US Space & Satellite Stocks Blast Off, Beating S&P 500; Will The Boom Survive In Long Term?

Every war is brutal and comes with extreme cascading shocks to normal lives and global economies. The West Asian conflict spiraling between the USA and Iran has darkened the global outlook in 2026. And the more missiles explode in Iran and the Red Sea, the longer it is expected to choke economies. Amidst this, one industry is winning: space and satellite stocks. The latest data from Goldman Sachs reveals that USA-based space and satellite stocks have surged 13% so far this year, outperforming the benchmark S&P 500 index.

The reasons for the rally in space and satellite stocks are not limited to geopolitical risks. From the hike in defence budget spending to Elon Musk’s SpaceX IPO debut on Nasdaq, all have turned the outlook for this industry into a sweet symphony.

“Prior to 2025, this theme was considered more speculative and traded more in line with nascent disruptive-tech-related stocks,” says Louis Miller, global head of the Equity Custom Basket business in FICC and Equities.

But since last year, the space industry has witnessed a growing interest from all categories of investors.

“In the last year, this group outperformed as a result of growing focus across verticals of the space industry such as rocket launches, satellites, global communications, and the potential for future markets that are then enabled by them,” Miller added.

US Space & Satellite Stocks Vs S&P 500

The space and satellite stocks in Goldman Sachs’ basket registered 13% growth this year as of July 14, 2026, higher than 9.8% growth in the S&P 500.

Almost all types of investors are finding space stocks attractive despite them being twice as volatile as the AI companies’ basket and about five times as volatile as the S&P 500.

For instance, Goldman’s space and satellite basket gained over 369% over the past two years but has cooled from its sharp highs of May. The hype around the debut of SpaceX on July 14, 2026 was another sensational return of bulls.

Also, the Aerospace & Defence index has skyrocketed by a whopping 107% versus 7.54 surge in S&P 500 index year-to-date, as per Yahoo Finance tracker. The industry has given multi-bagging returns of 125% in 1 year, whopping 336% returns in 3-years, and robust growth of 375% in 5-years versus S&P 500’s returns of 16.55% in 1-year, 61.85% in 3-years and 69% in 5-years.

“The demand we have observed has come from all types of investors across retail, private wealth management, as well as from institutional investors, all of which are looking for differentiated secular growth themes rather than traditional sector allocations,” Miller said.

Before US-Israel collectively launched ‘Operation Fury’ on Iran on February 28, 2026, the combined market valuation of some 41 global space and satellite companies stood around $4.155 trillion, as per the Stock Titan tracker. In fact, these companies’ market capitalization had plunged to $4.048 trillion by April 1, 2026, due to Iran’s retaliation and shutdown of the Strait of Hormuz.

But there was extraordinary pickup in market valuation to $4.403 trillion on April 13, 2026, when US President Donald Trump declared a US naval blockade of all ships entering or leaving Hormuz. With the US blockade on Iranian oil till late May, the combined valuation of these global space and satellite stocks reached a staggering $4.63 trillion by May 21, 2026.

In a year, the combined market cap has risen by 5.23% in the industry, the Stock Titan tracker revealed.

While the space and satellite basket is mainly made of fast-growing, nascent disruptive tech related stocks, Miller believes some of them could become profitable next year.

“There are a lot of future-oriented themes that have caught investors’ attention. We’ve seen thematic investing really increase this year,” he added.

The Opportunity!

In Miller’s opinion, there could be opportunities across the ecosystem and supply chain for space companies. He believes investors focused solely on launch providers may be missing a significant portion of the opportunity set.

Those companies include operators in communications infrastructure, semiconductors, electronics, software, advanced materials, and manufacturing companies that are part of the broader value chain.

Some of the companies in Goldman’s basket are already witnessing increasing sales linked to defence contracts with the US government. And then there is a rising trend to a ‘new defense theme,’ compiling of satellite imagery/connectivity as a main category, in addition to new technologies like drones and sensors.

Investors have shown promising interest in this theme in stocks like SpaceX’s Starlink, which is engaged in orbital broadband services.

And while SpaceX is indeed distinct from most of the other defence companies owing to its ambition for developing orbiting data centers, Miller believes investors are attuned to the potential for revenue growth from these services.

Will US Space & Satellite Stocks Witness AI-Like Storm?

The latest shift in the global space sector is compared to that of the evolution of AI stocks.

“The strongest long-term opportunity could come from identifying the picks-and-shovels providers that enable commercialization,” Miller says. “Just as AI investors increasingly migrated from model developers toward semiconductors, power, and data-center infrastructure, space investors may increasingly focus on suppliers and infrastructure providers.”

Although the near-term trajectory looks volatile for space stocks, the long-term opportunity appears compelling. However, the expert also added, investors’ enthusiasm will likely move ahead of fundamentals at times, making the path uneven even if the structural direction remains positive.

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