Rocket Lab (RKLB) stock has been in focus after a strong Q1 2026 update, with record quarterly revenue, improving margins, and a contracted backlog above US$2.2b, supported by new launch and defense contracts.

Rocket Lab’s share price has pulled back 5.9% over the past day to US$124.77 after hitting a new high. However, the 90 day share price return of 85% and very large 1 year total shareholder return reflect strong momentum following record Q1 results, defense wins and sector enthusiasm around the anticipated SpaceX IPO.

If strong moves in space stocks have your attention, this is also a good moment to scan the wider opportunity set through 42 AI infrastructure stocks

With Rocket Lab now trading around US$124.77 and sitting above the average analyst price target, the market clearly recognizes its Q1 momentum, defense wins, and backlog. The key question for you is whether the current price still represents an attractive entry point or whether the stock already reflects existing expectations for future growth.

Most Popular Narrative: 28% Overvalued

Rocket Lab’s last close at $124.77 sits well above the fair value of $98 suggested by the most followed narrative, which frames the current price as punchy relative to its long term assumptions.

Since my original post, RKLB has continued to expand its space systems business, including through acquisitions and raising more capital. Its Neutron rocket is still largely on schedule; and as expected, no major new players have arrived to take RKLBs #2 spot in space launch. This all means Rocket Lab's revenue can be expected to increase faster (though in a very lumpy manner, not the smooth curves that SimplyWallSt's valuator produces), reaching ~$44b by 2035, equivalent to around 5% market share of the ~$800B space 'backbone' economy.

Want to see how ambitious revenue targets, higher long term margins, and a premium profit multiple combine into that $98 fair value anchor? The full narrative spells out the exact expectations behind those assumptions, including what needs to happen with Neutron and space systems for this valuation case to hold up.

Result: Fair Value of $98 (OVERVALUED)

However, this hinges on Neutron reaching commercial scale and Rocket Lab turning its current US$182.6m net loss into sustainable profits, while it successfully manages its capital needs.

Next Steps

With sentiment split between the growth story and the risks around execution and losses, it makes sense to check the data yourself and move quickly to form your own view by weighing the 1 key reward and 3 important warning signs.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.