RBC Says SpaceX Stock Has 50% Upside. S&P Global Just Warned About Its Hidden AI Debt. Here’s Who I Think Is Right.

Last week, analysts at RBC and S&P Global released arguably opposing takes on Space Exploration Technologies (SPCX +1.14%), aka SpaceX. While the sell-side firm (RBC) reiterated its bullish view on SpaceX — a space stock and one of the top artificial intelligence (AI) stocks — the analysis from the ratings agency suggests it may be time to exercise caution.

There is substance to RBC’s bull case, but S&P Global’s warning regarding hidden AI debt at hyperscalers suggests investors should tread carefully.

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Strong results led to RBC’s bullish note on SpaceX

RBC’s reiteration of its outperform rating and $225-per-share price target comes following SpaceX’s latest quarterly earnings release. On Oct. 20, the company reported $14.6 billion in revenue and $4.4 billion in earnings. Revenue was up 161%, while earnings made a big swing from a reported $1.1 billion loss during the prior year’s quarter.

SPCX – Space Exploration Technologies

$148.58+$1.68 (+1.14%)

NASDAQ · As of 4:00 PM ET 10/27/26

The big factor behind SpaceX’s earnings smash was Starlink satellite internet network, which reported revenue and operating income of $5.25 billion and $2.4 billion, respectively. And management provided bullish guidance for Q1 2027, with a revenue forecast of $33 billion to $37 billion, well above Wall Street estimates of $22 billion. On the earnings call, founder Elon Musk noted that the company is building out its AI capacity faster than competing hyperscalers.

Hyperscaler debt and S&P’s cautious view

Musk may claim to be hyperscaling faster than competitors, but according to S&P Global, the company could be overextending itself. Per the ratings agency, the six top companies for hyperscaling — including SpaceX — plan to spend $7 trillion on AI through 2029, including guarantees that don’t appear as debt on their balance sheets.

SpaceX’s AI capital expenditures totaled $19.6 billion last quarter, with estimates calling for that figure to rise to $35 billion to $40 billion this quarter. Recently, SpaceX has been finalizing financing for a $40 billion off-balance-sheet debt structure to fund its AI build-out.

While SpaceX’s wager could pay off in time, for now, the jury’s still out. With trillions at stake, take your time before adding to or entering a SpaceX position.

Thomas Niel 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.

Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.