Space Exploration Technologies Corp (NASDAQ: SPCX) and Apple (NASDAQ: AAPL) are two of the largest publicly traded companies in the world. However, they are markedly different.
Apple, which focuses on consumer tech hardware, went public in 1980 and now has a market cap of nearly $4.7 trillion. SpaceX, which focuses on building rockets, broadband, and artificial intelligence (AI), only went public in June and has a market cap of over $2 trillion.
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Wall Street sees strong upside for one of these stocks and remains neutral on the other, at least from an appreciation perspective.
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Apple: Analysts largely view the stock as fully valued
While it often gets compared to hyperscalers, Apple varies in that it has been less direct in its AI strategy. The company is not investing hundreds of billions to build data centers, and it has spent far less than any other hyperscalers on capital expenditures.
The company recently turned over a new leaf with the departure of longtime CEO Tim Cook, who is being replaced by John Ternus. As the former senior vice president of hardware engineering, Ternus brings back traits of the late Steve Jobs, in that he is a “product guy.”
Apple recently unveiled a slate of new products, including the Apple 18 Pro and the iPhone Duo, the company’s foldable smartphone that starts at $1,999. It’s one of the biggest changes to the iPhone in quite a while.
Apple stock has performed pretty well this year, up roughly 18%. But Wall Street analysts, on average, now view the stock to be nearly fully valued. Of the 32 analysts who have issued a research report on Apple over the past three months, 16 have a buy rating on the stock, 12 recommend holding, and four assigned a sell rating.
The average price target among all the analysts is nearly $336 per share, implying about 5% upside from current levels (as of Sept. 10), according to TipRanks.
Earlier this month, Rosenblatt analyst Barton Crockett maintained a neutral rating on Apple and assigned a price target of $303 per share. Crockett believes the new iPhone rollout will be a major test for Ternus, demonstrating whether its product innovation can validate the current valuation.
Recently, Crockett, in a separate note, said gross margins could be pressured due to higher memory costs.
I certainly agree with the concerns about innovation. However, I do think Apple will be able to participate in the AI revolution by bringing AI to consumers through its hardware, which puts the company in a strong position. Furthermore, I like how Apple has not overinvested in AI infrastructure like other hyperscalers.
SpaceX: Controversial, but with significant potential upside
SpaceX is the largest initial public offering ever, raising an incredible near-$86 billion once everything was said and done.
The company is built on its signature fully reusable rockets, which make voyages into space significantly cheaper and quicker than older methods. It’s this innovation that serves as the backbone of the entire business.
SpaceX has a launch business, a low-Earth-orbit satellite internet service, Starlink, and an artificial intelligence division, which encompasses the social platform X, Grok Intelligence, data centers on land, and a future terafac facility, among other things.
In its registration statement, SpaceX claims to have a $28.5 trillion total addressable market (TAM).
While SpaceX has begun signing some large data center deals, investors are split because much of what the company is attempting to do in space depends on getting its fully reusable, super-heavy-lift rocket, Starship, operational. The business is also incredibly capital-intensive.
Starship is still in testing mode, and SpaceX has talked about the rocket operating on a launch schedule more like a commercial airline. Still, the company is run by Elon Musk, who has significant market sway, and analysts, on average, still see significant upside.
Of the 35 analysts who have issued a research report on SpaceX over the past three months, 26 have a buy rating on the stock, six recommend holding, and three assigned a sell rating. The average price target is roughly $228 per share, implying roughly 51% upside from current levels (as of Sept. 10), according to TipRanks.
Earlier this month, Oppenheimer analyst Timothy Horan maintained an outperform rating on the stock and raised its price target from $250 per share to $280. Horan praised SpaceX’s recent acquisition of Cursor, a platform that leverages AI to more easily write code that can create software.
Horan is bullish on SpaceX’s vertically integrated platform, which now includes intelligence, data centers, proprietary chips, and broadband via Starlink. Horan said SpaceX is targeting a $100 billion revenue run rate by year’s end and could hit $120 billion to $130 billion next year.
While I can certainly see the potential of SpaceX, I’m still cautious on the name, given the large valuation and capital-intensive nature of the business.
While everything Musk and the team want to do sounds incredible, I do think obstacles are inevitable, and the timelines for most of these ambitious projects will take much longer than investors expect.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
