Oppenheimer initiated coverage of SpaceX (SPCX) with an Outperform rating and a $190 price target on Thursday, one day before the company begins trading on the Nasdaq under the ticker SPCX. The price target implies around 40% upside from the $135 IPO price, and values the firm at a hefty $2.5 trillion.

Analyst Timothy Horan said SpaceX intends to converge communications and cloud computing using space-based infrastructure, calling it “the only vertically-integrated AI company with the required capital, data, LLMs, hardware, manufacturing and engineering talent.” The firm sees a potential $10 trillion total addressable market by 2035.

Key to that return is space-based, or orbital, data centers and getting that equipment up into space. Horan notes SpaceX is targeting 10,000 Starship launches per year, or 27 a day — to deploy one million orbital data centers and 100,000 communications satellites supporting a terawatt of its own manufactured chips.

Oppenheimer expects growth to accelerate in 2027 as Starship enters commercial service, but warned that the rocket “needs to enter commercial service before year-end” for its estimates to hold.

In the near term, there is some momentum on the AI, terrestrial data center side. SpaceX signed over $26 billion in annualized data center capacity deals in the past month, including Colossus compute agreements with Anthropic worth $1.25 billion per month and Google (GOOG) worth $920 million per month — though both carry 90-day termination clauses.

The data center compute deals have faced criticism due to those short termination clauses, and concerns over circular financing.

Horan says there are risks owning the stock. At more than 100 times trailing revenue, the stock is expensive, and the technology behind data centers in space is unproven. Thermal management of chips in space “within four years appears challenging,” he said, though SpaceX’s terrestrial data center like Colossus is a possible backup plan. Regulatory, execution and key-man risks tied to CEO Elon Musk are also top concerns.

Oppenheimer also said SpaceX’s small float, or supply of publicly traded shares, is a problem. With roughly 4.3% of shares trading freely, the firm expects an initial demand-supply imbalance driven by retail interest and accelerated index inclusion, and “high volatility, with shares trading up initially.”

Historical small-float IPOs including ARM and Google popped on day one before volatile but ultimately strong 12-month runs, Horan noted, cautioning there is no assurance investors can buy at the $135 price set by underwriters.