SILICON VALLEY — Elon Musk formalized a push to merge SpaceX with Tesla while unveiling the rocket company's quarterly results, laying out a plan to combine Tesla — now transforming from an electric-vehicle maker into a robotics company — with SpaceX's data center and space development capabilities around artificial intelligence. SpaceX also said its AI business grew ninefold in a year, delivering a quarterly profit four months after its listing.
Asked about a SpaceX-Tesla merger on a third-quarter earnings call on the 20th, Musk said that if the question is whether he sees it as a good idea, the answer is yes. "There is no guarantee yet that we will reach an agreement, but given that we have arrived at the superintelligence singularity, a merger has many advantages and there is a lot to gain," he said. He added that a full merger of the two companies would make sense given the work under way at each in semiconductors, AI and software.
Musk pointed to Terrafab, the two companies' chip manufacturing joint venture, as one example of merger synergy. He said the venture plans to produce its first test chip around May or June next year, with mass production targeted by the third quarter of 2028.
"At the request of shareholders, we have each formed a special committee on the board to review the possibility of a merger between SpaceX and Tesla," he said. "The committees are made up of outside directors, and I am not taking part because of a conflict of interest."
In February this year, Musk folded AI company xAI into SpaceX, signaling a restructuring centered on AI. Speculation about a merger gained further momentum last week with the unveiling of the Roadster, a flying electric sports car. At the time, Musk emphasized the collaboration between the two companies, saying the vehicle was built by the best car company and the best rocket company. Tesla's market capitalization currently stands at about $1.5 trillion and SpaceX's at $2 trillion, meaning a simple combination would create a $3.5 trillion space company.
SpaceX set the tone for the merger with results that eased concerns over its AI spending. The company said third-quarter revenue rose 161% from a year earlier to $14.58 billion, more than double the $5.6 billion reported in the same period last year. The figure also far exceeded the $12.72 billion average forecast compiled by the London Stock Exchange Group.
Operating profit came to $2.8 billion and net profit to $4.4 billion, a turnaround from a net loss of $541 million in the previous quarter. Net profit comfortably topped market expectations of $1.88 billion.
The surge in quarterly revenue came from the superintelligence business, which grew ninefold in a year. SpaceX began describing AI as superintelligence, or SI, from this earnings release, in line with the wishes of U.S. President Donald Trump. SI revenue of $7.56 billion overtook the communications business centered on Starlink, the low-Earth-orbit satellite service, which generated $5.25 billion. Revenue jumped sharply in what amounts to a neocloud business, under which SpaceX signs contracts to lease computing capacity to AI developers including Anthropic, Google and Reflection AI. The expansion of its own AI model, Grok, and its $60 billion acquisition of AI coding startup Cursor also contributed.
While revenue growth came from AI, the largest share of operating profit came from satellite communications, led by Starlink. Communications operating profit doubled in a year to $2.37 billion. The AI business contributed $431 million.
Capital expenditure rose to $19.6 billion in the third quarter as the AI business expanded rapidly, but the figure stayed within expectations and caused no shock. Brett Johnson, SpaceX's chief financial officer, said on a conference call after the results that capital spending would reach $35 billion to $40 billion this quarter because of new computing equipment. Musk said annual recurring revenue next year would be between $500 billion and $1 trillion. ARR projects annual revenue by assuming that one month's revenue recurs for 12 months.
Winning the approval of Tesla shareholders remains the key hurdle. Musk controls about 50% of SpaceX's shares and more than 80% of its voting rights, but a Tesla deal requires approval from 50% of all shareholders. If the two companies combine through a share swap, a higher SpaceX valuation would reduce what Tesla shareholders receive, so the two sides would need to agree on a merger ratio.
Musk's own say would also shrink. His stake in Tesla was 19.8% as of the end of last month. Fortune estimated that combining the two companies at current share prices would leave Musk with about one-third of the merged company. Investment bank Jefferies calculated in July that a merger without a premium would give Musk 55.3% of the voting rights, effectively making him the owner of the combined company.