Key Takeaways
- SpaceX’s AI arm, xAI, posted a staggering 213% revenue jump to $2.56 billion in Q2 2024, far outpacing Alphabet’s reported AI‑related growth.
- Alphabet’s Google Cloud remains a far larger and profitable business, delivering $24.8 billion in revenue and an $8.8 billion operating profit in the same quarter.
- Valuation concerns loom for SpaceX: analysts project ~$44.6 billion of 2026 revenue, implying a price‑to‑sales ratio of roughly 41×, well above Alphabet’s historic multiples.
- The Motley Fool’s Stock Advisor did not include SpaceX in its current “10 best stocks” list, citing its high valuation and uncertain profitability.
- Overall, the article concludes that Alphabet offers a more attractive risk‑adjusted entry point for investors seeking exposure to the AI boom.
SpaceX’s AI business is booming
Prior to its public debut, SpaceX acquired xAI, the creator of the Grok large language model and the parent of X (formerly Twitter). “During the second quarter last year, xAI generated $818 million in revenue. This Q2, it produced $2.56 billion — a 213% growth rate,” the article notes, highlighting a surge that eclipses any AI‑related growth Alphabet has disclosed. This rapid expansion gives SpaceX a foothold in what the piece calls “the most important technological trend seen in a long time: AI.”
Alphabet has a different segment of AI
While Alphabet also develops its own large language models to compete with xAI’s Grok, the article points out that “how those are accounted for in Alphabet’s financials is not as clear as SpaceX’s.” Consequently, any AI‑driven growth could be hidden within other divisions. The more transparent AI‑related business for Alphabet is its cloud computing arm, Google Cloud, which “is thriving, as several AI firms would rather rent computing power than build it themselves.”
Google Cloud’s impressive performance
The article provides concrete numbers: “During Q2, Google Cloud’s revenue increased by 82% year over year to $24.8 billion.” By contrast, SpaceX’s total revenue for the same period was $7.8 billion, meaning Google Cloud alone is roughly three times larger than the entire SpaceX enterprise. Profitability further separates the two: “Google Cloud produced an $8.8 billion operating profit,” whereas SpaceX “posted a $143 million loss from operations.”
Why Google Cloud may be the better AI business
Because cloud infrastructure is essential for training and deploying AI models, the article argues that Alphabet benefits from a “massive AI buildout” that is unlikely to slow down. The combination of scale, profitability, and clear AI‑related demand makes Google Cloud a “better business by itself than SpaceX,” according to the author’s assessment.
SpaceX is a very expensive stock
Valuing SpaceX proves challenging due to its limited public‑market history. The article explains that “investors need to use analyst projections to value the stock. For 2026, they expect an average of $44.6 billion in revenue. That values SpaceX at about 41 times sales.” In contrast, Alphabet’s price‑to‑sales ratio has “never traded for more than 10 times sales for nearly the past two decades,” peaking only near 25× during its early high‑growth years.
Motley Fool’s perspective on valuation
The author explicitly states, “I think the 40 times sales price tag on SpaceX is just too steep,” and argues that Alphabet’s “great AI offerings and business units that will thrive from increased AI spending” make it a more compelling investment. While not dismissing SpaceX’s potential to win the AI arms race, the piece concludes that Alphabet holds a stronger position from both a business and stock‑price standpoint.
Should you buy SpaceX stock right now?
The article advises caution before purchasing SpaceX shares, noting that “The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Space Exploration Technologies wasn’t one of them.” It then recalls past successes: “Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $430,571! Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,399,268!” The implied message is that SpaceX’s absence from the list signals a weaker outlook relative to those historical winners.
Disclosures and source
The piece concludes with standard disclosures: “Keithen Drury has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.” It also credits the original publication: “SpaceX vs. Alphabet: Which Is the Best Artificial Intelligence (AI) Stock to Buy Now? was originally published by The Motley Fool.”
In summary, while SpaceX’s AI subsidiary xAI exhibits explosive revenue growth, its overall valuation and current profitability lag far behind Alphabet’s Google Cloud division. Alphabet’s larger scale, clear profitability, and more modest valuation multiples lead the article to recommend Alphabet as the preferable AI stock for investors at today’s levels.
https://finance.yahoo.com/technology/ai/articles/spacex-vs-alphabet-best-artificial-082000324.html