure is a comment from SpaceX finance chief Bret Johnsen. He said the company is getting less than a one-year payback on some of its AI computing spending, according to Benzinga.
A one-year payback means the money spent on a data center is earned back within about 12 months. That is fast for infrastructure this large.
The demand behind it is real. SpaceX signed $14.1 billion in new cloud contracts during the quarter, then added $6.7 billion more early in the third quarter.
Its AI revenue rose 247% from a year earlier, to about $2.56 billion. Customers already include Google and Anthropic.
The revenue growth that supports the bull case
Behind the AI debate is a business growing quickly.
SpaceX reported second-quarter revenue of $7.81 billion, up 92% from a year earlier. That beat the $6.93 billion analysts expected. Its net loss narrowed to $541 million.
Starlink, the satellite internet service, remains the engine. It posted a $1.66 billionoperating profit in the quarter and now serves 12 million subscribers across more than 160 markets.
Related: SpaceX stock defies latest Wall Street forecasts
The company projects an annualized revenue rate approaching $100 billion by the end of 2026.
Elon Musk moved his $1 trillion annual revenue goal forward to 2030 from 2031.
Those are targets, not results. But the quarter gave the bulls, including Argus, a concrete reason to believe the growth is arriving.
SpaceX stock since its IPO
SpaceX went public on June 12 at $135 a share. It climbed above $225 within its first week, then fell for five straight weeks.
Since the public offering SPCX is down about 17%. The stock sits well below its June high of $225.64, which is also its 52-week high.
The broader market went the other way. The S&P 500 is up about 13% for the year, as of early August.
So a buyer of SPCX at the IPO is still losing money on that trade, while a buyer of an index fund has made a gain.
That gap is exactly what Argus is betting will close.
What still has to happen for the $160 target to work
An upgrade is a forecast, not a guarantee. Several things must go right for SpaceX to reach $160.
Four things the bull case needs
- AI revenue keeps scaling. The $2.56 billion needs to keep climbing to justify the spending.
- The AI segment turns profitable. It reached positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), but still loses money on an operating basis.
- Selling pressure fades. On August 6, a lockup ended and freed 911.5 million insider shares, more than doubling the tradable float.
- Spending stays disciplined. Full-year capital spending is tracking toward roughly $65 billion.
Other firms remain more cautious. Piper Sandler holds a neutral rating with a $140 target, citing valuation and the end of the share lockup.
What investors should take from the Argus call
Argus’s upgrade is not a guarantee that SpaceX stock will climb back up soon.
It tells you that at least one experienced firm sees SpaceX’s AI spending as a good move, and it puts a target of $160 on that view.
However, the stock is volatile, and more shares will keep unlocking through December. That means further price swings are likely, regardless of what the long-term outcome may be.
A practical approach lies in these two questions:
First, do you believe SpaceX can turn its spending into profit over several years? Second, is today’s price a reasonable entry point given the possibility of more near-term selling?
Argus answered yes to the first. The second is a decision only you can make.
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