Why Morgan Stanley calls SpaceX stock cheap: Starship, Starlink and the $300 target

October 6, 2026 was a loud day on the SPCX tape. SpaceX shares jumped 7.66% to close at $171.13, crossing the $170 line for the first time since the June listing. A 17% climb over five sessions overshadowed even the roughly 2% gains of the tech giants on a day the Nasdaq closed at a record. The move forces one question on every stock investor watching the name: is a solid valuation behind the rally, or are expectations running ahead of it. The host goes looking for the answer in Morgan Stanley's latest note.

The core of the answer is the bank's $300 price target. Morgan Stanley keeps an overweight rating on SpaceX and argues the target carries about 75% upside from current levels. The reasoning is that the AI business is barely reflected in the price: at around $160 a share, the bank estimates this unit is valued at only $32 a share, roughly one-fifth of the total. If the same unit reaches maturity, it could be worth $165 a share on its own. All of these figures are taken from HeraldCorp's October 6 market note and match the closing prints exactly.

Proof from orbit: Starship's 14th flight

The skyborne support for the bank's thesis arrived on September 28 with the 14th flight. Starship lifted off from the Starbase site in Texas on 33 engines; the 124-meter vehicle reached orbital velocity for the first time, leaving behind the deliberately slowed suborbital profiles of earlier attempts. From its cargo bay, 26 next-generation Starlink satellites were released into orbit one by one; these spacecraft are too large to fit inside a Falcon 9 fairing. The dispenser mechanism, working like a cassette feed, was the most discussed technical detail of the flight. These flight-log details are taken from ArsTechnica's September 28 flight analysis, and the liftoff time and thrust figures match the records published there.

What matters about these satellites is not their size but the revenue structure behind them. Starlink, with its subscription-based connectivity business, is the cash-generating arm of SpaceX, and the new generation of satellites expands capacity considerably. These large satellites, which cannot reach orbit without Starship, are seen as the main lever lifting the scale of connectivity revenue. It is no surprise, then, that AI and connectivity income, not launch services, take the lion's share in Morgan Stanley's valuation. For investors, the first indicator to watch is Starship's flight cadence and the number of satellites carried per flight.

The valuation math is worth rewinding to the listing days. SpaceX priced its shares at $135 on June 11, 2026, signing the largest public offering in history at a roughly $1.77 trillion valuation and raising $75 billion. The first-day close came at $161, up 19.2%, putting the value at $2.11 trillion. Trading under the SPCX symbol on Nasdaq began the next day; contrary to expectations, the whole company listed at once rather than spinning out only the satellite arm. Starlink's 2025 revenue of $11.4 billion making up 61% of company sales explains why the whole was sold together. This offering calendar and revenue split are taken from ValueAddVC's IPO review, and the pricing steps match the records kept there.

A basket instead of a single share

For stock investors who prefer not to buy SPCX directly, the basket side has matured as well. According to TickerInside records, SpaceX is held by 156 American stock funds ; 12 of them carry a weight above 5% while 91 keep it below 1%. The median weight reads 0.56% , with the largest position at 32.06% in the RONB fund. Among familiar index funds, QQQ sits ninth with 3% and AIQ holds 3.81%; VOO, SPY and IVV carry no SPCX at all. This entire fund breakdown is taken from TickerInside's current fund files, and the weight ranking matches the table published there.

The second leg of the thesis stands on computing power. Broadcom's chief executive said the company has secured supply for about $115 billion in 2027 AI revenue, added that demand exceeds this outlook, and expects growth to continue into 2028. The balance sheet backing it looked strong too: in the quarter ended in early August, sales rose 86% to $29.6 billion and earnings per share climbed 96% to $3.32. Custom-designed circuits have opened a separate lane alongside general-purpose accelerators. These results and executive remarks are taken from Fool's earnings analysis, and the percentages match the records kept there. According to TipRanks' October 6 pre-market note, AMD, NVDA and AVGO are rising together; the plan to expand supply materially in 2027 on the AMD side and 43.23% upside on Broadcom stand out.

The third leg hides in data-center power and cooling. According to a TIKR review, Vertiv and Eaton sell the same equipment into nearly every new data center, no matter which technology company pulls ahead. Both firms reported record order backlogs in the second quarter of 2026 and lifted their full-year expectations; yet valuation multiples trade near historical peaks. Vertiv works the uninterrupted-power and liquid-cooling side while Eaton covers switchgear and power distribution, an approach management describes as a grid-to-chip strategy. This picks-and-shovels framing and the order figures are taken from TIKR's infrastructure review, and the quarterly results match the records kept there.

Reading it as a portfolio

Put together, the host's framework turns clear: SPCX for orbit and connectivity, NVDA and AVGO for computing power, ETN and VRT for electrical infrastructure. Because these names all lean on the same theme, the AI-driven capital-spending cycle, they can rise and fall together; what looks like diversification may carry a single bet in different costumes. Capping the weight of each leg separately matters more than picking a single share, which is why this three-legged frame earns its keep. In a rally that ran 17% in five sessions, that discipline marks the difference between chasing the stock and sticking to the plan.

The last word belongs to valuation again. Morgan Stanley's cheapness claim looks to 2028 and rests on two conditions: Starship cadence holding up, and AI plus connectivity revenue climbing far above today's price. If those conditions land, the $300 target stays reasonable; if delays arrive, the share could buckle under heavy expectations. The three indicators for investors are set: the Starship flight calendar, Starlink's quarterly revenue, and disclosed accelerator orders. Read together, they let the cheap-or-expensive question be answered anew every earnings season.