After a Nasty Post-IPO Selloff, SpaceX Looks to the Pentagon to Give SPCX Stock a Boost

According to a report in The Wall Street Journal , the Pentagon is looking to source compute from SpaceX to run AI models. Not confirmed by either organization, the deal could be worth billions of dollars for SpaceX (SPCX) and deepen its ties with the government. Notably, the deal would be along similar lines to the ones the company has with the likes of Anthropic, Alphabet (GOOG) (GOOGL), and Reflection AI.

However, the news was not enough to arrest the decline in SPCX stock, which is down more than 25% since its listing, witnessing seven straight sessions of losses. Although today might break that trend, to some extent, as the stock is up about 7% in morning trading. The company's market cap now stands at $1.6 trillion.

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Yet, just as the euphoria around the stock in the initial days smacked of overreaction, has the recent correction been the same as well? I believe so, as investors with a bent of mind aligned with the long term should see this as an opportunity to add SPCX stock at a discount to its IPO price. Why? Let's find out.

In my last deep-dive analysis, I made a case as to why SpaceX will not be for short-term thrill seekers but for patient, long-term investors. Yes, the ride will be topsy-turvy (not what one likes to hear about a rocket company). Yet, Musk has been there and done that in the automobile space with Tesla (TSLA) (with the rider that it encountered numerous speed bumps along the way of varying timelines and intense competition from China), and if I were a betting man, I would put my money on him again to deliver.

His shifting focus away from politics and a $1 trillion pay package certainly helps.

However, apart from the usual growth drivers of AI and space, what are the other things that make SPCX an exciting bet?

The most underrated aspect of SpaceX's competitive advantage is its vertically integrated manufacturing prowess. For instance, by mid-2025, the company was stamping out over 15,000 Starlink user terminals per day inside its Bastrop, Texas facility. That same factory churns out solar arrays, ion thrusters, and phased array antennas entirely in-house, which allowed SpaceX to deploy over 10,000 satellites without ever being held hostage by a third-party parts shortage.

Then, coming to its compute business, what stands apart is the Colossus supercomputing complex in Memphis, which by March 2026 had scaled to over 150,000 H100 GPUs, 50,000 H200 GPUs, and 30,000 GB200 GPUs, making it the largest fully operational, single-coherent AI training cluster in the world. The payoff is already visible in the revenue line, with the previously disclosed compute leasing agreements with Anthropic and Alphabet (GOOG) (GOOGL) potentially delivering up to $2 billion a month through mid 2029, a figure that would make this compute business rival the entire launch services segment in sheer cash generation even before factoring in the orbital ambitions.

Finally, energy independence is what fuels the company's compute ambitions.

xAI's Colossus complex in Memphis started with just an 8 megawatt grid connection when the first 100,000 GPUs went live in July 2024, which is roughly enough to power a small shopping center rather than what would become the world's largest AI training cluster. To bridge that gap at the speed Musk demanded, xAI controversially deployed a fleet of gas turbines from rental supplier Solaris Energy Infrastructure (SEI) alongside 208 Tesla Megapacks and eventually brought a purpose-built 150-megawatt substation online in 97 days, a process that would normally take two and a half years. A second 150-megawatt substation followed, bringing total grid supply to 300 megawatts, with the gas turbines progressively shifted from primary power source to a backup and peaking capacity as each substation came online.

Looking forward, xAI has filed plans for a 1.2-gigawatt natural gas power plant to serve the Memphis campus as it scales toward one million GPUs, alongside a joint venture with Solaris Energy, targeting over 1.1 gigawatts of total on-site generation capacity by the second quarter of 2027.

SpaceX has shown notable revenue expansion over recent years, advancing from $10.4 billion in 2023 to $18.7 billion in 2025. The company recorded profits of $791 million in 2024 before reporting losses of $4.9 billion the following year.

Net cash from operating activities increased during this timeframe, reaching $6.8 billion in 2025 from $4.5 billion in 2023. The firm closed 2025 with a strong cash position of $24.7 billion and minimal short-term debt, which helps address potential liquidity questions.

In the first quarter of 2026, revenue grew 15.4% year-over-year (YoY) to $4.7 billion. Net losses widened substantially to $5 billion from $528 million in the comparable period a year earlier.