SpaceX (NASDAQ:SPCX) stock has been hot recently, going from $108 in early August to $143 today. That’s a healthy gain of 32% in just a couple of weeks.

According to Morgan Stanley, though, the recovery potentially has much further to run. In fact, the investment bank reckons the SpaceX share price could hit $300 in 12 months’ time. If so, that would be a more than doubling from today!

Why is Morgan Stanley so bullish?

SpaceX essentially has three parts to its business: rocket launches (Falcon 9, Heavy, and Starship), connectivity (Starlink satellite internet and defence-related Starshield), and AI (renting out compute, Grok, and Cursor).

Morgan Stanley’s discounted cash flow (DCF) model values the core launch business and Starlink at $127 per share. So the remaining AI side is currently being undervalued, according to its analysis.

One thing it highlights is SpaceX’s potential $60bn acquisition of Cursor, which owns an enterprise AI coding agent trusted by the likes of OpenAI, Nvidia, Samsung, and BP. The Cursor/Grok potential is underappreciated, says the bank.

Furthermore, the next Starship test in September could act as a powerful positive catalyst. The test may attempt a first-ever catch of the upper stage on its return to Earth. If successful, this would indicate that Starship is getting closer to becoming fully operational/reusable.

As a reminder, Starship would support a much larger and more powerful Starlink satellite network. And it will be needed to deploy other space-based infrastructure, including AI satellites.

Things we don’t know

Of course, if Starship were to end up in a massive ball of flames on the platform next month, that would dent investor confidence. Timelines would presumably slip back.

Another thing we don’t know is how much SpaceX will end up spending on AI this year — it was $18.4bn in the second quarter! Sometimes, firms are punished after revealing higher-than-expected AI spending. So this is another risk to the share price.

Is the valuation bonkers?

Looking at the company’s numbers today, the near-$2trn valuation looks absurd. After all, SpaceX is on track to deliver around $44bn in revenue in 2026, with seriously negative free cash flow and a possible bottom-line loss.

However, Wall Street does have truly enormous growth rates pencilled in. The forecasts point to SpaceX generating about $160bn in revenue by 2028, alongside adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) of $117bn.

On those numbers, a 2028 enterprise value-to-EBITDA multiple of roughly 16.5 doesn’t look quite so bonkers.

Taking the long-term perspective

Investors considering the stock really need to take a long-term view here. Getting Starship doing dozens — let alone hundreds — of trips to space every year is going to take some time. Orbital AI infrastructure is unproven.

In the meantime, the only thing guranteed from this stock is high volatility. It could fall 30% or more in the blink of an eye, especially if investors like Alphabet and Nvidia start selling down their chunky stakes in the AI/rocket company.

Personally, I’d be surprised to see the stock reach $300 by next summer. But I’m certainly not ruling it out over the longer term, which is why I’m planning to buy SpaceX shares on the next substantial drop.

Should you invest £5,000 in SpaceX right now?

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Ben McPoland owns shares in Nvidia.