SpaceX and xAI Have Merged. Now Investors Are Wondering What's Next for Tesla

Earth's richest man wants to build a mega company. Its mission is as ambitious as its reported valuation.

Elon Musk yesterday confirmed earlier reports that his private space exploration company, SpaceX, had acquired xAI, his private artificial intelligence company—the latter which, by the way, owns X, his private social media company. The overarching goal, he said in a blog post, is to put satellites in space to "harness the sun's full power" for AI-driven applications and "accelerate humanity's future."

If the premise of the company seems heady, it's because it is—if the future of AI is constrained by a lack of resources on Earth, Musk proposes, why not build it somewhere else?

In more earthbound terms, meanwhile, the deal values the combined entities at $1.25 trillion, according to a Bloomberg report. The financial implications are big: Musk was already expected to make SpaceX the biggest initial public offering in history this year. The news has also revitalized discussions about space-based data centers—and kicked off fresh speculation that Musk might also bring Tesla (TSLA), the EV maker turned robotics company, into the fold.

Imaginations worldwide—those fascinated by Musk, mega-finance, the next moves in technology, or all three—are fired up by the possibilities. So are bettors on prediction markets, though shares of Tesla and SpaceX rival EchoStar (SATS) don't appear to reflect the the volume of Street gossip.

"SpaceX and xAI combine... Tesla next?" Wedbush tech analyst Dan Ives posted on X this morning. "In our view there is a growing chance that Tesla will eventually be merged in some form into SpaceX/xAI over time."(One X user suggested a "clue to watch for": news that Musk acquires former U.S. Steel stock ticker "X" from the NYSE. "I'm guessing Elon Musk would only want the X ticker if he were to merge @Tesla with @SpaceX/@xai," they wrote.)

The "SpaceXLounge" Reddit thread in the last 24 hours has lit up too, with one user posting: "Wonder if they are gonna go for tesla next lol."

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Musk has shut down such rumors before. In July, when an X user tried to poll Tesla investors on their support of a merger between it and xAI, Musk responded simply: "No." But the latest news, along with last week's revelation that Tesla is now an investor in xAI, has reinvigorated the speculation.

The probability of a "Tesla-SpaceX merger announced before June 30," per a Polymarket contract, has risen to 24% from the mid-teens polled before yesterday's news was confirmed. The SpaceX-xAI deal has also given way to other notions: Traders recently recently placed an 88% probability on it becoming the largest IPO by market cap this year.