MarketBeat hosts Rob Spivey and Joel Litman of Alimetry Research for a valuation-heavy discussion of SpaceX and a stock-picking segment tied to AI, space, defense, and electrification. They argue SpaceX’s hype is partly grounded in accounting data, but they still prefer other names right now: ASML, Northrop Grumman, and GE Vernova on the buy side, and AST SpaceMobile and Tesla on the avoid side.
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The core thesis is straightforward: the guests think SpaceX is not a pure fantasy valuation story, but they still wouldn’t chase it at current levels because there are better risk/reward opportunities elsewhere. They frame SpaceX as a collection of businesses that should be valued separately: launch, Starlink/connectivity, and xAI/compute. On their uniform-accounting view, launch is a solid, mature business with about a 12% ROA and roughly $120 billion of value; Starlink is the standout with about $11 billion of revenue and roughly 30% ROA; and xAI is the most speculative leg, but could be enormous if it becomes an AI compute ecosystem rather than a standalone competing model business. …
Near term, the actionable setup is to avoid chasing SpaceX at the implied valuation and instead watch whether AI and power bottleneck stocks keep confirming on backlog, pricing power, and earnings beats. Volatility is likely to remain elevated, especially in GE Vernova and Northrop, while AST SpaceMobile and Tesla face skepticism.
Over the next few months, the base case in their framework is that AI infrastructure beneficiaries should keep outperforming if capex and power demand stay strong, while SpaceX remains an optionality story rather than a clean entry. The setup breaks if spending slows, government budgets shift away from their cited tailwinds, or the market stops rewarding scarcity.
Structurally, they argue that the AI and space era will be won by bottlenecks: advanced chip equipment, grid power, launch infrastructure, and dense defense capability. That means the durable winners may be industrial and infrastructure enablers rather than the most visible brand names.
SpaceX on a uniform accounting basis is already a profitable business throwing off real cash flow today.
Speaker points to S1 data and uniform accounting methodology to show SpaceX generates real cash flow despite XAI losses.
The bottleneck for AI compute is electricity, specifically the GE Vernova gas turbines (Jersey Boys), which have a 5-year-plus backlog and are sold out at premium pricing.
Speaker explains that while chips and talent are plentiful, electricity generation via GE Vernova's large turbines is the constrained input for AI data centers, with years-long wait times and pricing power.
Tesla's current stock price requires a 50% return on assets to justify, but its current ROA is only 6%, making the valuation unsustainable.
Speaker uses a valuation framework comparing the market's implied ROA (50%) to Tesla's actual current ROA (6%), arguing the gap is too wide to close, especially given competition and brand headwinds.
Can you talk about the SpaceX story and how much the market is chasing this massive valuation?
Rob explains that SpaceX is actually profitable on a uniform accounting basis, with three key segments: the launch business (12% ROA, worth ~$120B), Starlink/connectivity (30% ROA, ~$600B potential), and XAI (currently losing money but could become a 15-30% ROA business worth $600-700B if it becomes the hyperscalers' best partner). Combined, a $1.3-1.5 trillion valuation is realistic. The bull case could go to $2.5 trillion, but he says he wouldn't buy at this price because he wants 3-to-1 upside.
What's your take on SpaceX IPOing at such a huge valuation and getting into indexes where investors will have exposure through index investments?
Joel notes that index inclusion does create demand, especially for the S&P 500 which is market-cap weighted, but getting into the S&P 500 takes time — Tesla took a decade, Meta took 19 months. So he doesn't see it happening anytime soon, maybe a year and a half like Meta or longer like Tesla. Rob adds that even for NASDAQ or Russell ETFs, the company gets added relative to its float (~$75-100B), which would be comfortably under 1-1.5% of those indexes, so investors shouldn't panic about their portfolios being blown up.
What should investors know about ASML as a strong growth story, even stronger than SpaceX?
ASML is one of the most important companies in the AI boom because they make the equipment TSMC needs to produce complex chips. The company has a 22% return on assets (much higher than the 15% commonly perceived), and it's seeing massive demand ramp for its equipment needed for data centers whether on land or in space. ASML has significant upside that nobody fully understands.
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