Why Analysts Have Mixed Reactions to the SpaceX and xAI Merger

The announcement that SpaceX is acquiring xAI has led to mixed reactions from analysts. Many see the deal as exciting because it combines two fast-growing areas: space and artificial intelligence. At the same time, some investors are unsure how to feel, especially if SpaceX goes public, since it would no longer be a pure space-focused company. Not everyone who wants exposure to rockets and satellites also wants AI exposure in the same stock. Analysts are also questioning how realistic Elon Musk’s long-term vision is.

Musk believes that AI computing will eventually move into space because solar power is abundant there. However, experts point out that running data centers in orbit brings major challenges, including managing heat, maintaining equipment, supplying power reliably, and dealing with legal and regulatory issues. While the idea sounds logical in theory, analysts say it is far more complicated in practice. Even so, Musk describes the merger as a major step toward building a fully integrated system that combines rockets, satellites, AI, and global communications.

The deal also raises questions about Tesla (TSLA), which recently agreed to invest about $2 billion into xAI. Analysts at Wedbush believe this could lead to deeper ties between Tesla, SpaceX, and xAI in the future, especially as Tesla shifts more focus toward self-driving technology, robots, and energy storage. Other analysts note that Tesla’s energy and hardware systems could eventually help power AI infrastructure, including space-based data centers.

What Is the Prediction for TSLA Stock?

Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 11 Buys, 12 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average TSLA price target of $393.51 per share implies 7% downside risk.

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