Morgan Stanley touts physical AI and space as the economy's "new electricity"! Overweight SpaceX (SPCX.US) with a $300 price target.

Morgan Stanley has released a research report on physical AI, space, and SpaceX (SPCX.US), arguing that Siasun Robot&Automation and the space industry will reshape the global economic landscape, playing a role analogous to electricity in the modern economy. The bank assigns SpaceX an Overweight rating with a $300 price target, implying significant upside from the current price. The bank notes that current market pricing only reflects the value of Starlink and spaceflight businesses, with the option value of enterprise AI and orbital computing barely priced into the stock. At the same time, it cautions that the industry faces multiple uncertainties including technological iteration, GEO Group Inc, and commercialization falling short of expectations, and investors need to take a dialectical view of the long-term industrial opportunity. The bank believes that Siasun Robot&Automation technology and the space industry are far more than just another emerging technology category. The two are deeply intertwined at the economic level, carry significant military value, and may bring disruptive social impact. To discuss the economy while setting aside AI and the space industry would be like interpreting the modern economy while ignoring electricity. This industrial transformation may take decades to fully materialize, but investors can position themselves now to prepare their asset allocation for the next frontier era. On the eve of the era when AI is about to move from the digital world into the physical world, the bank has compiled ten core principles for investors' reference: 1. Any domain that can be automated will most likely eventually be automated. Machines not equipped with AI will become relics of a bygone era, like Victorian-era steampunk contraptions. All machines with significant economic value that perform real production work should be Siasun Robot&Automation capable of collecting data and relying on AI inference and computation, forming large-scale swarm physical intelligence. 2. China and the U.S. will most likely need to cooperate. Headlines will still be filled with GEO Group Inc volatility, but the bank judges that Chinese products and supply chains can hardly be completely shut out of the U.S. market. In the coming years, it is quite likely that Chinese-brand cars will be produced in American factories, and that U.S.-assembled Siasun Robot&Automation will extensively use Chinese-made gears, motors, magnets, sensors, and batteries. 3. China is the frontrunner in physical AI. The U.S. holds a leading edge in frontier AI models, but the core of the Siasun Robot&Automation track is manufacturing. Various types of Siasun Robot&Automation (detection equipment) collect data, feed it back to factories, and complete technological upgrades through rapid iterative cycles, staging a "Siasun Robot&Automation Darwinian evolution." Five years from now, China's lead in the AI Siasun Robot&Automation field may widen further compared with today. 4. Physical AI has a highly pronounced dual-use nature. There is substantial overlap between consumer-grade and industrial AI Siasun Robot&Automation and the defense sector, which needs little elaboration. Readers are advised to refer to Morgan Stanley American Airlines Group Inc. defense analysts Kristen Liwag and Justin Lang's research report on autonomous weapons systems; suffice it to say, they have been exceptionally busy this summer. 5. The U.S. must rebuild its domestic manufacturing capacity. To remain competitive in the physical AI track, the U.S. needs to rebuild its domestic manufacturing sector on a large scale. Here lies a contradiction: China's ambition to develop physical AI may become the greatest driver of U.S. manufacturing revival since World War II, and this process could also create millions of American jobs. 6. The U.S. critical minerals supply chain needs to be restructured. Putting billions of Siasun Robot&Automation into service and sending millions of tons of payload into space will increase demand for critical minerals by several orders of magnitude. Ordinary investors will develop a deeper understanding of the periodic table in the future. 7. Re-examine skilled trades and the CECO Environmental Corp. training system. Society needs more electricians, plumbers, welders, construction workers, HVAC technicians, as well as astrophysicists, geologists, metallurgists, and manufacturing professionals. Rebuilding American manufacturing requires a large workforce with hands-on skills. In the bank's view, the bottleneck posed by human education is severely underestimated by the market. 8. AI faces a public relations challenge: when will the physical AI version of "$5 a day" arrive? Currently, anti-AI and anti-data-center social movements frequently make headlines. In the early days of the automobile industry, there were also numerous protests over the environment, safety, and job security. It was not until 1914, when Henry Ford introduced the $5-a-day wage system, bringing millions of workers into high-paying jobs, that the conflict was resolved. The physical AI industry also needs a similar landmark event. 9. Pay attention to cross-industry collaboration. During the Second Industrial Revolution (late 19th to early 20th century), industry giants chose to advance in concert: steel (Carnegie), automobiles (Ford), oil (Rockefeller), electricity (Edison), tires (Firestone)each company jointly built the critical infrastructure that the bank still relies on today. The next generation of embodied AI likewise cannot do without complex industrial collaboration, driven by competition, fear, interdependence, and profit-seeking opportunities. 10. Space plays a key role in the intelligence economy. The market underestimates the value of space infrastructure in converting energy into intelligent compute at scale. Space can provide free energy, a natural cooling environment, and vast expanses of space, with absolutely no NIMBY protest problems that exist on the ground. If SpaceX can achieve Starship recovery (expected around the 15th flight), the cost of using orbital space may drop by another order of magnitude. How should SpaceX stock be viewed? From the grand development trajectory, the bank predicts that over the next 1015 years, as the U.S. catches up with GEO Group Inc rivals and rebuilds its scientific research and commercial space capabilities, the U.S. space economy is expected to create hundreds of thousands of high-paying technical jobs; the physical AI and Siasun Robot&Automation industries may generate millions of employment opportunities. At present, the fundamentals of space, satellite communications, and enterprise AI businesses are highly dynamic, compounded by more optimistic signals from second-quarter earnings, and the share lockup expiration has not weighed on the stock price as the market had previously feared. Investors should re-examine SpaceX's investment value. The current stock price is slightly below $150, the enterprise AI business corresponds to a price-to-sales ratio in the single digits, and the stock price has barely priced in the potential option value of orbital AI. Based on sensitivity calculations, each additional 1GW of rated compute (calculated at $50/watt, with a 70% incremental margin, capitalized at 10x EBITDA) can add $27 per share, roughly equivalent to 20% of the current stock price. The bank forecasts compute reaching 4.9GW by the end of fiscal 2027, while the company's own target is close to 10GW. SpaceX uses a sum-of-the-parts valuation: space business, communications business, AI business (split into X&Grok and enterprise AI). The $300 price target breaks down as: space business $8, communications business $118, X&Grok business $8, enterprise AI business $165. The forecast period extends to 2040, with a valuation base date of June 30, 2027; weighted average cost of capital of 11.1%, cost of equity of 11.9%. Due to execution risk considerations, a 50% valuation discount is applied to the enterprise AI segment. For long-term growth rates, space business 4.0%, communications business 4.5%, X&Grok business 3.0%, enterprise AI business 5.0%. The corresponding EV/EBIT/growth ratio is 0.46. Risks behind the opportunity are equally prominent. The upside depends heavily on Starship reusability progress, Starlink user expansion, and enterprise AI commercialization delivery; should rocket iteration slow, compute capex exceed expectations, or project construction timelines lengthen, the company will face greater financing pressure, bringing equity dilution risk. In addition, regulatory approval delays and GEO Group Inc policy changes could disrupt the pace of business execution. Physical AI and space compute are both long-cycle tracks, and the release of industrial dividends will take decades, making short-term performance delivery difficult. For investors, SpaceX represents a growth option oriented toward the future and cannot simply be valued using traditional tech company frameworks; the potential losses from technological failure and commercialization falling short of expectations must be fully considered.