Elon Musk’s SpaceX reported its first quarterly profit since going public four months ago, with third-quarter revenue reaching $14.6 billion, marking a 161 percent increase compared to the same period last year. Approximately half of this revenue was generated by the company’s artificial intelligence operations, highlighting the rapid growth of its AI-related business. The earnings announcement boosted SpaceX shares and contributed to gains in the tech-focused Nasdaq index.
Following the financial disclosure, Musk revealed that SpaceX and Tesla have established special committees to explore a possible merger. If completed, the combined entity would be valued at roughly $3.5 trillion, potentially making it the largest corporate merger in history.
Founded in 2002 by Musk, SpaceX initially aimed to reduce the cost of space travel and ultimately enable human missions to Mars. The company’s reusable Falcon 9 rockets dominate the commercial launch market, while its Dragon spacecraft regularly ferry NASA astronauts to the International Space Station. Additionally, SpaceX’s Starlink satellite constellation provides global internet connectivity. Beyond aerospace, SpaceX expanded into artificial intelligence in 2025 by absorbing Musk’s xAI startup, which operates the Grok chatbot and controls the social media platform X. The company went public earlier this year and is now valued at about $2 trillion, with a significant portion of its recent growth attributed to leasing data center computing power to other AI firms.
Tesla, established in 2003, rose to prominence primarily as an electric vehicle manufacturer after Musk took over as CEO in 2008. Currently valued at around $1.5 trillion, the company has faced challenges in its core automotive segment, prompting Musk to emphasize Tesla’s ambitions in self-driving robotaxis and the development of its Optimus humanoid robot.
Musk described the potential merger as “a good idea” during discussions with analysts. Experts suggest that the combination could create a company controlling crucial elements of AI development—including chips, energy, and connectivity. However, some analysts, such as Garrett Nelson of CFRA Research, argue potential synergies might be limited relative to the deal’s size, viewing the transaction primarily as a consolidation of control.
Musk holds approximately 82 percent of SpaceX’s voting power but just 20 percent at Tesla, where his management has attracted legal scrutiny. Despite this, many analysts anticipate the merger will proceed. Dan Ives of Yorkville Ives estimated a 90 percent probability of the deal closing by early 2027, noting that Tesla’s valuation would likely need to exceed $500 per share to secure shareholder approval.
Musk acknowledged that a merger requires support from a majority of all Tesla shareholders, presenting a significant hurdle. However, with loyal retail investors holding about 25 to 27 percent of Tesla’s shares, combined with Musk’s stake, gaining the necessary backing from institutional investors may be achievable.
From a legal standpoint, the merger faces limited obstacles because both SpaceX and Tesla have relocated their incorporation from Delaware to Texas. According to University of Colorado law professor Ann Lipton, Texas law imposes stricter requirements on shareholder lawsuits challenging mergers, making it easier for Musk to advance the transaction.
Lipton identified broader risks related to SpaceX’s reliance on contracts with the U.S. government, including NASA and the Department of Defense, and Tesla’s operations in China. Political developments could impact Musk’s companies, particularly if Democratic lawmakers regain power and initiate investigations or impose stricter conditions on government contracts. Musk has publicly warned against such scrutiny should the political landscape shift.
As discussions continue, Musk’s plan to merge his two flagship companies highlights the growing intersection of aerospace, automotive innovation, and artificial intelligence under a unified corporate strategy.