On April 10, four U.S. astronauts safely returned to Earth after completing a 10-day journey around the Moon. NASA’s Artemis II mission carried the crew farther from Earth than any humans in history had been previously, marking a significant milestone in deep-space exploration.
The mission’s success adds to investors’ interest in the space economy, which is now at the highest levels since Morgan Stanley Research started tracking the sector.
“A combination of scientific advancements, geopolitics and economics has rekindled investor attention on the space theme,” says Adam Jonas, Morgan Stanley’s Global Embodied AI/Robotics Strategist, who also covers the space economy. “Space has been ‘discovered’ and partially commercialized, but we are just scratching the surface.”
Investment Gets a Boost
Government investment is accelerating alongside private-sector momentum. The Trump Administration has proposed a record $1.5 trillion in defense spending for 2027, including a 77% increase in the Space Force budget—from $40 billion this year to $71 billion. Through the Artemis program, NASA aims to return humans to the moon in 2028 and build a base for continued lunar operations.
Private companies are playing an increasingly central role, partnering with NASA while also investing heavily to unlock the commercial potential of space. The number of objects launched into orbit, including satellites and rockets, has grown at an annual rate of roughly 20% between 2020 and 2025.
“Investors are looking for opportunities related to the space theme,” says Kristine Liwag, who leads coverage of Aerospace & Defense and Space Technology at Morgan Stanley Research.
Morgan Stanley Research has identified seven categories of stocks in the space value chain that could benefit from continued growth in the sector.
1. Raw Materials and Mining
All space hardware relies on critical minerals to withstand extreme heat, stress and radiation. A single satellite can incorporate dozens of specialty metals across its structural, power, thermal and communication systems. China currently accounts for roughly 60% to 90% of the global supply of key materials—including rare earth elements, tungsten, gallium and germanium—making supply chain disruptions a potential risk across the industry and creating opportunity for companies that can manage that disruption.
2. Specialty Materials and Alloys
Companies in this category develop advanced materials engineered to perform under extreme conditions. Spacecraft must endure dramatic temperature fluctuations and intense mechanical stress. For example, rocket engines require materials capable of withstanding temperatures above 3,000°C. Innovation extends beyond metals, with aerospace manufacturers increasingly adopting lightweight solutions—such as carbon fiber composites and ceramic matrix materials—to improve capacity, maintaining strength and stiffness, and reduce launch costs.
3. Propulsion and Fuels
Propellants and industrial gases are essential for both spacecraft launch and in-orbit movement. Traditionally, companies in this group have been suppliers of a mix of refined kerosene with cryogenic liquid oxygen. However, many next-generation reusable launch vehicles are transitioning to methane, which burns more cleanly and simplifies maintenance between missions.
4. Electronics and Semiconductors
Standard electronic components can degrade quickly in space due to radiation exposure. Companies in this segment design radiation-hardened semiconductors and systems that enable reliable communication, navigation and onboard processing over extended periods in orbit.
5. Components and Subsystems
This segment includes suppliers of the thousands of precision-engineered parts that make up space systems—from connectors and valves to bearings, actuators and wiring harnesses. Reliability is critical: The failure of a single component can jeopardize an entire mission. These components must meet stringent standards to endure vibration, thermal vacuum conditions and radiation over many years.
6. Spacecraft and Launch Systems
This group designs, builds and launches satellites and rockets. There were 330 orbital launches last year, including 317 successful missions. Those numbers are expected to increase as demand for satellite deployment grows. Companies in this category are focusing on improving reusability, scaling manufacturing and increasing launch cadence to lower the cost of reaching orbit.
7. Satellite Operators and Services
These companies are responsible for constellations of satellites and their associated ground infrastructure that provide services such as communications, Earth observation and navigation. Growth in this sector is driven by demand for global connectivity, real-time data and analytics, in addition to declining costs for satellite production and launches.
