SpaceX (SPCX.US) under a US$500 billion growth vision: Morgan Stanley bets on an AI computing power explosion, while the "Big Short" warns of a bubble

SpaceX (SPCX.US), the "AI + space exploration" super-giant founded and led by Musk, staged a strong rebound last Friday after a sharp selloff triggered by Democrats sweeping both chambers of Congress in the midterm elections. Wall Street financial giant Morgan Stanley remains bullish that the stock could climb toward US$300, while "Big Short" Michael Burry questions whether the company's high valuation can be sustained and places it at the forefront of the "AI bubble" risk. The real disagreement between the two sides is whether SpaceX can convert the synergies among rockets, satellite communications, and AI computing power into sustained cash flow sufficient to support a trillion-dollar valuation. On November 5, SpaceX fell 9.05% to close at US$123.62; the next day it rebounded 8.62% to close at US$134.27, still not fully recovering Thursday's losses. Based on Friday's closing price, Morgan Stanley's US$300 target price implies about 123.4% upside, but the Morgan Stanley analyst team's US$75 bear-case scenario also implies about 44.1% downside. The wide gap between target prices reflects sharply different assumptions about technology deployment, commercialization speed, and capital supply. Michael Burry, known as the "Big Short" and one of the real-life inspirations for the film "The Big Short," has continued to warn through his Substack column about high AI valuations, returns on capital expenditure, and crowded-trade risks, expressing his views through instruments such as put options. He previously shorted popular stocks including NVIDIA Corporation, Micron, Tesla, Inc., and Applied Materials, but has recently adjusted his positioning, concentrating his main bearish exposure in Nasdaq- and semiconductor-related instruments. The latest notable change is that Burry sold 25% of his VanEck Semiconductor ETF put options during the November 5 tech-stock rout, partially locking in gains while retaining a relatively large remaining position, and continues to be bearish on QQQ (Nasdaq 100 Index ETF), Palantir, Oracle Corporation, and Carter's Incorporated. These latest bearish positions continue to show that he is still betting on a valuation and capital expenditure cycle correction in the AI investment boom, while actively managing exposure based on the magnitude of the market decline. The valuation disagreement between Morgan Stanley and Burry: Who pays for SpaceX's future? SpaceX's stock price remains exceptionally volatile. It is currently about 17% below its closing price on its first trading day in early June. So far this year, the stock has repeatedly lost more than a third of its market value in rapid declines, then risen more than 50%. The market seems unable to form a consensus on SpaceX's valuation, and neither can Wall Street's top experts. By one measure, most Wall Street analysts are quite unanimous in their views on SpaceX stock. Of the 35 analysts covering the aerospace stock, 29 rate it "Buy," 6 rate it "Hold," and only 1 rates it "Sell." The consensus target price is about US$250, implying more than 86% potential upside. Yet a deeper look reveals clear divisions within Wall Street. Some bullish analysts have target prices below US$200, while others go as high as US$500. Morgan Stanley sits in between with a US$300 target price, implying more than 124% upside over the next 12 months. Legendary investor Michael Burry disagrees. The hedge fund manager once made billions of dollars for investors during the 2008-2009 financial crisis by shorting the U.S. housing market. "There is nothing in that S-1 filing that justifies it being worth US$1 trillion, let alone US$2 trillion," Burry warned this summer, referring to SpaceX's IPO prospectus. SpaceX's valuation rose further after listing, making Burry even more cautious. He stressed: "At a US$2.8 trillion market cap, SpaceX is essentially a small aerospace company, a telecom company serving a niche market, a troubled social media company, and a simplified version of CoreWeave, with total revenue of less than US$20 billion." "Any upside will be driven by hype and technical factors." Given these concerns, why is Morgan Stanley still so bullish on SpaceX? Morgan Stanley's US$300 target price ultimately depends on several key assumptions. Why is Morgan Stanley bullish on SpaceX stock? Almost all analysts covering SpaceX with a bullish stance focus on one key business segment: artificial intelligence. According to SpaceX's own prospectus, AI accounts for more than 90% of the company's total addressable market. Therefore, any bullish view on SpaceX stock can be considered to include optimistic assumptions about its AI business. However, Morgan Stanley is bullish not only on SpaceX's AI business. Analysts in the bank's investment division are also optimistic about the synergies between the company's other businesses and its AI business. Morgan Stanley analysts explained: "We believe the company is one of the few platforms capable of integrating orbital space resources, global connectivity services, and computing power into a single infrastructure system." In another report, the institution emphasized that SpaceX's AI business is "the part of the SpaceX investment case we believe has the greatest growth potential." It added that rockets and satellites will be key to generating AI revenue. This is because SpaceX's Starship rocket will play a critical role in sending satellites into orbit at low cost and at scale. At the same time, these satellites can not only be used by SpaceX's Starlink division to provide more connectivity servicesa business that already contributes substantial cash flow to the company's profitabilitybut can also support orbital data centers. Orbital data centers could give SpaceX an edge over other large tech competitors in terms of cost and resource availability, although questions remain about the economic viability of space data centers, as well as technical and physical constraints. This is precisely the main difference between how Burry and Morgan Stanley view SpaceX stock. Morgan Stanley believes in synergies among SpaceX's business segments and expects these synergies to drive significant AI business growth. By contrast, Burry is more skeptical. It is worth noting that Morgan Stanley analysts also acknowledge in their bear-case scenario that Burry's pessimistic valuation is possible. The Morgan Stanley analyst team explained: "Our US$75 bear-case target price assumes Starship is delayed to 2029 and AI commercialization and deployment proceed slower than expected, leaving aerospace and connectivity businesses accounting for about 90% of the company's valuation." "Access to required capital is one of the biggest risks to our forecasts." Morgan Stanley's bull case depends on SpaceX continuing to raise massive amounts of new capital through the rest of this decade. Burry's argument essentially centers on one thing: betting that all three of SpaceX's business segments succeed simultaneously and generate synergies, while continuing to obtain capital at affordable cost for years to come, is a very difficult judgment to make. For some cautiously positioned investors, it is hard not to agree with this concern. That is why some investors, like Burry, neither go long nor short SpaceX stock, but instead choose to watch from the sidelines over the long term, which to a large extent also explains why SpaceX's stock has struggled to establish a sustained breakout trajectory. Strong rebound after a sharp drop: The core of the SpaceX trade is whether growth can navigate financing and policy constraints The recent market selloff first hit expectations for the realization of SpaceX's ground-based AI expansion. After Democrats won majority control of both chambers of Congress and key state elections such as Texas, the market worried about stricter data center approvals, cost-sharing, and community oversight, while reassessing the regulatory scrutiny that Musk's companies may face. For SpaceX, project delays not only mean deferred revenue, but may also cause equipment, financing, and construction spending to occur before cash is recovered, reducing the turnover efficiency of invested capital. Therefore, the stock price adjustment has a clear market-level operating and valuation transmission path and cannot simply be attributed to Musk's Republican political bets failing. Musk's growth outlook at the Barron's investment conference on November 6 provided bulls with a new basis: he expects SpaceX's fourth-quarter revenue to grow about 70% quarter over quarter, and reiterated that annualized revenue would exceed US$100 billion by December 2026 and could exceed US$500 billion by December 2027. It should be noted, however, that this describes annualized revenue at specific points in time, not full-year revenue already achieved or formally committed for the corresponding years; he explicitly called the 2027 judgment a personal expectation rather than a commitment, and gave only about a 2% probability to the possibility of US$1 trillion in annualized revenue. Undoubtedly, SpaceX's growth focus is rapidly shifting toward delivering AI computing resources to major customers such as Alphabet Inc. Class C, Anthropic, and OpenAI, and what the market needs to verify is whether AI GPU/TPU/ASIC procurement, power supply, construction, and system integration can be simultaneously converted into strong computing expansion capacity that generates sustainable fees. SpaceX's third-quarter revenue reached US$14.575 billion, up 161% year over year; superintelligence business revenue was US$7.560 billion, accounting for about 52% of total revenue, but this division also includes infrastructure, models, software, and advertising businesses and cannot be entirely regarded as computing power leasing. At the same time, third-quarter capital expenditure reached US$19.593 billion, higher than revenue for the quarter. This financial structure explains the bull-bear divergence: rapid growth expands future profit potential, but continued investment also raises the company's requirements for external financing and the speed of project cash collection. Morgan Stanley's core judgment is that SpaceX can link advantages across multiple links: Starship lowers deployment costs through reusability and high payload capacity, Starlink expands connectivity service revenue, and orbital computing is expected to open up new space for computing supply. At the conference, Musk estimated that the StarMind computing device co-designed with NVIDIA Corporation could begin launches as early as the third quarter of 2027, expand deployment in 2028, and scale further in 2029. However, this is still his expected timeline. At the investment level, what truly needs verification is whether low-cost launches can combine with power supply, heat dissipation, communications, and equipment reliability to form a competitive full-lifecycle cost; only if these links all hold can orbital computing potentially transform from a technology choice into a sustainable profit source. Financing channels are still providing support. SpaceX has obtained binding commitments for about US$40 billion in GPU and related equipment finance leases, used for NVIDIA Corporation Vera Rubin equipment and ground-based computing buildout, expected to be completed by year-end after closing conditions are met, with equipment scheduled for delivery in the first half of 2027. On the other hand, Morgan Stanley estimates the company may need to issue about US$230 billion in debt from 2027 to 2029, indicating that its optimistic valuation itself is built on continued capital market support for expansion. To judge whether Morgan Stanley or Burry is closer to the eventual outcome, the key is whether incremental revenue can continue to cover equipment renewal, operations, and financing expenses and drive improvement in free cash flow. Morgan Stanley is betting that this path can be delivered; Burry questions whether the market has already paid too high a premium for success in advance.