Oppenheimer became the first global brokerage to start coverage of SpaceX, ahead of the rocket and AI company’s highly anticipated $75 billion market debut on Friday.

The brokerage issued an “outperform” rating and set a price target of $190, implying an upside of nearly 41% to SpaceX’s IPO price of $135.

The $190 price target means Oppenheimer expects Elon Musk-led SpaceX, aiming for a $1.75 trillion IPO valuation, to notch a market capitalization of about $2.5 trillion in the next 12-18 months.

“We see it as the only vertically integrated AI company with the required capital, data, LLMs, hardware, manufacturing and engineering talent,” Oppenheimer analyst Timothy Horan said in a note published on Thursday.

Horan expects the Starlink satellite internet service to be the main cash generator, and SpaceX’s AI business, including xAI, to become the largest contributor over time.

An eventual merger with Tesla is “plausible”, Horan noted, but believes both companies will “remain a quasi-vertically integrated ecosystem” to maintain access to capital.

New Street Research soon followed, initiating coverage with a 12-month price target of $165.

But Not All Analysts Are Bullish

Earlier this month, Morningstar analysts pegged SpaceX’s valuation at $780 billion, less than half of what the company is reportedly targeting in its IPO, saying prospects for its AI business, which includes xAI and social media platform X, were uncertain.

Unlike the IPO’s underwriters, which must observe a post-listing quiet period before initiating research coverage, brokerages outside the syndicate face no such restrictions and can publish their views on the stock shortly before or immediately after its market debut.

J.P. Morgan, Goldman Sachs and Morgan Stanley are among the more than a dozen underwriters for the IPO.

Oppenheimer’s Horan expects “an initial demand/supply imbalance on SPCX shares given broad retail demand and accelerated index inclusion,” following the market debut.

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(Reporting by Siddarth S in Bengaluru; additional reporting by Manya Saini in Bengaluru; Editing by Shinjini Ganguli and Shilpi Majumdar)