Tesla (NASDAQ:TSLA) shares are up nearly 3% as of this writing, climbing after reports suggested that SpaceX is exploring a potential merger with Tesla or, alternatively, with artificial intelligence firm xAI. The discussions are said to be preliminary, with no final decisions made, but the market is already weighing what such a move could mean for investors.
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From an investor’s perspective, the appeal is rooted in how these businesses could reinforce each other rather than in any short-term deal mechanics. Musk has discussed plans for SpaceX to support advanced AI computing through space-based data centers, while Tesla already plays a key role in energy storage and large-scale battery systems. A combination could align SpaceX’s future data center ambitions with Tesla’s manufacturing and power capabilities, creating an integrated ecosystem that spans hardware, energy, and AI.
There is also a valuation angle that investors cannot ignore. Tesla’s market value is currently around $1.4 trillion, while SpaceX is reportedly targeting an IPO valuation near $1.5 trillion. Any form of consolidation between two companies of that scale would be one of the largest corporate tie-ups ever discussed, which naturally draws interest from major funds and sovereign investors who prefer assets with long-term infrastructure characteristics. Reports suggest that such a deal might require substantial financing, indicating that outside capital would likely be involved, rather than Tesla simply absorbing SpaceX on its own balance sheet.
For Tesla shareholders, the main question is whether this would dilute focus or enhance growth. Supporters of the idea argue that Tesla would gain exposure to SpaceX’s future revenue streams, particularly if space-based computing and communications become meaningful markets. At the same time, Tesla’s existing expertise in batteries and energy systems could become more valuable if they are used beyond Earth-bound applications, broadening the company’s addressable market well beyond cars and robotics.
There is also the strategic timing to consider. SpaceX is reportedly weighing a public listing as early as June and could seek to raise as much as $50 billion, which would make it the largest IPO on record. If merger talks advance ahead of that process, Tesla investors could end up indirectly owning a stake in a business that many see as one of the most valuable private companies in the world.
For now, no deal has been agreed, and the companies could remain separate. However, the fact that such combinations are being discussed highlights how Elon Musk is thinking about unifying his ventures around AI, energy, and infrastructure. It reframes Tesla not just as an automaker or robotics play, but as a core piece of a much larger technology platform with potential upside tied to space, data, and computing over the long term.
Is Tesla stock a Buy?
Wall Street’s view on Tesla remains cautious rather than enthusiastic, reflecting a balance between long-term optimism and near-term concerns. Based on 28 analyst ratings over the past three months, the stock carries a Hold (i.e., Neutral) consensus, with 11 Buys, 11 Holds, and 6 Sells. The average 12-month price target stands at $401.27, which implies 3.7% downside from the current share price, suggesting analysts see limited upside at present levels. (See TSLA stock analysis)
