Space Exploration Technologies(NASDAQ: SPCX)better known as SpaceX, too Nvidia (NASDAQ: NVDA) you have a few things in common. They work in the field of Artificial Intelligence (AI), they are billion dollar companies, and their leaders, Elon Musk in the former and Jensen Huang in the latter, have big ambitions.
These companies have also seen their valuations rise, although Nvidia has been going public for decades, while SpaceX just completed its record IPO last week. Nvidia stock has risen more than 300% in the past three years as demand for AI accelerates; SpaceX saw its stock rise 40% in its first three trading days from the opening price.
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And now, these companies have something else in common. Both Musk and Huang announced forecasts of $1 trillion in revenue. Let’s examine the details and consider which of these technology stocks is the best buy.
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The AI chip leader
We’ll start with Nvidia. The company is a leader in the AI chip space, selling graphics processing units (GPUs) that power the most important AI tasks. Nvidia has greatly expanded these GPUs into complete systems and offers many related products and services. All of this has led to massive earnings growth, with revenue up 65% in the most recent full year to a record of more than $215 billion.
The company’s focus on innovation has helped it maintain market leadership and operate at high growth; each time it releases a new update, and this happens about once a year, customers flock to get into it. And this brings me to Jensen Huang’s prediction. Nvidia predicted earlier this year that the revenue from the Blackwell platform, as well as the upcoming Vera Rubin program, in 2027 will be $1 trillion.
Considering the company’s performance so far, the demand for its GPUs, and details about the release of Rubin later this year, I wouldn’t be surprised to see Nvidia reach that goal.
Now, let’s look at SpaceX. The company operates three business units — space, communications, and AI — and the strength of the space business should help grow the other two. SpaceX could use its rockets to help connect business, Starlink, and commercial AI transports in space, for example. This can create an interesting platform in the long run.
Starlink is driving revenue
But, for the time being, SpaceX’s ambitions require large capital expenditures, especially in the AI business. The capex of that unit reached $12 billion last year. And the company’s total revenue of $18 billion looks paltry considering that level of capex and compared to the hundreds of billions in annual revenue generated by other multi-billion dollar companies. Currently, Starlink is driving SpaceX’s growth as it accounted for more than 60% of its total revenue last year.
Meanwhile, in a recent post on X, Elon Musk said SpaceX could bring in $1 billion in revenue by 2030, and he would be surprised if revenue doesn’t exceed that level the following year.
Considering this forecast and Nvidia’s, which of the two AI stocks is the better buy right now? SpaceX has seen subscriber growth at Starlink, made significant progress in reusable rockets for the space business, and the AI business has signed significant computing power contracts with Anthropic and Alphabets. The two deals combined represent $26 billion in annual revenue for SpaceX. This is all great, but, as mentioned, SpaceX is involved in a capital investment phase – and it’s hard to see a path to $1 trillion in less than five years. And at the same time, the stock price went up a lot out of the gate.
Meanwhile, Nvidia’s path to $1 trillion in revenue is much clearer, and the stock looks significantly undervalued at 23x forward earnings estimates. All of this makes Nvidia a much better buy right now.
Should you buy stock in Space Exploration Technologies right now?
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Alphabet and Nvidia. The Motley Fool has a policy of disclosure.
SpaceX and Nvidia each forecast $1 Trillion in profits. Which Stock is the Best Buy? was first published by The Motley Fool
