SpaceX (SPCX) stock investors are still reeling from a post-earnings sell-off, digesting a quarter dominated by soaring CapEx and growing questions over cash generation.Before the report, Wall Street was looking for strong headline numbers but remained mostly skeptical of its ability to expand AI, satellite, and mobile ambitions to justify the sheer amount of investment.Management’s plan to maintain similar spending levels through the back half confirmed those fears.Yet in a note shared with me, Bank of America saw something the market did not. Investors continued punishing the stock for its lofty capex numbers, but the bank materially lifted its long-term forecasts post-earnings, pointing to an unexpectedly powerful growth engine.Why is Bank of America still bullish on SpaceX after earnings? BofA analyst Ronald Epstein and his team remained bullish on SpaceX stock post earnings. The bank reiterated its Buy rating and $235 price target, representing 87.5% upside from the report’s reference price of $125.33. The core of what’s driving the bank’s conviction is mainly SpaceX’s AI economics, instead of its traditional rocket-launch business. More SpaceX:Morgan Stanley says SpaceX investors miss the bigger storyPeter Schiff says SpaceX is a warning for hyped stocksSpaceX stock defies latest Wall Street forecastsBofA says SpaceX’s AI segment posted the main Q2 upside, spearheaded by third-party computing sales. Elon Musk’s aerospace giant wrapped up the quarter with 1.4 gigawatts of computing capacity, plans to exceed 2 gigawatts by year-end, and expects to reach 5 to 10 gigawatts in 2027. At the top end of that range, capacity may be more than seven times its Q2 level.The bank expects AI sales of nearly $24.5 billion in 2026, equal to over 50% of revised companywide sales forecasts. Put simply, that means AI is no longer a speculative side business inside the SpaceX valuation; it’s becoming the core driver of the earnings model.BofA sees further growth because SpaceX’s Anthropic agreement only began contributing in May, while its Google computing contract is expected to start firing in October.
Bank of America maintained its bullish SpaceX view after second-quarter earnings results.Siskin/McMullan via Getty Images
Earnings estimates were transformed, not merely raisedBofA bumped its 2026 sales forecast on SpaceX stock by roughly 15%, to $46.9 billion.Moreover, its 2027 estimates jumped roughly 29% to $100.7 billion, while its 2028 forecast shot up 29% to $184.8 billion.On top of that, its earnings revisions were even more dramatic. BofA moved its 2026 EPS estimate from a 2-cent loss to a 91-cent profit. Additionally, its 2027 EPS forecast jumped more than 50% to $3.19, while the 2028 estimate climbed approximately 93% to $7.29. EBITDA forecasts were raised by 40% to 46% across those three years.That said, the model assumes remarkable operating leverage. BofA expects SpaceX’s operating margin to improve from negative 13.9% in 2025 to 24.9% in 2026, then reach 41.9% in 2027 and 51.8% in 2028.Yet the company is still expected to burn a ton of cash. BofA projects negative free cash flow of $43.6 billion in 2026, $45.4 billion in 2027, and $37.4 billion in 2028, as capex rises toward $167.5 billion. BofA therefore expects earnings and operating profits to improve far quicker than actual cash generation. Why BofA is less alarmed by the capex surgeSpaceX dropped a massive $18.4 billion on capex during the quarter. Though that was slightly behind BofA’s estimate, its management indicated that spending will remain close to that level through the second half.That forecast compelled BofA to raise its 2026 CapEx forecast to $67.3 billion from $48.2 billion, a 40% revision. The new estimate implies nearly $13 billion over second-half spending, compared to consensus expectations, and $18 million higher than what BofA previously modeled.It’s important to note, though, that BofA distinguishes SpaceX’s spending from conventional long-duration infrastructure investment. Roughly 86% of Q2 CapEx, or nearly $15.8 billion, went toward AI. Management said those investments are reaching cash break-even in less than one year as demand sped past available supply, backing up unusually strong pricing for third-party capacity.That claim is critical to BofA’s bullishness.A sub-one-year cash payback makes the current capex surge economically rational, even if it appears alarming on the cash-flow statement.At the same time, it introduces a major risk.Those returns depend heavily on today’s shortage of computing capacity. As SpaceX, hyperscalers, and specialized cloud providers add supply, pricing will likely normalize and lengthen those payback periods.How much value has SpaceX lost, and could selling worsen it?SpaceX shares traded at $108.27, following a 14% post-earnings plunge on Aug. 5, according to Yahoo Finance.The stock ended the previous day near $125.28, which meant the earnings fallout erased roughly $223 billion in market value at the Aug. 5 close.Since pricing its IPO at $135 and a $1.8 trillion valuation, SpaceX has dropped about 17% at $112, wiping out $300 billion in equity value. Moreover, it remains roughly 50% below its post-IPO peak.The next pressure point arrived Aug. 6, when up to 911.5 million insider shares, worth roughly $100 billion, become eligible for sale. Not every holder will sell, but it unlocks double the thin public float, raising supply and volatility.In addition, according to Barchart data, SpaceX stock has tanked 28.3% over the past 20 trading days and another 2.8% over five days. Its 20-day average true range is $11.28, meaning the shares have moved by nearly 10.3% per session, underscoring incredible volatility. Meanwhile, its nine-day relative strength index sits near 38, indicating sluggish momentum. What investors need to see for the $235 target to holdBofA’s $235 price target is based on a discounted cash-flow analysis of bull, base, and bear scenarios stretching through 2045. Apart from being an unusually long period of time, it uses a 5% long-term growth rate and discount rates ranging from 14% to 28%, underscoring high uncertainty surrounding the business.Even after the stock’s decline, SpaceX remains remarkably expensive based on near-term earnings. BofA’s estimates imply a 137.7x PE ratio, but that figure drops to 17.2x if the company can deliver quadruple-digit earnings growth from 2026 levels (a tall order, to say the least).The next big catalyst is Starship Flight 14, expected in late August or early September. BofA will be monitoring whether the upper stage can potentially reach orbit, survive reentry, and demonstrate a controlled tower landing. Success will strengthen the case for rapid reusability, lower launch costs, and eventual orbital computing infrastructure.So Starlink Mobile offers a major opportunity, but it’s not without its caveats.SpaceX is looking to deploy its own terrestrial infrastructure and compete head-on with U.S. wireless carriers instead of relying entirely on mobile-network partners. Going alone would improve long-term unit economics but would entail a lot more capital and expose SpaceX to greater regulatory and competitive risks. Related: Morgan Stanley sends cautious Apple stock message after earnings