Ever since Elon Musk’s Space Exploration Technologies (TSX: SPCX), or SpaceX as it’s better known, hit the ground running with its IPO, there’s been increased interest in space and the future of the orbital economy (and beyond). Of course, it’s fun and exciting to be at the very frontier of an emerging market that may very well swell in size over the coming years and decades.
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SpaceX is the titan that’s captured the hearts of investors looking to participate in the space race
But, at the same time, there’s uncertainty about whether the next big frontier of growth will exceed other opportunities on this planet. Indeed, the rise of AI may very well be where the earnings growth opportunities lie in the next two to three years, as compute helps pave the way for next-generation applications and perhaps the occasional breakthrough.
When you consider the amount of AI that goes into SpaceX, I do think that it’s primed for growth either way. For investors who want a Canadian way to play the space economy, I do think that MDA Space (TSX: MDA) starts to stand out. Though shares are currently in the midst of a correction, down around 34% from its all-time highs, I do think that there might be an opportunity for dip-buyers as SpaceX launches keep the industry in focus.
Of course, you’re not going to get widely followed launches with MDA Space, given it’s a satellite and infrastructure play, but, in my view, any SpaceX successes (think Starlink and Starship advancements), I think, will bolster the industry as a whole, providing a nice jolt to names, including the likes of MDA Space.
MDA Space is looking like a value play
Beyond satellite systems, MDA Space’s space robotics arm (forgive the pun) could get a massive boost if SpaceX really starts breaking new ground on some of its lunar ambitions. Of course, it feels way too early to start thinking about lunar manufacturing sites, but at the end of the day, I do think that MDA Space, the $7.2 billion lesser-known space play, might be a cheaper backdoor into the booming industry. Does that mean you should favour the Canadian name over the likes of SpaceX?
In my view, SpaceX is a space play that’s in another world, with xAI (think Grok and Cursor), Colossus data centres, and, of course, skin in the game of a new chip fab named Terafab. That’s a vastly different play than MDA Space. And, in my view, I do think that those looking for big wins in AI while the extremely long-term space business expands might be better off in a SpaceX.
The bottom line
Personally, I think there’s no reason why one can’t own shares of both companies. At the end of the day, SpaceX is a giant with a nearly $2 trillion market cap, while MDA Space is a mid-cap titan that punches way above its weight class, and at 35 times forward price-to-earnings (P/E), I do think that there’s potential value to be had in the name. At the end of the day, MDA has a nice moat of its own, and let’s just say I wouldn’t be surprised if it were to become an acquisition target at some point down the line, given its role as a supplier of space-based infrastructure.
