The next major market bubble may not come from AI software or crypto tokens. It may come from orbit.
Wall Street is rapidly repositioning around the idea that space is becoming the next multi-trillion-dollar economic battleground, and the coming IPO of SpaceX is accelerating the frenzy. New Street Research just initiated coverage on 10 space-related companies while signaling that SpaceX’s expected midyear IPO could become one of the largest and most influential public offerings in market history.
The timing matters. Retail investors are already chasing anything tied to rockets, satellites, AI infrastructure, and defense technology. Institutional money is now joining the move.
And that changes the risk profile entirely.
Wall Street Is Quietly Building a “Space Trade”
New Street Research launched coverage this week on a basket of space and satellite companies, handing Buy ratings to RKLB, VSAT, EchoStar, and UAE-based Space42.
The catalyst behind the calls is straightforward: analysts believe the economics of space have fundamentally changed.
Launch costs have collapsed over the past decade thanks largely to reusable rocket technology pioneered by SpaceX. According to New Street, SpaceX’s Starship system could eventually reduce launch costs by another 90% compared to Falcon 9, which already slashed costs versus the Space Shuttle era by more than 95%.
That cost compression opens the door to something much larger than satellite internet.
Wall Street now sees a future where telecom infrastructure, military systems, Earth imaging, AI computing, logistics, and broadband networks increasingly shift into orbit.
That is why analysts are beginning to talk about “the space economy” the same way investors once discussed “the internet economy” in the late 1990s or “the AI economy” over the past two years.
Rocket Lab Is Becoming the Purest Public Market Bet
Among the names attracting the most attention is RKLB.
The stock has exploded roughly 415% over the past 12 months as investors increasingly view the company as the only meaningful Western launch competitor outside of SpaceX. Roughly 80% of analysts covering the company now rate the stock Buy, well above the broader market average.
New Street slapped a $150 price target on the shares despite Rocket Lab already trading at extremely aggressive valuation levels.
That is where things become dangerous.
Rocket Lab is currently trading around 111 times forward sales expectations, a valuation multiple that assumes massive future execution and near-flawless industry expansion. The company is not expected to achieve profitability until 2028 according to FactSet estimates.
Investors are no longer pricing Rocket Lab based on current fundamentals. They are pricing it based on future dominance in a market that may not fully exist yet.
That does not mean the trade is irrational.
It means investors need to understand what kind of trade this actually is.
This Is Starting to Resemble Early AI Market Behavior
The real story underneath this rally is psychological.
Markets are increasingly rewarding “infrastructure narratives” over near-term earnings. That same dynamic powered Nvidia’s historic rally during the AI boom. Investors became willing to pay extreme premiums for companies seen as owning the rails of the next economic era.
Space is beginning to receive similar treatment.
Rocket launch systems, satellite spectrum, defense communications, orbital broadband, and even space-based AI data centers are being framed as scarce strategic assets.
That framing matters because scarcity narratives can sustain high valuations far longer than traditional valuation models suggest.
Investors chasing this trade are effectively betting that governments and corporations will spend trillions over the next two decades building orbital infrastructure.
If that thesis gains broader institutional acceptance after the SpaceX IPO, the entire sector could rerate higher again.
Why Defense Investors Are Paying Attention
This story is bigger than speculative tech enthusiasm.
Defense spending is becoming deeply intertwined with the commercial space industry.
Governments increasingly view satellite networks, missile tracking systems, Earth imaging, communications infrastructure, and launch capacity as national security priorities. That has turned companies tied to orbital infrastructure into geopolitical assets.
This is one reason firms like EchoStar and VSAT are attracting attention despite mixed historical performance.
New Street specifically pointed to valuable spectrum assets and strategic positioning.
Meanwhile, SpaceX’s dominance through Starlink has created pressure on legacy satellite operators including Eutelsat and Telesat, both of which received Sell ratings.
That divide is critical for investors.
The winners in the next phase of the space economy may not necessarily be the companies already operating satellites today. The winners may be the firms controlling launch infrastructure, spectrum rights, military integration, or scalable orbital networks.
The IPO Could Become a Liquidity Vacuum
The SpaceX IPO itself may become a major market event.
If the company achieves anything close to the rumored $2 trillion valuation, it would instantly become one of the most valuable companies on Earth. That would likely trigger massive institutional reallocations, ETF adjustments, and speculative retail flows into adjacent names.
Historically, blockbuster IPOs create sympathy rallies across entire sectors.
That happened during the dot-com era. It happened during the EV boom. It happened during AI infrastructure rallies.
Space stocks could become the next momentum cluster.
The risk is that expectations may begin running far ahead of commercial reality.
Even bullish analysts acknowledge that many of these companies are years away from generating meaningful free cash flow. Several rely heavily on future contracts, government spending assumptions, and technologies still under development.
That creates a setup where volatility could become extreme.
Catalysts Investors Should Watch Next
- SpaceX IPO timing and valuation disclosures
- Additional Wall Street coverage initiations on space companies
- Pentagon and NATO spending tied to satellite systems and orbital defense
- Progress on Starship launches and launch cost reductions
- AI infrastructure partnerships involving orbital computing or communications
- Retail investor momentum flows into speculative space names
- Capital raises from unprofitable companies attempting to capitalize on enthusiasm
The Bottom Line
The market is beginning to treat space as the next strategic economic frontier.
That does not mean every space stock becomes a winner. Many will likely collapse under unrealistic expectations. But the capital rotation underway is real, and SpaceX’s expected IPO could dramatically accelerate it.
Investors should view this sector the same way they would have viewed early AI infrastructure plays several years ago: potentially transformational, highly speculative, and capable of producing both extraordinary winners and brutal reversals.
The companies controlling launch systems, spectrum, orbital communications, and defense integration are attracting the smartest money right now.
Everyone else is chasing the headline.
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