Artemis II successfully orbits the Moon, Bank of America hails a positive outlook for the commercial space sector's "starry sea" opportunities

Zhitong Finance APP learned from a latest research report by Ronald Epstein, a senior securities analyst at Bank of America, that the launch of NASA’s Artemis II mission is strengthening investors’ attention to the long-term growth potential of the space economy and, more broadly, the commercial space sector.

The mission on April 1 is the first crewed flight around the Moon in more than 50 years, aiming to test life-support systems and critical docking procedures—technologies that will lay the groundwork for future lunar landings and even the final Mars missions.

The project also highlights a deep industrial ecosystem supporting America’s space ambitions. Lockheed Martin (LMT.US) serves as the prime contractor for the Orion spacecraft, Northrop Grumman (NOC.US) manufactures the solid rocket boosters, Boeing (BA.US) produces the core stage of the rockets for the space launch system, and L3Harris (LHX.US) provides key engine component parts.

It is reported that NASA’s “Artemis II” spacecraft, carrying four astronauts, has made its first personal voyage to the Moon in more than 50 years. As of local time on Monday, the distance it has traveled in space exceeds that of any astronaut in history.

In recent years, both the U.S. and China governments have投入 in the tens of billions of dollars of funding, trying to send humans back to the Moon and doing everything they can to support commercial space technology companies of all sizes actively exploring space—thereby driving a substantial increase in investment scale across the entire commercial space sector.

In addition, SpaceX, the world leader in global space exploration under Tesla’s CEO and the world’s richest person Elon Musk, is going public with what would be the largest IPO in its history at a time when global stock markets’ enthusiasm for space exploration is being rapidly stoked, drawing global capital toward those cutting-edge space exploration companies that are closely related to the broader commercial space sector but are smaller in scale than SpaceX.

As Musk has recently released frequent positive progress on topics including space AI data centers, large-scale energy storage, artificial intelligence, fully autonomous driving (FSD), Robotaxi, and the revolutionary “Optimus” humanoid robot, it appears he is turning “commercial space systems + Starlink satellite communications + space AI compute/AI large models + energy/energy storage + electric vehicles + autonomous driving + robot manufacturing” into a fundable, clearly explainable “super vertically integrated asset chain,” in order to amplify leverage simultaneously in both capital markets and the industrial side.

SpaceX plans to launch an astonishing 1M satellites. These satellites will serve as distributed space-grade cloud computing super-server systems. These orbital data centers in space are reportedly expected to use solar power to process AI workloads on a massive scale. Musk believes that in order to achieve this goal, an urgent need in the future is to build a super satellite factory on the Moon, where the Moon-based lunar electromagnetic catapult AI super satellites will be realized. There’s no doubt that his wide-ranging, Hollywood-sci-fi-like vision will require a large amount of cash—while SpaceX’s potential initial public offering (IPO) is precisely the source of that enormous funding.

Reusability becomes the next frontier

Although Artemis II places greater emphasis on reliability rather than cost efficiency, the long-term trend points to reusability shifting from a “luxury” to a “necessity.”

NASA chose not to reuse the boosters in this mission to maximize the probability of success. However, Epstein noted that if the agency wants to carry out sustained lunar landing missions and ultimately explore Mars, reusable systems will be necessary.

Upcoming milestones include the Artemis III mission expected in 2027, which will test commercially built lunar landers in near-Earth orbit. The subsequent mission aims to send astronauts back to the Moon’s surface before 2028, which puts pressure on both the government and commercial partners to execute.

International competition adds urgency

This timeline is not moving forward in a vacuum. The report states that an environment of intense international competition may sustain funding for aerospace and defense and keep investors interested—especially companies related to space infrastructure and advanced propulsion technologies.

A key emerging area to watch is nuclear-powered spacecraft. NASA’s “Space Nuclear Reactor One” program is set to launch as early as 2028, aiming to improve propulsion efficiency and shorten travel time, which could accelerate plans for crewed Mars missions.

Valuations remain high but steady

The report’s analysis indicates that despite recent market volatility, valuations in the aerospace and defense sector are broadly stable.

Large defense companies’ average transaction price is about 30 times forward earnings expectations for the coming year, and free cash flow yield is about 5%. For small- and mid-sized companies—especially those tied to the recovery of commercial aviation—the valuation multiples range between 10 and 30 times.

Epstein noted that even though companies such as General Electric and Boeing have undergone valuation re-assessments in recent years, their current valuation levels are still broadly in line with historical ranges from the mid-2010s.

High-growth space companies drive the upside narrative

Bank of America believes investor enthusiasm is most pronounced in emerging space and defense technology companies.

Stocks such as Rocket Lab (RKLB.US) and Aero Vironment (AVAV.US) have delivered extraordinary gains over the past year, reflecting strong market demand for next-generation capabilities including launch services, drones, and autonomous systems.

At the same time, analysts’ consensus for this segment remains divided—some well-known companies receive both “strong buy” and “sell” ratings. This divergence highlights the balance between long-term growth potential and execution risk.

Macro tailwinds and cost pressure

While the broader macro backdrop is supportive, it is not without challenges.

Global GDP growth is expected to be about 3.5% in 2025, while inflation is expected to slow to about 2.7% in 2026. However, input costs remain high. Copper and aluminum prices are near the upper end of their historical ranges, which could put pressure on profit margins across the aerospace supply chain.

Meanwhile, jet fuel prices have risen sharply versus their long-term average levels, adding another layer of cost sensitivity for commercial aviation.

Ambition and execution

Overall, the report characterizes aerospace and defense as a sector where sustained investment is driven jointly by technological ambition and geopolitical competition.

The Artemis program is both a symbolic anchor for this thesis and a real-world foundation. Its success or failure will not only shape the future of human space exploration, but also influence how capital flows into next-generation space companies.

For investors, the message is clear: the path to the Moon and beyond is becoming a core narrative in the market, but it requires continued execution to prove the reasonableness of current valuations.