Artificial intelligence (AI) stocks have driven the stock market’s direction over the past few years — and soon, investors will have the opportunity to get in on a new trillion-dollar player that’s also involved in two other high-growth businesses. I’m talking about SpaceX, a company making great strides in AI, rocket launches, and satellite-based internet services.
This Elon Musk-led giant is set to launch the biggest ever initial public offering on June 12, and my prediction is this will be a huge day — not only for the company but for the entire stock market. Let’s check out the details.
Image source: Getty Images.
AI stocks and IPOs
SpaceX actually isn’t the only new kid on the stock market block. Chip designer Cerebras Systems completed its IPO, the biggest so far this year, last month — and others are on the horizon. Anthropic submitted a confidential filing with the Securities and Exchange Commission recently, and rival AI lab OpenAI may be next, according to press reports. So, AI investors soon will have a whole new selection of AI stocks to choose from — in addition to market giants like chip leader Nvidia, cloud powerhouse Alphabet, and others that have led gains over the past few years.
Updates from these AI players or general news about the development and use of AI have been enough to supercharge the market, if positive, or weigh on performance, if negative. AI truly has set the tone for market direction, as investors have been eager to get in on this technology that may transform the way business is done — and as a result, offer a significant boost to corporate earnings.
Today’s Change
(18.32%) $36.82
Current Price
$237.83
Key Data Points
Market Cap
$52B
Day’s Range
$204.13 – $249.76
52wk Range
$185.00 – $386.34
Volume
53K
Avg Vol
8.8M
Gross Margin
39.03%
Now, many of these investors may turn to SpaceX. The company is the leader in rocket launches, and this business could be key to its overall success. Its focus on reusable rockets is bringing down the cost of launches, making it a valuable partner for NASA, for example, and this business should help SpaceX in its other endeavors — such as bringing data centers to space and advancing its Starlink satellite-based internet service.
Today, all of this requires significant investment, and as a result of capital expenditures, particularly in AI, SpaceX reported a net loss of $4.9 billion last year. But analysts expect this to potentially generate incredible results. Goldman Sachs, the IPO’s lead underwriter, forecasts that SpaceX’s AI business will deliver a 100-fold increase in revenue to $322 billion by 2030, The Financial Times reported. And Goldman predicts total revenue will reach $474 billion then, up from $18 billion last year.
SpaceX excitement
Meanwhile, SpaceX has created an environment of excitement around its planned offering, from its plan for 30% of shares to be allotted to retail investors to its creation of a website specifically for the IPO. Everything is being done to make this IPO an opportunity that the nonprofessional investor may seize — this isn’t always the case with IPOs, as often, more than 90% of the shares are marketed to institutional investors.
Against this backdrop, my prediction is that June 12 will be a big day for the stock market as a whole. If SpaceX shares open above the IPO price and soar, this momentum may spill over into other AI and technology stocks — and it could be an excellent day for the S&P 500.
What does this mean for you? Though it’s exciting to watch an IPO or even participate in it, it’s important to remember that whatever happens, it won’t impact the long-term performance of your portfolio or the major benchmarks by much. So, if you don’t take part in the IPO or buy AI stocks on June 12, you aren’t missing out: History has shown us that many IPO stocks — and current AI giants too — generally offer several interesting buying opportunities to investors over time.
This means that, as always, the best investing strategy is to buy quality companies at reasonable prices and hold on for the long term — and not be distracted by short-term ups or downs.
Leave a comment