SpaceX Posts First Public Profit and Launches Tesla Merger Talks as Shares Jump 10%

SpaceX reported blowout third-quarter results on October 21, posting its first profit since going public, with revenue surging 161% year over year to $14.58 billion, beating Wall Street estimates by roughly $1.6 billion. Net income came in at $4.4 billion, and adjusted EBITDA jumped 306% to $8.8 billion. The headline driver was AI, with AI data-center revenue soaring 830% to $7.6 billion, surpassing both Starlink connectivity revenue of $5.2 billion and the rocket business for the first time. Nameplate computing capacity reached 1.7 gigawatts, and Musk guided toward 13 gigawatts by the end of 2027, with first-quarter 2027 revenue forecast in a range of $33 billion to $37 billion, well above analyst expectations.

On the earnings call, Musk said a merger of SpaceX and Tesla would be "a good idea" and confirmed that both companies have formed independent special committees to evaluate a potential combination. Musk acknowledged he cannot personally participate in those committee deliberations. No terms have been set and no deal has been announced, but the disclosure alone sent SpaceX shares up roughly 8 to 10 percent in premarket trading, with Tesla climbing about 1.3 to 1.4 percent. A completed merger would unite SpaceX's reported $2 trillion valuation with Tesla's market capitalization into a combined entity that multiple sources placed at roughly $3.5 trillion, which would make it the largest corporate merger in history. The deal would also consolidate the companies' combined Bitcoin holdings of approximately 30,221 BTC, comprising SpaceX's 18,712 BTC and Tesla's 11,509 BTC.

Wall Street responded aggressively to both the earnings beat and the merger speculation. JPMorgan more than doubled its SpaceX price target from $240 to $500, maintaining an Overweight rating, and now forecasts $254 billion in 2027 revenue with 10 gigawatts of computing capacity by year-end. The bank cited shared AI infrastructure, engineering talent, and chip development as strategic rationale for a potential combination, and floated a SpaceX-led all-stock deal at a 30 to 35 percent premium to Tesla. Morgan Stanley set a $300 target with an Overweight rating, Wells Fargo raised its target to $274 from $214, Citi lifted its target to $240 from $200, and UBS raised its target to $230 from $210.

Analysts noted that while the AI revenue surge is striking, roughly 84 percent of capital spending was absorbed by the AI segment, raising questions about the sustainability of margins. One Bloomberg commentary flagged that the AI revenue surge stems primarily from renting excess computing capacity rather than adoption of SpaceX's own Grok AI product. Regulatory complexity also looms large, with legal analysts warning that a deal consolidating rockets, satellites, electric vehicles, AI data centers, and autonomous driving under one corporate roof would face intense antitrust scrutiny. Tesla was set to report its own third-quarter earnings later the same day, with analysts expecting $28.34 billion in revenue and $0.45 in adjusted earnings per share, and investors watching for further merger commentary from Musk.