How a SpaceX and Tesla Merger Would Reshape Musk’s AI Empire

Elon Musk said Tuesday that the boards of SpaceX and Tesla have each formed special committees to study merging his two biggest companies, a deal that would put rockets, electric cars, humanoid robots, a social network and the Grok chatbot inside a single corporation worth roughly $3.5 trillion.

“I do think there’s a lot of merit to combining the companies as we are pretty much in the superintelligence singularity,” Musk said on SpaceX’s third-quarter earnings call. The singularity is Silicon Valley shorthand for the point where AI outsmarts humans and starts improving itself faster than anyone can keep up.

He then listed what the two companies would share: “superintelligence software, chip design, the Terafab obviously, robotics, mass-to-orbit with the Starmind constellation, connectivity.”

In plain English, that means AI models, custom chips, a giant chip factory, robots, and satellites that work as data centers in orbit.

If it happens, one company—with one man holding the majority of its votes—would own a leading AI chatbot, the social network that feeds it data, the satellites that connect it, the factory that makes its chips, and the cars and robots it is meant to drive.

Nothing has been signed and Musk warned that assuming a merger is a certainty “would be overstating it.” If you own an S&P 500 index fund, you already hold a sliver of Tesla—not SpaceX—and in an all-stock deal those shares would likely be swapped for stock in the combined company.

It would be Musk’s third consolidation since March 2025, when xAI absorbed X (formerly Twitter). In February, SpaceX swallowed xAI in a deal valuing the AI company at $250 billion, weeks after Tesla put about $2 billion into it; in June, SpaceX went public in the largest IPO ever.

SpaceX reported third-quarter revenue of $14.58 billion on Tuesday, well above the $12.72 billion analysts expected. It also booked its first quarterly profit since going public, largely by renting the computing power of its AI server farms to firms such as Anthropic and Google.

The most ambitious piece is Starmind, SpaceX’s plan to put AI data centers in orbit. The company has asked U.S. regulators to approve up to 1 million satellites that would run AI models on near-constant sunlight, and Musk expects deployments to start in late 2027 and reach  “significant scale” in 2028.

Musk’s argument is that Earth is running out of room and electricity for AI, and the politics back him up. An Annenberg survey found 61% of Americans now oppose new data centers in their area, and roughly $130 billion in projects were blocked or delayed in the first quarter of 2026 alone.

SpaceX’s own IPO paperwork, however, warned investors that orbital AI computing relies on “unproven technologies” and “may not achieve commercial viability.” Tesla’s main contribution would be Terafab, a $16.8 billion chip factory the two companies are building in Texas to supply Optimus robots, Cybercab robotaxis, and those space data centers.

Musk isn't the first to look past dry land to keep servers cool. Microsoft's Project Natick sank 855 servers off the coast of Scotland in 2018. Over two years only six failed, a 0.7% rate against 5.9% for a comparable group on land, yet Microsoft shut the program down anyway, with cloud operations chief Noelle Walsh saying, “I’m not building subsea data centers anywhere in the world.”

China has since picked up the idea with a wind-powered underwater data center about six miles off Shanghai, which its builder, HiCloud, says uses at least 30% less electricity than land-based rivals, while startup Lonestar aimed at launching a small data storage unit toward the Moon in early 2025.

Wall Street mostly likes the idea, at the right price. “We believe this is a no-brainer move for both SpaceX and Tesla, it comes down to the price for shareholders,” Dan Ives of Yorkville Ives & Co. told Reuters, estimating Tesla shares would need to be valued around $550 apiece—a premium, or bonus over the market price, big enough to win the vote.

Tesla spiked almost 4% after Elon’s statements went public. His words were more powerful for Tesla’s stocks than building a flying car, considering the stock dipped after the demonstration.

Even if nothing is for certain, markets are flirting with the idea. Tesla investor Gene Munster of Deepwater Asset Management now puts the odds of a deal within two years at 95%.

SpaceX is also a major contractor for the U.S. military, intelligence agencies, and NASA, while Tesla relies heavily on its Shanghai factory, a national security mix Reuters said could draw scrutiny from both Washington and Beijing.

A merger would also hand Musk the tighter grip on Tesla he has long demanded. He owns about 20% of Tesla but controls most of SpaceX’s votes through supervoting shares—stock that carries extra votes—and Barclays estimates he would hold about 56% of the votes in a combined company.

SpaceX reacted much more favorably with a 10% spike, the best movement since June.

Any deal still needs the support of 50% of all outstanding Tesla shares, not just those cast, a bar Musk called “quite a high hurdle.” Barclays suggested last week that an announcement could come before Tesla’s annual meeting on December 3.