Will Space Stocks Soar?

Bitcoin is in a slump, down about 25% this year and losing about half of its value since reaching a peak above $126,000 in early October.

The market is also getting impatient with the on and off Hormuz story as energy stockpiles dwindle and oil prices react to the daily news cycle.

Gold has overtaken US Treasury bonds to become central banks’ favorite investment, as faith in America’s political stability and public finances erode a bit. The share of gold in central banks’ official holdings of foreign currencies climbed to 27% last year, surpassing US Treasuries at 22%, according to a report from the European Central Bank (ECB).

The retail trading crowd has found a surprising new meme stock: IBM (IBM). As a result, the stock posted its best two-day showing in records going back to the early 1970s and shares were up 19.8% this week following last week’s 14.8% gain.

The catalyst seems to be the recent award of $1 billion for its quantum computing initiative and recognition that IBM is a sleeper AI play. AI continues to create surging demand for more data and communication infrastructure. A remarkable 61% of all venture capital last year went into AI, according to the Organization for Economic Cooperation and Development (OECD).

However, in terms of AI spending, China is still putting disproportionate sums of capital into advanced manufacturing sectors instead of AI data centers. It is integrating and deploying AI to boost manufacturing and industrial productivity.

As we turn to SpaceX, I should note that our Alphabet (GOOG) might own around $100 billion stake in SpaceX, a consequence of its 2015 investment in the rocket company. Alphabet’s holding wasn’t reported in SpaceX’s IPO registration document, which only means Alphabet doesn’t own more than 5% of the company. Nevertheless, $100 billion is a lot, even if it’s only 2% of Alphabet’s market value.

SpaceX may be one of the greatest private companies ever built. It dominates commercial launch. Starlink has become a global satellite broadband network. Reusable rockets have changed the economics of space. The global space economy is already estimated to be worth more than $600 billion as the economics of the broader space sector become more practical. Satellites are cheaper while defense and strategic rivalry is growing.

But even great companies can still make poor investments at the wrong price. Investors learned this lesson with Cisco Systems during the dot-com bubble. Cisco sold the picks and shovels during the internet boom. Yet investors who bought Cisco at the peak in 2000 spent years trying to claw back deep losses. The business was real, the potential profits were there but the valuation was - ridiculous.

Although the valuation and target price has come back a bit, this is the danger with SpaceX I’m not negative on the company and would have snapped up SpaceX shares a few years ago at venture-capital prices if I had had the chance.

Today’s space economy infrastructure includes satellite internet, launch services, space robotics, defense communications, and eventually even orbital data centers. One key driver is that launch costs are falling. When this happens, everything becomes easier.

For the space economy, that means rockets, satellites, propulsion, robotics, sensors, communications and defense systems. That is where I have been looking for alternatives to SpaceX but such stocks as Rocket Lab (RKLB), BlackSky Technology (BKSY), and AST SpaceMobile (ASTS) have already really taken off.

I also like Kratos Defense & Security Solutions (KTOS) – the maker of advanced XQ-58 Valkyrie drone aircraft that is Kratos’s marquee product.

Kratos is the primary unmanned aerial target drone system provider for the U.S. Air Force, Navy, Army and several allied defense agencies, which has led to multiple recent contracts and partnerships. The company currently holds orders for multiple Erinyes and DarkFury hypersonic vehicles – a key area of competition with China. Kratos took the stock market by storm in 2025, rising by 187%. However, Kratos shares have come way down in 2026, dropping approximately 50% from its all-time high. Still, I would prefer a better price entry point.

That is the main risk of moonshot investing. Paying too much.

The better strategy is not to bet the farm on one stock but own a carefully chosen basket and let the winners lead the way. In the space economy, that means rockets, satellites, propulsion, robotics, sensors, communications, and defense systems.

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