Elon Musk and SpaceX Just Delivered Incredible News to Nvidia That Could Help the Stock Double in the Next Year
Key PointsSpaceX plans to build out 10 gigawatts of compute capacity or more in 2027.
Elon Musk, the CEO of SpaceX, has delivered remarkable news to Nvidia, potentially doubling its stock value in the next year. In the company's Q3 earnings call, Musk announced that SpaceX plans to significantly increase its AI infrastructure spending, aiming for an annual recurring revenue (ARR) between $500 billion and $1 trillion by the end of 2027. This news comes after Musk previously stated that SpaceX would exclusively use Nvidia's chips, as Nvidia's Vera Rubin architecture was deemed the best on the market.
Musk projected SpaceX would have up to 3 gigawatts of computing capacity by the end of 2026, with the potential to add 10 gigawatts of compute power in 2027. This is a substantial boost from the initial estimate of 2 gigawatts by the end of the year. The partnership between SpaceX and Nvidia to develop radiation-resistant chips for orbital data centers could lead to a significant increase in Nvidia's revenue.
Nvidia's revenue would rise by an estimated $400 billion if SpaceX adds 10 gigawatts of computing power. If SpaceX were to reach 20 gigawatts, Nvidia's revenue could surge by an additional $800 billion. Currently, Nvidia is projected to generate nearly $412 billion in revenue for the fiscal year ending in January 2027. With SpaceX's increased AI infrastructure spending, Nvidia's revenue could soar to around $850 billion by fiscal 2028, resulting in an adjusted earnings per share (EPS) of approximately $20.72.
If Nvidia can maintain its current forward P/E of 13.5 times, its stock could be valued at around $415, nearly double its current price.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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