'Space has never been hotter': Analysts reveal top stock picks as investors target intergalactic gains

Published Sun, May 17 20261:00 AM EDT

Tessa McCann @/in/tessa-mccann-b525b732/

Key Points

The space sector is back in the spotlight for investors in a new era of intergalactic exploration.
The S&P Kensho Global Space Index has risen 33% year-to-date, sharply outperforming the S&P 500.
As Dylan Taylor, CEO of Voyager Technologies, recently put it, "space has never been hotter."

NASA's Artemis II mission and market buzz ahead of the upcoming SpaceX IPO have launched the space sector back into the spotlight for investors. Once the exclusive domain of governments, space exploration is rapidly transforming into a commercially driven industry, spanning rockets, satellites, infrastructure and defense systems. But government spending continues to underpin funding. The Trump administration has earmarked $71 billion for the U.S. Space Force in its 2027 budget — a 77% increase on the previous year. Across the Atlantic, members of the European Space Agency have committed a record 22.3 billion euros ($25.9 billion) over three years. The S & P Kensho Global Space Index has risen 45% year-to-date, as of May 15, sharply outperforming the S & P 500 , which is up by around 8.6% over the same period, demonstrating investor interest in a new age for space exploration. As Dylan Taylor, CEO of Voyager Technologies , recently put it , "space has never been hotter." With capital flowing into the sector, analysts are asking where the most sustainable returns are likely to be found. Yuri Khodjamirian, chief investment officer at TEMA ETFs, said the answer lies in the "pure-play space economy" — companies whose core business is directly tied to space, rather than diversified conglomerates with only partial exposure. His top picks include high-frequency wireless-hardware firm Filtronic , Taipei-listed microwave communication solutions firm Universal Microwave Technology, and integrated technology solutions company, Sphere Corporation . But Khodjamirian urged caution and a focus on fundamentals when investing in a sector defined by technical complexity and operational risk. "You're better off paying a premium for launch platforms that actually work, than speculating on ones that don't," he said. Tejas Dessai, director of thematic research at Global X ETFs, sees particularly strong medium-term opportunities in launch services and reusable rocket technology as a result of falling launch costs. As access to orbit becomes cheaper, innovation across the entire sector accelerates, he said. Dessai highlights Rocket Lab as a major player in launch services, while pointing to Planet Labs as a compelling opportunity in the data and analytics segment. However, he warned against overconfidence in individual names, adding that today's leaders may not be the dominant players in five years. Space picks and shovels Dessai said thematic ETFs are a way to gain broad exposure, while reducing single-company risk . As the market matures, consolidation will likely determine long-term winners , he added, and diversified investors will be better positioned to capture value across the sector. This broader perspective is echoed in a recent report from Morgan Stanley titled "The Space 60: Picks & Shovels for the Final Frontier." "Space is back in a big way," Morgan Stanley analysts noted in the report, with investor interest returning to levels not seen since the bank first launched its dedicated space research team nearly a decade ago. Morgan Stanley highlighted space-related opportunities across the broader market. Companies such as Alcoa , ATI Inc, Nvidia , York Space Systems , and STMicroelectronics represent a wider selection of stocks that underpin the entire ecosystem, analysts said. There is also a growing geopolitical dimension to the space industry. As Dessai noted, China has firmly established itself as the world's second-largest launch power behind the U.S., using state-backed enterprises to scale rapidly and compete aggressively on cost. He also said that the defense applications of space infrastructure remain "under-discussed and overlooked" by the broader market. TEMA ETFs' Khodjamirian highlighted space sovereignty and the commercialization of government space programs as key themes. Countries including Germany, Italy, and Japan are investing heavily in domestic launch capabilities, satellite constellations, and national space champions. It comes as governments are becoming more willing to work with agile commercial operators, rather than relying solely on legacy defense contractors. Khodjamirian pointed to space-launch propulsion systems firm, Avio in Italy and satellite and space-systems company, OHB SE in Germany as examples of companies positioned to benefit from this shift.