RKLB Stock Jumps: Why Is Rocket Lab Surging in Early 2026?

Rocket Lab (RKLB) surged 65.5% in December 2025 due to a $816M U.S. Space Force contract and renewed investor optimism in the space economy. Morgan Stanley upgraded RKLB to Overweight and raised its price target to $105 from $67, citing strategic importance and long-term growth potential. A DCF analysis suggests Rocket Lab is overvalued by 31.5%, with a fair value of $73.25 per share, far below the current price.

Rocket Lab is in the spotlight as the space industry gains momentum. The company's recent $816 million contract with the U.S. Space Force for 18 satellites has pushed its stock to new heights. Investors are watching closely as this deal not only strengthens Rocket Lab's financial position but also cements its role as a key player in national defense and satellite tracking. The company's stock has surged over 200% since early 2025 and is flirting with $100 per share, reflecting strong market confidence.

Why Is RKLB Stock Rising in Early 2026?

Rocket Lab's recent performance has been driven by a perfect storm of factors. The company secured a $816 million contract with the U.S. Space Development Agency to build 18 satellites with advanced missile warning and tracking capabilities. This is the largest contract in Rocket Lab's history and a major step forward in its national security positioning. Additionally, it received a long-awaited upgrade from Morgan Stanley, which cited Rocket Lab's growing role in the space economy and its ability to execute repeatable, successful launches with its Electron rocket.

Morgan Stanley's upgrade was not just a technical move — it was a strategic signal that Rocket Lab is now being taken seriously by major financial institutions. The firm raised its price target to $105 per share, nearly 15% above the current price. This upgrade came on the heels of several analysts from Needham and Stifel increasing their price targets as well. Analysts see Rocket Lab as a vertically integrated space prime with a unique combination of capabilities in satellite manufacturing, launch services, and national defense support.

Is RKLB Stock Overvalued or Undervalued in 2026?

While the recent surge in Rocket Lab's stock has been impressive, valuation concerns remain. A DCF analysis suggests the stock is overvalued by 31.5%, with a fair value per share of $73.25. Rocket Lab is currently trading at a price-to-book ratio of 40.16x, far above the industry average of 4.27x. This indicates the stock is priced for significant growth, but that growth may not be fully supported by near-term fundamentals.

Still, Rocket Lab's long-term prospects remain strong. The company is expected to convert its Defense and Space Systems backlog into approximately $900 million in revenue in 2026. This growth trajectory, combined with a 52.42% revenue increase in the last twelve months, has led to increased investor confidence. Rocket Lab is now one of the few vertically integrated space primes that matter in the national security space.

What Should Retail Investors Watch in 2026?

For retail investors, the key to Rocket Lab's success will be how it executes on its large backlog and continues to secure high-profile defense contracts. The company's ability to deliver on the Neutron rocket program will also be a major factor. Neutron is a larger, more powerful rocket designed to carry heavier payloads and is expected to compete with SpaceX's Starship in the commercial and government launch markets.

Investors should also keep an eye on Rocket Lab's expenses. In the most recent quarter, the company reported $155 million in revenue but $214 million in expenses. While this is a common pattern for high-growth aerospace companies, it raises questions about when Rocket Lab will reach profitability. The recent contract wins and strong investor sentiment have helped the stock trade at a premium, but fundamentals will need to catch up eventually.

Ultimately, Rocket Lab is at an inflection point. It has moved beyond the startup phase and is now a serious player in the space industry. The coming months will test whether the company can sustain its momentum and whether the current valuation is justified by the long-term growth potential in the space economy.