SpaceX stock sinks over 6% today, but analyst remains strongly bullish

SpaceX stock SPCX fell sharply on Wednesday as investors continued to navigate volatile post-IPO trading.

Shares of Elon Musk's space and artificial intelligence company dropped more than 6% to $159.95 in early trading.

The decline came amid broader weakness in technology and semiconductor stocks.

The Nasdaq Composite fell 0.4%, while the S&P 500 slipped 0.1%. The Dow Jones Industrial Average rose 88 points.

Among other technology names, Micron fell 6%, Sandisk dropped 8%, Nvidia lost roughly 2%, and Broadcom declined about 1%.

Investors focus on valuation after IPO surge

The pullback highlights the ongoing debate over SpaceX's valuation following its blockbuster public market debut.

With the stock experiencing significant swings since listing, investors are increasingly looking to analyst assessments for clues about how much upside remains after the company's rapid ascent.

On Tuesday evening, Wedbush analyst Dan Ives initiated coverage of SpaceX with a Buy rating and a $190 price target.

"We view SpaceX as one of the most differentiated assets within the tech market with a strong footprint across its three core markets, with Starlink driving success with connectivity, Starship launches leading to a demand flywheel, and increasing deal flow for its Colossus [AI data centers]," Ives wrote.

According to Ives, Starship remains central to the company's long-term growth strategy.

The analyst argued that the next-generation launch vehicle could reduce the cost of reaching space by roughly 90% compared with Falcon 9 missions, potentially enabling a broader range of commercial opportunities, including orbital AI data centers.

"All of SpaceX's future business runs through Starship, whether it's Starlink's next-generation [satellites], the orbital AI-compute constellation, the Artemis lunar lander, or the cost-and-capacity step the whole forward [valuation] case assumes," Ives wrote.

"The vehicle is the single largest source of value in the franchise as much as its largest risk."

AI represents largest piece of valuation

Ives based his valuation on a sum-of-the-parts framework that separately assesses the company's launch, satellite internet, and artificial intelligence businesses.

Under that approach, he values SpaceX's launch operations at approximately $66 billion and Starlink at roughly $600 billion.

The largest component of the valuation is the company's artificial intelligence business, which Ives estimates is worth approximately $1.8 trillion.

He expects AI-related operations to generate more than $80 billion in revenue by 2028, before any contribution from potential orbital AI data centers.

The analysis places significant emphasis on SpaceX's expanding AI ambitions alongside its traditional aerospace operations.

Nasdaq-100 inclusion could drive demand

Separately, SpaceX is set to become one of the fastest companies ever added to the Nasdaq-100 index following recent rule changes adopted by Nasdaq.

Nasdaq announced after last Friday's close that SpaceX qualifies for inclusion in the benchmark technology index.

Assuming the company continues to meet eligibility requirements, index-tracking funds and related investment products will begin purchasing shares after the market closes on July 6, with SpaceX officially joining the Nasdaq-100 before trading begins on July 7.

More than $800 billion tracks the Nasdaq-100, including the Invesco QQQ Trust, one of the largest and most actively traded exchange-traded funds.

SpaceX is expected to enter the index with a weighting of less than 1%.

Even with a relatively small weighting, inclusion could create meaningful buying demand because SpaceX's public float remains limited compared with its overall market capitalization.

Index funds and exchange-traded funds tied to the Nasdaq-100 will need to acquire shares to reflect the benchmark's revised composition, while active managers benchmarked against the index may also adjust positions.