HSBC’s Cautious Take on SpaceX: Hold Rating and a $115 Price Target

Wall Street has spent the bulk of July debating how to value SpaceX (ticker SPCX). Then, on July 24, HSBC stepped into the arena, becoming the first major bank to officially cover the rocket‑maker. The outcome? A modest “hold” rating and a $115 price target – a figure that actually sits a few dollars below where the stock closed on July 23.

At first glance the rating seems tame, but the story really lives in the numbers HSBC used to get there. The bank didn’t just slap a target on the wall; it broke SpaceX down into its core businesses – launch services, Starlink satellite internet, and the newly‑added AI arm (xAI) – valued each piece separately, then added a 2× “innovation premium.” That premium is meant to capture Elon Musk’s knack for reshaping whole industries, using Tesla’s first decade as a public company as a benchmark.

Even with that lofty premium, the base‑case target still lands at $115, lower than the market price of about $118 and well under the $135 IPO price from June. HSBC did run a best‑case scenario – a sky‑high $293 per share – assuming Starship goes commercial, Starlink adoption accelerates, and AI revenues pour in faster than anyone expects. But the bank treats that as a long‑shot, not the expected outcome.

Revenue, on the other hand, looks rosy. HSBC projects SpaceX’s top line to more than double from $18.7 billion in 2025 to $38.2 billion in 2026, driven largely by the AI segment and continued growth of Starlink. Yet the optimism stops there. The bank sees GAAP losses persisting through 2027 and doesn’t expect free cash flow to turn positive until roughly 2030.

Why does that matter? Free cash flow is the cash left after a company pays its bills and funds its equipment – the money that ultimately ends up in shareholders’ pockets. HSBC estimates that SpaceX will need to burn about $106 billion in cumulative cash before that positive cash‑flow moment arrives. In plain English, investors may have to wait a decade and watch the company consume more than a hundred‑billion dollars before any real cash returns materialize.

The AI piece is where HSBC pushes back hardest. While it acknowledges SpaceX’s dominance in commercial launches and Starlink’s lead in satellite broadband, the bank is skeptical about the newly‑acquired xAI business. It argues that xAI lags behind the likes of Amazon, Microsoft and Google in both enterprise adoption and computing scale, meaning massive spending will be required to close that gap.

HSBC also questions whether SpaceX’s orbital data centers and the massive addressable market for Starlink – which the company tells the SEC tops $28.5 trillion, with $26.5 trillion tied to AI – are realistic. The bank essentially says the market may have already priced a slice of that speculative AI pie into the stock, even though there’s no solid proof the company can capture it.

Recent filings back up some of that caution. In Q1 2026, SpaceX generated $4.69 billion in revenue but lost $1.94 billion on an operating basis. Starlink contributed $3.26 billion of that revenue and $1.19 billion of operating income, underscoring how critical the satellite business remains to the bottom line.

All of this frames a nuanced picture: rapid top‑line growth paired with a long‑term cash‑burn trajectory, and an AI ambition that may be farther off than the hype suggests. For investors, the takeaway isn’t just the $115 target – it’s the $106 billion cash‑use horizon that HSBC flags as the real risk factor.