Morgan Stanley: SpaceX AI business worthless if stock falls to $100

Morgan Stanley analyst Adam Jonas has indicated that if SpaceX's stock price falls to $100 per share, it would suggest the market is assigning zero value to the company's artificial intelligence (AI) initiatives. The space exploration company experienced a turbulent debut after its record $86 billion IPO in mid-June. The stock initially surged by nearly 50% in the first three trading days but subsequently reversed course, hitting a low of $110.85 earlier this week, an 18% drop from its offering price.

Jonas stated in a client note that the significant divergence between pessimistic investor sentiment and SpaceX's largely unchanged fundamentals presents an attractive buying opportunity. He believes that many investors are discounting the value of SpaceX's AI ventures, such as its Grok chatbot and Cursor tool. Concerns over substantial capital expenditures for AI, an uncertain business model, and the significant management time dedicated to these efforts have led some investors to view the AI segment as having no value or even being a drag on the overall valuation.

The sell-off in SpaceX shares occurs amidst a broader market trend of capital withdrawal from technology companies planning billions in AI and supporting infrastructure investments. Factors such as macroeconomic instability and geopolitical tensions contributing to rising oil prices and inflation fears are making investors more risk-averse.

Despite these concerns, a majority of Wall Street analysts maintain a positive outlook on SpaceX. Approximately 80% of analysts covering the company recommend buying the stock, with an average price target of $232, suggesting potential for more than a double from current levels. Leading investment banks involved in SpaceX's IPO, including Goldman Sachs and JPMorgan, have also issued buy recommendations.