According to Zhitong Finance APP, Elon Musk’s outlook for SpaceX (SPCX.US) is prompting Wall Street to assess a potential mega-company of unprecedented scale. If combined with a possible partnership between SpaceX and Tesla (TSLA.US), Musk’s electric vehicle giant, investors could be facing a “giant”-level transaction.
Musk expects that by the end of 2027, SpaceX’s annual recurring revenue (ARR) will reach “some level between $500 billion and $1 trillion.” Its rapidly growing AI computing business is fueling market speculation that SpaceX could become the fifth hyperscaler, following Meta (META.US), Alphabet (GOOGL.US), Microsoft (MSFT.US), and Amazon (AMZN.US).
Daniel, CEO of Futurum Group
Newman said in an interview: "Given that SpaceX has a growing satellite business alongside its profitable space operations, and its AI business continues to fund these efforts, its potential merger with Tesla now suggests not just that it will become the fifth hyperscale cloud provider, but that it will become a global supercompany."
Wall Street strategists have begun to view SpaceX and Tesla as a single entity. As Musk continues to expand into areas such as artificial intelligence (AI), robotics, advanced manufacturing, satellite communications, and computing infrastructure—including data centers on Earth and potentially future ones deployed in orbit—the business boundaries between the two companies have gradually blurred.
During SpaceX's Q3 earnings call, Musk responded to an analyst's question by stating that both SpaceX and Tesla have established special committees to discuss a potential merger. He also said that a merger between the two companies is a good idea.
Wall Street is increasingly betting that this will become the largest merger in history. Renowned technology analyst Dan from Yorkville Ives
Ives said: “We believe there is an 80% to 90% probability that Tesla and SpaceX will merge by the end of 2027, due to a series of strategic AI and data-driven factors, which would be the right move for Musk.”
If a deal with Tesla is reached, SpaceX will participate in Tesla’s launch of the Optimus humanoid robot, the development of its Cybercab business, and ultimately the advancement of the Terafab initiative—a highly ambitious chip manufacturing plan by Musk aimed at reducing production costs by up to 90%.
Tom, Chief Equity Analyst at RBC Capital Markets
Narayan said, “This (the Terafab project) is their way of bypassing NVIDIA and TSMC. If they can achieve this, it would be a massive breakthrough.” These chips will be used in a range of devices, from data centers to hundreds of thousands of humanoid robots, as Tesla plans to produce 20,000 Optimus robots per week by the end of 2027.
George, analyst at Canaccord Genuity Capital Markets
After Tesla announced its quarterly earnings, Gianarikas raised Tesla's target price from $410 to $442, with the core rationale being a potential merger between the two companies. George
Gianarikas said: "If the two companies merge, you're buying into the future of the physical world. This is a company trying to build Tomorrowland—and it’s not just about programming. You’re buying a Berkshire Hathaway of physical technologies for the future."
Meanwhile, JPMorgan analyst Doug
After SpaceX announced better-than-expected quarterly results last week, Anmuth raised its target price for the company more than twofold to $500. SpaceX’s business has long expanded beyond rockets and satellites, and the company plans to become a leading mobile communications provider and build data centers in space. Doug
Anmuth said: “SpaceX’s ambitions are greater than those of any company we’ve ever seen—enabling humanity to become multiplanetary, expanding AI in space using solar power, and establishing bases on the Moon and cities on other planets.” “No other company is as well-prepared as SpaceX to capture an estimated total addressable market (TAM) exceeding $28 trillion.”