Bernstein remains bullish on SpaceX but sees challenges in telecom ambitions

Investing.com -- Bernstein weighed in on SpaceX's ambition to build a standalone direct-to-device mobile network, which they believe faces stubborn physics problems that are unlikely to be resolved anytime soon.

The analysis carries clear implications for U.S. incumbent carriers AT&T (NYSE: T), Verizon (NYSE: VZ), and T-Mobile (NASDAQ: TMUS), all of which face the prospect of a SpaceX-led mobile entrant and currently invest double-digit billions of dollars annually to maintain nationwide LTE and 5G coverage.

Bernstein analyst Douglas Harned, writing in conjunction with the firm's U.S. Telecom and Communications Infrastructure teams, maintains an Outperform rating and $248 price target and frames SpaceX's broader valuation opportunity around its space launch dominance and the AI-driven orbital data center theme. "We have seen the opportunity for a multi-trillion dollar valuation of SpaceX as coming primarily from the linkage between its dominant space launch position and the AI opportunity from orbital data centers," Harned wrote. The mobile D2D segment, by contrast, is where Bernstein's bull case becomes qualified.

SpaceX reiterated on its Q2 earnings call its intention to launch its Mobile business by late 2027, and the company is already working with mobile network operators in more than 30 countries on its D2D service. The coming V2 satellite constellation represents a genuine engineering leap, operating at approximately 350 km altitude versus the roughly 500 km of current LEO satellites, with four times the receiver size and higher beam density. But Harned argues that closing the remaining gap to terrestrial performance requires advances that the industry has not yet achieved.

Harned identifies three core technical constraints. The first is uplink free-space path loss: a satellite at 350 km is orders of magnitude farther from a handset than a cell tower a few hundred meters away, and compensating for that additional path loss demands meaningful advances on both the handset and satellite side. The second is battery drain, as operating a smartphone at the higher transmit power needed to reach a LEO satellite accelerates battery depletion in ways consumers will not tolerate as a primary service. The third is antenna gain. On that point, Harned is particularly direct: "Amplifying a poor-quality signal is like turning up the volume on a conversation you can barely understand. Louder does not necessarily mean clearer."

Taken together, Bernstein's assessment is blunt. "All these are engineering problems that are unlikely to be fully solved in the near-term," Harned wrote. "SPCX will likely need to continue exploring additional approaches to provide a wireless service capable of competing with incumbent operators." The firm's conclusion is that D2D satellite connectivity, in its current form, can serve as a valuable supplemental coverage layer in remote areas but falls short of what consumers expect from a primary wireless provider — reliable indoor coverage, consistent performance, and low latency.

The strategic fork Harned presents is stark: "neither a D2D-only strategy nor a traditional greenfield network build appears to offer an obvious answer." Building a nationwide terrestrial network from scratch would require the kind of sustained capital commitment that AT&T, Verizon, and T-Mobile each make every year, a daunting prospect for a company whose core revenues today come from Starlink broadband rather than mobile. Bernstein's preferred path is a partnership or MVNO model, where SpaceX licenses its spectrum and satellite capacity to incumbents rather than competing head-on. "We continue to see 'partner' as the right solution (i.e., MVNO)," Harned noted, acknowledging that SpaceX continues to float the build option publicly.

Commercially, the challenge is equally clear. "To make this an economic success, it must be much more than dead zone coverage," Harned wrote, pointing out that a dead-zone-only value proposition cannot justify the capital and engineering investment required to scale a mobile business.

With a late-2027 launch target still on SpaceX's roadmap, Bernstein's report sets up the V2 constellation deployment and any formal MVNO partnership announcement as the most meaningful near-term catalysts for the mobile thesis. Until then, the firm's Outperform call rests on the launch and AI infrastructure story, not on mobile becoming a standalone competitive force.

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