Verizon vs. SpaceX: Which Stock Has Better Growth Prospects?

Verizon Communications VZ and Space Exploration Technologies Corp. SPCX are two key players in the connectivity market. Verizon provides a vast array of communication and business solutions that include wireless, local exchange, long-distance, data/broadband and Internet, video, managed networking, wholesale and cloud-based services. It has extensive 4G LTE network coverage and a steadily expanding 5G infrastructure with Ultra Wideband deployment.

Operating a fleet of more than 11,000 broadband and mobile satellites, SpaceX's Starlink offers satellite Internet directly to consumers and business enterprises. The network serves more than 13 million Starlink subscribers across 160 countries and other markets. SpaceX reported a median residential download speed of 225 Mbps during peak hours.

Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the industry.

The Case for VZ

Verizon is benefiting from the growing demand for its industry-leading 5G portfolio. The company delivers faster peak data speeds and capacity for customers, driven by disciplined engineering and steady infrastructure investments. The company’s 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology – massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells.

Verizon is witnessing significant 5G adoption and fixed wireless broadband momentum with premium unlimited plans. It is offering various mix-and-match pricing in both wireless and home broadband plans, which has led to solid customer additions. Moreover, in the enterprise and wholesale business, Verizon is shifting its revenue mix toward newer growth services like cloud, security and professional services.

However, the company operates in a highly competitive market, leading to intense price wars. Verizon has announced a three-year price lock guarantee for all its myPlan and myHome network plans. This ensures that the core monthly plan price for calling, data and texting will not change in the next three-year period, excluding taxes, fees and perks. Although the customer-first strategy is designed to woo new customers and retain existing ones, it is likely to contract margins. The company recorded high capital expenditures in order to support the launch and continued build-out of its 5G Ultra Wideband network, deployment of significant fiber assets across the country and an upgrade to Intelligent Edge Network architecture. It remains unclear if and when a reasonable return can be achieved from such investments.

The Case for SPCX

SpaceX has transformed the launch industry through its reusable Falcon 9 rockets, significantly reducing launch costs and increasing mission frequency. The company now conducts more launches annually than any of its global competitors, giving it a commanding share of the commercial launch market. In addition, Starlink provides recurring subscription income and potentially higher long-term margins. The business also benefits from a powerful competitive advantage. SpaceX can launch its own satellites at a fraction of the cost of its competitors, allowing Starlink to expand its network faster and more efficiently. As global demand for reliable broadband connectivity increases, Starlink's prospects become solid.

The Elon Musk-led company is aiming to evolve into a vertically integrated artificial intelligence (AI) infrastructure company by combining advanced AI models, large-scale computing capabilities and satellite connectivity under one umbrella. The transformation is likely to unlock a significantly larger addressable market while diversifying the company's revenue base beyond launch services and Starlink. As part of the transition, xAI's flagship chatbot, Grok, has started operating under the SpaceXAI brand. The integration is expected to strengthen collaboration between the company's AI software, computing infrastructure and satellite network, creating a differentiated ecosystem that few competitors can match.

The company plans to deploy AI compute satellites as early as 2028, effectively creating space-based data centers capable of delivering large-scale computing capacity. This initiative leverages SpaceX's leadership in satellite deployment while addressing the growing demand for AI computing resources. Alongside its satellite ambitions, SpaceX continues to expand its Colossus data center platform, strengthening its position in AI infrastructure. SpaceX has also entered into a definitive agreement to acquire Anysphere in an all-stock deal valued at $60 billion. The buyout of a startup firm behind the rapidly growing AI coding assistant Cursor is primarily aimed at gaining a firmer footing in the enterprise AI market.

However, SpaceX is scaling several capital-intensive platforms simultaneously. The company is investing heavily in COLOSSUS, COLOSSUS II, Grok, enterprise offerings, compute services and future orbital AI compute. Management expects a multi-year investment cycle until sustained positive segment adjusted EBITDA is realized. The strategy may create a cost advantage if compute, energy and launch assets integrate as planned. Until then, AI adds uncertainty to margins, capital needs and consolidated earnings quality.

How Do Zacks Estimates Compare for VZ & SPCX?

The Zacks Consensus Estimate for Verizon’s 2026 sales and EPS implies year-over-year growth of 2.1% and 6.8%, respectively. The EPS estimate for 2026 has inched up 1% over the past 60 days.

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The Zacks Consensus Estimate for SpaceX’s 2026 sales indicates year-over-year growth of 131.9%. EPS estimates have improved 71.7% over the past 60 days.

Image Source: Zacks Investment Research

Price Performance & Valuation of VZ & SPCX

Since its IPO, SpaceX has plummeted 7.9%. Verizon has gained 3.9% compared with the industry’s growth of 124.8% over the same period.

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Verizon looks more attractive than SpaceX from a valuation standpoint. Going by the price/sales ratio, Verizon’s shares currently trade at 1.46 forward sales, lower than 22.64 for SpaceX.

Image Source: Zacks Investment Research

End Note

Both Verizon and SpaceX carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Both Verizon and SpaceX expect sales to increase in 2026. In terms of price performance, VZ has outperformed SPCX. An uptrend in estimate revisions shows bullish investor sentiment for Verizon. Moreover, Verizon appears to have attractive valuation metrics compared with SpaceX. With an aggressive growth path (broadband upgrades + bundling + fiber densification), Verizon offers more upside potential and appears to be relatively better placed than SpaceX and hence is a better investment option at the moment.

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Verizon Communications Inc. (VZ): Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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