Jim Cramer Says Goldman's SpaceX Price Target Hike Proves It Wasn't Guesswork
Key Summary
CNBC host Jim Cramer attributes Goldman Sachs' $230 price target hike to SpaceX's rising stock price, citing analysts moving ahead of the stock instead of chasing it. The target hike follows Goldman's earlier $220 raise, which Cramer says looked hard to defend when SpaceX shares were near $120. Cramer links the target hike to demand for SpaceX's rented AI computing, which he says explains its $40 billion chip plan.
Fundamentals Behind the Price Target Hike
Goldman Sachs' higher target arrives before SpaceX reports third-quarter results.
The $230 target is its second raise since, citing higher expected AI capacity, revenue and margins.
Cramer links the target hike to demand for SpaceX's rented AI computing, which he says explains its $40 billion chip plan.
However, Bloomberg sources say the talks are preliminary and may not produce a deal.
Trading View reports Nvidia chip plan splits into $10 billion in bank loans and $30 billion in investment-grade debt.
The $40 billion would rank among the largest debt raises for AI infrastructure.
Goldman Sachs, a lead underwriter on SpaceX's June initial public offering (IPO), opened coverage at $205 in July under analyst Eric Sheridan.
The $220 target looked hard to defend when SpaceX shares sat near $120.
Since then, SpaceX has climbed, closing at $171.92 on October 6, according to Google Finance.
Cramer sees analysts moving ahead of the stock instead of chasing it.
He says the $220 target was not guesswork, but a result of rigorous analysis.
The latest raise changed his view.
Cramer adds that SpaceX's story could play out faster than Tesla's, though it does not suit his Charitable Trust.
Does the rest of Wall Street read the numbers the same way?
On August 5, Goldman lifted the target to $220 while Deutsche Bank cut its own from $255 to $235.
Meanwhile, Morgan Stanley's $300 target is the highest among the four banks that led the IPO.
SpaceX has been rising in the past 5 days.