Bernstein Report Analysis: SpaceX Ground Computing Power Initially Boosts Revenue, Orbital Center Sets Valuation Cap

Written by: Rita

Markets are concerned that SpaceX's capex is running ahead of demand. Bernstein raised its 2027 ground AI compute forecast by 5 GW. The target price was increased from $248 to $268, with the current price at $147.49, representing an upside of 82%. Released on October 26, 2026, the report notes that the orbital data center remains the cornerstone for long-term valuation, while ground compute will first lift the revenue curve.

Bernstein's assessment hinges on two factors. SpaceX generated $7.56 billion in AI revenue in Q3, about 20% above market consensus. The connectivity segment's operating margin was 45%, compared to a market consensus of 38%. Management provided a 2027 year-end run rate for revenue of $500 billion to $1 trillion. Bernstein's own 2028 revenue forecast is $423.7 billion, which is below management's target but higher than previous estimates.

Four variables determine whether the $268 target price can materialize: ground compute capacity, per-watt pricing, orbital launch cadence, and valuation multiples.

Ground Compute Forecast Raised to 13 Gigawatts

SpaceX ended Q3 with a rated compute capacity of 1.7 GW, expected to reach 2.5 to 3 GW by year-end. Bernstein sets ground compute at 2.8 GW by end of 2026, 12.8 GW by end of 2027, and 20.1 GW by end of 2028. This represents an increase of 5 GW over the prior forecast for 2027. Capex is estimated at $35 billion per GW. AI operating capex is projected at $40.9 billion in 2027, $33.5 billion in 2028, $29.1 billion in 2029, $42.6 billion in 2030, and $45.7 billion in 2031. AI revenue is forecast at $571.167 billion in 2031, with EBITDA of $476.756 billion.

AI revenue in Q3 was $7.56 billion, with an operating profit of $431 million, contrasting with a market consensus estimate of a $14 million loss. The turn positive in operating profit is primarily driven by per-watt prices exceeding the $30 to $50 range. Bernstein raised its assumed average per-watt price for 2027 to $26, with subsequent annual declines. While short-term contract pricing from the company exceeds the $30 to $50 range, Bernstein did not fully extrapolate according to the company's figures.

Per-Watt Price Exceeds $30

Short-term compute contracts with customers like Google are priced at $30 to $50 per watt. Management stated during the Q3 earnings call that newly negotiated prices exceed this range. Bernstein sets the blended per-watt price for 2027 at $26, below the level observed by the company. For every $1 increase in per-watt price, AI revenue in 2027 would rise by approximately $1.3 billion.

With high exposure to short-term contracts, prices adjust to supply and demand dynamics. Bernstein assumes supply catches up to demand after 2028, leading to annual declines in per-watt prices: $26 in 2027, $21 in 2028, $19 in 2029, $17 in 2030, and $15 in 2031. This downward assumption is the key risk to the $268 target price. If the company maintains pricing above $30, Bernstein's AI revenue forecasts would be too low.

Orbital Data Center Set for Late 2027 Debut

SpaceX plans its first orbital data center launch by late 2027, with commercial operations starting mid-2028. Starship Flight 15 will take place within weeks, attempting to simultaneously catch both the booster and the spacecraft. Flight 14 showed strong thermal protection performance, paving the way for the first reflight on Flight 16. The company aims for one launch per week in H1 2027 and two launches per week by late 2027 across five launch pads. Bernstein does not model this cadence.

The orbital data center remains the core driver for long-term valuation. Orbital compute capacity is projected at 77 GW in 2031 versus 20 GW on the ground. The second growth curve for AI revenue will only open once orbital compute enters commercial operation. Starship reflight progress determines whether the orbital data center can launch on schedule. Bernstein raised the discount rate for the space business from 10% to 15% to reflect uncertainties in launch and orbital operations.

Valuation Multiple Downgraded to 17x

Bernstein performs segmented valuation using 2031 EBITDA. The AI business is assigned a 17x EV/EBITDA multiple, connectivity 15x, and space 13x. The AI multiple was downgraded from 21x to 17x due to contracting valuations in AI-related equities. Discount rates are set at 35% for AI, 25% for connectivity, and 15% for space. Combined segmented valuation totals $3.50 trillion, implying a target price of $268.

Adjusted EPS is forecast at $1.44 for 2027 and -$0.01 for 2026. At the current price of $147.49, this represents an 82% upside. The upgraded target price is primarily driven by ground AI revenue and the connectivity segment, partially offset by lower AI multiples and higher discount rates. Bernstein maintains an Outperform rating.

Ground compute lifts the revenue curve first, while the orbital data center ultimately determines the valuation ceiling. Two key validation points remain: whether the 13 GW of ground compute will be energized on schedule in 2027, and whether per-watt pricing can hold at $26.

Disclaimer

This article compiles and interprets a third-party broker research report (Bernstein, October 26, 2026) by TechFlow, supplemented with public market information. The ratings, target prices, earnings forecasts, and related judgments cited herein represent the views of the respective broker's analysts and solely reflect their institution's stance, not those of TechFlow, nor do they constitute any investment advice.

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