SpaceX (NASDAQ: SPCX) just gave one of its biggest skeptics a reason to change his mind. Stronger artificial intelligence revenue, improving profitability, and growing connectivity demand prompted Phillip Securities to upgrade the stock from Sell to Buy. Analyst Glenn Thum also raised his price target to $250 from $75.
SpaceX may be best known for rockets and satellite internet, but its latest results show why artificial intelligence deserves more attention. Third-quarter revenue reached $14.58 billion, up 161% from a year earlier. Adjusted earnings were 45 cents per share, above the 13 cents analysts expected, according to Reuters. Net income reached approximately $4.4 billion, compared with a loss of roughly $1.1 billion a year earlier.
The biggest contributor was Super Intelligence, the company’s AI business. That segment generated $7.6 billion in revenue, up 830% from a year earlier.
In other words, AI now accounts for more than half of SpaceX’s total revenue. That matters because investors are increasingly evaluating the company on its ability to supply computing power and AI services, alongside its established space and connectivity operations. A business once associated primarily with launches now has another major source of growth.
Why Phillip Securities Upgraded SpaceX Stock to Buy
Thum’s upgrade reflects a substantial revision to his revenue expectations.
He raised his fiscal 2026 revenue forecast by 56% to $45.1 billion. His fiscal 2027 forecast increased even more sharply, rising 201% to $132 billion, largely because of stronger expectations for Super Intelligence.
Several developments helped drive that change. New cloud services agreements began generating revenue at higher rental prices, while Cursor contributed $608 million from mid-August, according to the analyst’s note.
There is also an important profitability angle. As cloud revenue increases, the company can spread certain operating costs across a larger sales base. That is known as operating leverage, and it helps explain why revenue growth can produce even stronger improvement in operating earnings. According to Thum, higher-margin cloud services helped move Super Intelligence into profitability.
For shareholders, that is a meaningful development. Rapid sales growth attracts attention, but the ability to earn money from that growth makes the investment case more convincing.
SpaceX Connectivity Revenue Adds Another Growth Driver
Connectivity revenue reached $5.2 billion, up 69% from a year earlier and 22% from the previous quarter. Consumer revenue increased 57% year over year, while enterprise and government revenue climbed 91%. Thum pointed to aviation installations and Starshield contracts as contributors to the enterprise and government gains.
That gives investors another business to watch as the AI operation expands. Growth across consumer, commercial and government customers broadens the company’s revenue base and gives it several opportunities to win additional business.
Meanwhile, the space segment generated $1.8 billion in revenue, up 6% from a year earlier and 84% from the previous quarter. Together, these results show that SpaceX’s latest quarter benefited from progress across all three major businesses, even though AI supplied the most dramatic acceleration.
The Opportunity Comes With a Large Spending Bill
SpaceX reported $19.59 billion in quarterly capital expenditures, including $16.44 billion tied to its AI business. Capital expenditures cover investments in assets such as computing infrastructure and facilities. They also show why investors should look beyond reported profits when evaluating the company’s finances. With that, Thum remains cautious about how quickly SpaceX can expand computing capacity. Power availability and cooling requirements could delay projects, even when customers are ready to buy.
The encouraging part is that Thum sees computing demand exceeding available supply, supporting higher contract prices and attractive returns on new capacity.
SpaceX has given investors stronger reasons to take its AI ambitions seriously. The next test is execution: bringing capacity online, maintaining pricing and converting growing revenue into sustainable cash generation. If the company delivers on those fronts, the latest upgrade could reflect a meaningful improvement in the business. But shareholders will need to watch the spending as closely as the growth.
