- SPCX rose 8-10% after SpaceX’s strong Q3 earnings of $14.6B and Elon Musk hinted at a potential Tesla merger.
- Musk highlighted the merit of combining the companies’ superintelligence capabilities.
- Musk also said SPCX revenue could hit $1T by 2027, while JPMorgan has more than doubled SpaceX’s price target.
Space Exploration Technologies Corp. (SpaceX) (NASDAQ: SPCX) surged more than 8% after the company reported a 161% year-over-year (YoY) increase in revenue for the third quarter (Q3) of 2026.
Meanwhile, Elon Musk confirmed that SpaceX and Tesla Inc. (NASDAQ: TSLA) have established special committees comprising independent directors to explore a potential historic merger.
Musk also highlighted significant overlap between the companies’ capabilities, strengthening the bull case for artificial intelligence (AI) cloud providers amid growing investor interest in AI infrastructure.
SpaceX Shares Surge Over 8% on Musk’s Merger Hints
SpaceX shares jumped 8.06% to over $164 in early trading Wednesday. The rally followed a strong Q3 2026 earnings report and CEO Elon Musk’s confirmation that independent committees at SpaceX and Tesla are exploring a potential merger.
SpaceX recorded $14.58 billion in earnings, an increase of 161% year-over-year, surpassing the $12.72 billion consensus forecast. Net income hit $4.4 billion, a massive turnaround from a net loss of $1.05 billion during the same period in 2025.
SpaceX Chief Financial Officer Bret Johnson attributed the strong results to recurring revenue from its Starlink satellite internet business and the expansion of its artificial intelligence (AI) infrastructure.
A potential merger would combine SpaceX’s estimated $2 trillion valuation with Tesla’s approximately $1.5 trillion valuation, making a technology giant with an estimated value of $3.5 trillion. However, the discussions remain exploratory, with the final terms yet to be determined.
How AI Expansion and Potential Tesla Merger Drive Investor Interest
Investors are interested in the possibility of merging AI infrastructure, autonomous technology, and robotics. SpaceX has rapidly expanded its artificial intelligence (AI) business, which it calls Super Intelligence (SI). The segment’s revenue surged ninefold to $7.56 billion in Q3 2026, up from $813 million in the same quarter last year.
Musk highlighted the potential merger’s strategic value, citing the “superintelligence singularity” and significant overlap between the companies’ initiatives. These include their joint Terafab chip plant, which targets SRAM test chips by mid-2027, Optimus robotics, AI software development, and Starlink connectivity. Integration could connect SpaceX’s AI computing infrastructure with Tesla’s autonomous-driving technology, custom chips, and humanoid robots.
Following its integration with xAI earlier this year, SpaceX’s AI business expanded its activities to include computing-power rentals and AI software development, including Grok. The segment also reportedly benefited from the acquisition of coding platform Cursor, which contributed $608 million in Q3. Musk suggested that SpaceX’s revenue could reach $1 trillion by the end of 2027.
What’s Next for SpaceX and Tesla?
The proposed merger faces several challenges before it can proceed, such as shareholder approval, regulatory scrutiny, and the financial demands of combining two major technology businesses. SpaceX’s reported $19.6 billion in capital expenditures also highlights the significant investment required to expand its AI infrastructure.
Meanwhile, price targets signal analysts’ expectations for future growth, but they do not guarantee further gains. Cantor Fitzgerald has assigned Tesla an Overweight rating and a $485 price target, while JPMorgan has more than doubled its SpaceX price target to $500 by the end of 2027. However, Musk acknowledged that obtaining approval would be challenging, noting that the proposal requires support from 50% of Tesla’s outstanding shareholders.
Regulatory issues could also complicate the deal. As a US government and military contractor, SpaceX could have national security concerns raised during the review process, and Tesla’s manufacturing and supply chain ties to China could complicate matters. Until the firms disclose formal terms and a clear approval process, investors should monitor for updates on whether the proposed merger can move forward.
Related: SpaceX Faces High Share Supply Shock as Musk’s Unlock Nears
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