Elon Musk’s announcement that SpaceX and xAI are merging in a deal valuing the combined entity at $1.25 trillion sent shockwaves through the space industry on February 3rd. The merger represents a major push to expand artificial intelligence infrastructure beyond Earth, with Musk estimating that within two to three years, the most cost-effective way to generate AI compute will be in space.
The record-setting deal sparked an immediate rally across space stocks as investors recognized the validation of space-based infrastructure for the next wave of AI development. “This is the strongest validation yet that space will be the backbone of the next wave of AI,” said Seraphim Space CEO Mark Boggett. Global investment in space technology is poised to climb further this year, propelled by government spending on defense-linked satellite systems and private sector bets on launch capacity.
Musk’s vision extends beyond theoretical ambitions. SpaceX has recently sought permission to launch a constellation of up to 1 million satellites that will orbit the planet and harness solar power for AI data centers. Building and sustaining such a constellation—with each satellite having a five-year life—would require launching about 200,000 satellites into orbit annually. The capital required could be so vast that SpaceX may need to tap public equity markets, with sources indicating plans for a blockbuster IPO this year that could value the company at more than $1.5 trillion.
This infrastructure buildout creates opportunities across the space industry ecosystem. Companies providing launch services, satellite manufacturing, and space-based communications are positioned to benefit as the sector transitions from niche applications to essential AI infrastructure. Three publicly traded space companies offer different approaches to capturing this growth, each with distinct business models and risk-reward profiles.
Rocket Lab USA Inc. (RKLB) produces reusable orbital rockets and has established itself as a proven launch services provider, currently trading around $78 after surging over 400% in the past year. The company has launched its flagship Electron rocket 81 times to date, deploying over 248 satellites for customers including NASA, the U.S. Space Force, the Swedish National Space Agency, Kinéis, and BlackSky Technology.
Rocket Lab’s stock jumped 3.9% immediately following the SpaceX-xAI merger announcement, reflecting investor recognition that increased space infrastructure deployment will drive launch demand across the industry. The company plans to launch its second rocket, Neutron, in 2026 to carry much heavier payloads—expanding its addressable market beyond small satellite launches into medium-lift capabilities.
The company recently secured an $816 million contract with the U.S. Space Development Agency to design and manufacture 18 satellites for its missile-defense satellite constellation. This represents Rocket Lab’s largest contract to date and diversifies the business away from pure launch services into satellite manufacturing. Over the long term, management plans to evolve into an “end-to-end” provider of space transportation services, capturing more value across the satellite deployment value chain.
Wall Street expects Rocket Lab to more than double revenue from $600 million in 2025 to $1.29 billion in 2027 while achieving profitability by the final year. The company’s 28.93% gross margin demonstrates improving unit economics as launch cadence increases and manufacturing efficiencies scale.
The $40 billion market cap reflects high expectations, with the stock trading at 33 times next year’s projected sales. But Rocket Lab’s proven launch track record, expanding customer base, and vertical integration into satellite manufacturing position it as a primary infrastructure provider for the space economy. If Musk’s vision of millions of satellites supporting AI compute materializes, launch capacity will become a critical bottleneck—and Rocket Lab is one of the few companies with demonstrated ability to execute frequent, reliable launches.
Intuitive Machines Inc. (LUNR) focuses on lunar exploration and near-space services rather than Earth orbit operations, currently trading around $18 after gaining 4.7% on the SpaceX-xAI merger news. The company produces lunar landers and exploration vehicles, having already sent two Nova-C landers to the moon for NASA: IM-1 (Odysseus) in February 2024 and IM-2 (Athena) in March 2025. Odysseus marked the first successful U.S. moon landing since 1972.
Intuitive Machines operates under NASA’s Commercial Lunar Payload Services (CLPS) program, which aims to establish sustained lunar presence supporting eventual Mars missions. The company plans to launch its next mission, IM-3, in 2026 as part of this long-term contract. Beyond lunar landers, Intuitive has secured lunar terrain vehicle contracts, an exclusive near-space network services contract, and lunar logistics solutions agreements with NASA.
To diversify beyond purely lunar operations, the company recently acquired Lanteris Space Systems, a developer of satellite and space defense systems. This acquisition supports Intuitive’s evolution into a diversified “one-stop shop” for space transportation services, expanding addressable markets beyond NASA lunar programs into commercial and defense satellite applications.
Analysts expect Intuitive’s revenue to more than quadruple from $219 million in 2025 to $1.04 billion in 2027 as lunar missions scale and the Lanteris acquisition contributes. The company is projected to turn profitable in 2026 and grow net income more than fivefold in 2027—suggesting dramatic operating leverage as the business reaches scale.
At a $2.1 billion market cap, Intuitive trades at just 2 times next year’s projected sales—remarkably cheap compared to Rocket Lab’s 33x multiple. This valuation discount reflects both smaller scale and higher execution risk around lunar missions, which are technically complex with limited margin for error. The company’s negative 70.43% gross margin demonstrates it’s still investing heavily to establish lunar capabilities rather than optimizing for profitability.
But if lunar economy development accelerates—whether for NASA’s Artemis program, commercial mining operations, or supporting deep space missions—Intuitive Machines is positioned as the leading private lunar logistics provider. The company’s proven track record of successful moon landings creates barriers to entry that new competitors would struggle to overcome.
AST SpaceMobile Inc. (ASTS) pursues a completely different strategy as a developer of space-based cellular broadband, currently trading around $116 after gaining 4.3% on the merger announcement. The company aims to provide direct-to-device cellular service from space, eliminating coverage gaps in areas without traditional cell towers.
AST SpaceMobile plans to launch 45-60 satellites in 2026 to begin commercial direct-to-device services, competing directly with SpaceX’s Starlink in the satellite connectivity market. The company announced timing for its BlueBird 7 orbital launch aimed at enhancing direct-to-device cellular broadband connectivity, with plans for launches “every month or two” involving six to eight satellites each.
Chief Strategy Officer Scott Wisniewski indicated these deployments will enable “commercial-grade service continuously in the United States, Europe, and other markets that matter around the world.” The company successfully launched its first next-generation satellite in December 2025, which is expected to support 10 times the data capacity of prior satellites—a critical improvement for delivering usable cellular speeds from space.
Deutsche Bank analyst Bryan Kraft rates the stock at “buy” with a $137 price target, implying roughly 18% upside from current levels. Kraft emphasized that executing the satellite build and launch plan to enable 24-hour continuous commercial service represents the “key driver” of AST SpaceMobile’s stock in 2026. The company plans to complete five satellite launches by the end of March—requiring four launches over roughly 10 weeks to meet that aggressive timeline.
AST SpaceMobile is “effectively pre-revenue,” with Kraft’s valuation based on expectations for 2030 assuming a 40% growth rate on EBITDA. This forward-looking approach reflects that the company won’t generate meaningful service revenue until 2027 after achieving continuous coverage in initial markets. The business requires as many as 100 satellites for global coverage, opening access to approximately 5.8 billion unique mobile subscribers worldwide.
The stock has surged over 400% in the past 12 months, reflecting investor excitement about the direct-to-device market opportunity. But AST SpaceMobile faces formidable competition. Starlink already serves over 9 million customers across 155 markets, while Amazon plans to begin rolling out its competing Project Kuiper service in 2026. AST’s satellite deployment schedule will determine whether it can establish market position before well-funded competitors dominate the space.
The company’s success hinges on execution over the next 12 months. If AST SpaceMobile hits its 45-60 satellite deployment target and begins generating service revenue in 2027, the stock could continue its dramatic appreciation. But any delays in launches or technical setbacks with satellite performance would undermine the investment thesis, potentially triggering significant selloffs given the stock’s rich valuation relative to current revenues.
These three space stocks offer different risk-reward profiles within the sector. Rocket Lab provides proven launch services with established customer relationships and a path to profitability. Intuitive Machines delivers lunar exploration expertise with exclusive NASA relationships and aggressive growth projections. AST SpaceMobile pursues the massive direct-to-device connectivity market but faces intense competition and requires flawless execution.
The SpaceX-xAI merger validates that space infrastructure will play a critical role in AI development and other technology trends. Whether through launch services, lunar logistics, or satellite communications, these three companies are positioned to participate in the space economy’s expansion—though with vastly different timelines, competitive dynamics, and probabilities of success.
