overheated

Artificial intelligence (AI) stocks may have gotten most of the attention from investors over the last few years, but some of the period’s top-performing stocks don’t hail from the AI space — at least, not directly.

Instead, they represent emerging technologies like quantum computing, electric vertical takeoff and landing (eVTOL) aircraft, small modular nuclear reactors, and rockets and satellites. The artificial intelligence boom has provided a halo effect to other emerging technologies, as growth investors have become particularly keen to find those that might power the next breakout trend. Investing early in the company that may launch the next ChatGPT would produce huge returns, the thinking seems to go.

Thanks to the speculative optimism about their potential, many of these tech stocks have delivered returns of more than 1,000%, outperforming even Nvidia. However, few hot growth stocks have beaten AST SpaceMobile (ASTS -5.49%), which is building a satellite-based broadband network.

While it has yet to generate meaningful revenue, excitement around the business and its potential have surged recently as it has forged new agreements with customers. 

ASTS data by YCharts.

Over just the last 18 months, a $1,000 investment in AST SpaceMobile would have grown into a stake worth more than $35,000. But with that climb behind it, is it too late to buy the stock? 

What is AST SpaceMobile?

AST SpaceMobile is sometimes lumped together with other space and rocket companies like Rocket Lab, Planet Labs, and SpaceX and its Starlink subsidiary, but the company says its technology can be used with existing unmodified smartphones and operates within the low- and mid-band spectrum used by mobile network operators. That contrasts with existing space-based telecom services that are intended for low-data-rate applications, such as emergency service.

The company is building the first global cellular broadband network to connect with everyday smartphones. It intends for the technology to be used for commercial and government purposes, and is designed to reach places that are not covered by terrestrial cell towers.

It is deploying a constellation of low-Earth-orbit satellites and partnering with other telecoms to provide service to users. Founded in 2017, AST SpaceMobile launched its first test satellite in 2019 and now has a total of six satellites in orbit. It aims to have 45 to 60 satellites in orbit by 2026, serving the U.S., Europe, Japan, and other markets.

AST SpaceMobile has signed partnership deals with several global telecom companies, including AT&T, Vodafone, and Rakuten, and the stock just jumped on news that it had its expanded partnership with Verizon, adding to an earlier $100 million commitment from the telecom giant. According to the new agreement, Verizon will integrate AST SpaceMobile’s satellite network with Verizon’s 850 MHz spectrum across the country, allowing Verizon’s service to reach remote areas it doesn’t currently cover.

Image source: AST SpaceMobile.

Is AST SpaceMobile a buy?

The company expects to start booking meaningful revenues in the second half of the year. Management forecasts $50 million to $75 million in sales in the second half of 2025 as it deploys intermittent service in the U.S. That will soon be followed by service coming online in other markets like the U.K., Japan, and Canada.

Management hasn’t given a forecast for 2026, but investors expect its financial momentum to continue to build as new satellites go into service. The Wall Street consensus now predicts $254.9 million in revenue in 2026.

The company’s momentum, partnerships, and satellite deployments all sound promising, but much of its expected future success is already baked into the stock price.

AST SpaceMobile’s market cap has already soared to $31 billion, a huge number for a company that has yet to generate significant revenues. Notably, it also competes in an industry — internet connectivity — with notoriously low valuations. Verizon has a market cap of $172 billion, even though it generated nearly $20 billion in profits over its last four quarters. Internet service providers carry similarly underwhelming valuations. For example, broadband and cable service provider Charter Communications has a market cap of $36 billion, and it brought in $5 billion in net income over the last year.

The size of AST SpaceMobile’s total addressable market isn’t fully clear, though management says the global wireless services market produces over $1.1 trillion in annual revenue.

AST SpaceMobile is competing globally, which differentiates it from domestic services like Verizon. However, as it’s currently structured, the satellite company essentially aims to be a subcontractor for larger telecoms, and the telecom industry is decidedly unexciting, according to investors. As long as it’s beholden to that low-valuation ecosystem, it’s difficult to picture how the company could deliver the kind of blockbuster returns that investors seem to expect, especially considering that telecom is a mature industry.

At $31 billion, AST SpaceMobile’s market cap seems to have gotten well ahead of the reality of the business, especially as commercialization could present unforeseen challenges. In the near term, the stock could move higher if it signs more partnerships or announces other promising news, but given the sky-high valuation, the stock now looks overheated.

With AST SpaceMobile, investors are playing with fire at this point. Eventually, they’ll get burned.

I was driving while listening to the news Sunday when I heard House Speaker Mike Johnson justify President Trump’s move to send National Guard troops to Los Angeles.

“We have to maintain the rule of law,” Johnson said.

I almost swerved off the road.

Maintain the rule of law?

Steve Lopez

Steve Lopez is a California native who has been a Los Angeles Times columnist since 2001. He has won more than a dozen national journalism awards and is a four-time Pulitzer finalist.

Trump pardoned the hooligans who ransacked the Capitol because he lost the 2020 presidential election. They clashed with police, destroyed property and threatened the lives of public officials, and to Trump, they’re heroes.

Maintain the rule of law?

Trump is a 34-count felon who has defied judicial rulings, ignored laws that don’t serve his interests, and turned his current presidency into an unprecedented adventure in self-dealing and graft.

And now he’s sending an invading army to Los Angeles, creating a crisis where there was none. Arresting undocumented immigrants with criminal records is one thing, but is that what this is about? Or is it about putting on a show, occupying commercial and residential neighborhoods and arresting people who are looking for — or on their way to — work.

Protesters and members of the National Guard watched one another in front of the federal building in Los Angeles on Monday.

(Luke Johnson/Los Angeles Times)

Defense Secretary Pete Hegseth warned that U.S. Marines were on high alert and ready to roll, and in the latest of who knows how many escalations, hundreds are headed our way.

What next, the Air Force?

I’m not going to defend the vandalism and violence — which plays into Trump’s hands—that followed ICE arrests in Los Angeles. I can see him sitting in front of the tube, letting out a cheer every time another “migrant criminal” flings a rock or a scooter at a patrol car.

But I am going to defend Los Angeles and the way things work here.

For starters, undocumented immigration is not the threat to public safety or the economy that Trump like to bloviate about.

It’s just that he knows he can score points on border bluster and on DEI (diversity, equity and inclusion), so he’s going full gasbag on both, and now he’s threatening to lock up Gov. Gavin Newsom.

To hear the rhetoric, you’d think every other undocumented immigrant is a gang member and that trans athletes will soon dominate youth sports if someone doesn’t stand up to them.

I can already read the mail that hasn’t yet arrived, so let me say in advance that I do indeed understand that breaking immigration law means breaking the law, and I believe that President Biden didn’t do enough to control the border, although it was Republicans who killed a border security bill early last year.

I also acknowledge the cost of supporting undocumented immigrants is substantial when you factor in public education and, in California, medical care, which is running billions of dollars beyond original estimates.

But the economic contributions of immigrants — regardless of legal status — are undeniably numerous, affecting the price we pay for everything from groceries to healthcare to domestic services to construction to landscaping.

Protesters shut down the 101 Freeway in Los Angeles on Sunday.

(Jason Armond/Los Angeles Times)

Last year, the Congressional Budget Office concluded that a surge in immigrants since 2021 — including refugees, asylum seekers and others, legal and illegal — had lifted the U.S. economy “by filling otherwise vacant jobs,” as The Times reported, and “pumping millions of tax dollars into state, local and federal coffers.”

According to a seminal 2011 study by the Public Policy Institute of California, “many illegal immigrants pay Social Security and other taxes but do not collect benefits, and they are not eligible for many government services.”

In addition, the report said: “Political controversies aside, when illegal immigrants come, many U.S. employers are ready to hire them. The vast majority work. Estimates suggest that at least 75 percent of adult illegal immigrants are in the workforce.”

Trump can rail against the lunatic radical left for the scourge of illegal immigration, but the statement that “employers are ready to hire them” couldn’t be more true. And those employers stand on both sides of the political aisle, as do lawmakers who for decades have allowed the steady flow of workers to industries that would suffer without them.

On Sunday, I had to pick up a couple of items at the Home Depot on San Fernando Road in Glendale, where dozens of day laborers often gather in search of work. But there were only a couple of men out there, given recent headlines.

A shopper in the garden section said the report of federal troops marching on L.A. is “kind of ridiculous, right?” He said the characterization by Trump of “all these terrible people” and “gang members” on the loose was hard to square with the reality of day laborers all but begging for work.

I found one of them in a far corner of the Home Depot lot, behind a fence. He told me he was from Honduras and was afraid to risk arrest by looking for work at a time when battalions of masked troops were on the move, but he’s got a hungry family back home, including three kids. He said he was available for any kind of jobs, including painting, hauling and cleanup.

Two men in a pickup truck told me they were undocumented too and available for construction jobs of any type. They said they were from Puebla, Mexico, but there wasn’t enough work for them there.

I’ve been to Puebla, a city known for its roughly 300 churches. I was passing through about 20 years ago on my way to a small nearby town where almost everyone on the street was female.

Where were the men?

Protesters shut down the 101 Freeway in Los Angeles on Sunday.

(Jason Armond/Los Angeles Times)

City workers repair broken windows at LAPD headquarters on Spring Street in downtown Los Angeles on Monday.

(Robert Gauthier/Los Angeles Times)

I was told by a city official that the local economy was all about corn, but local growers couldn’t compete with American farmers who had the benefit of federal subsidies. So the men had gone north for work.

Another reason people head north is to escape the violence wrought by cartels armed with American-made weapons, competing to serve the huge American appetite for drugs.

In these ways, and more, the flow of people across borders can be complicated. But generally speaking, it’s simply about survival. People move to escape poverty or danger. They move in search of something better for themselves, or to be more accurate about it, for their children.

The narratives of those journeys are woven into the fabric of Los Angeles. It’s part of what’s messy and splendid and complicated about this blended, imperfect corner of the world, where many of us know students or workers or families with temporary status, or none at all.

That’s why this overheated invasion looks so ugly and feels so personal.

We’re less suspicious of our neighbors and the people we encounter on our daily rounds than the hypocrites who would pardon insurrectionists, sow division and send an occupying army to haul away members of our community.

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