SpaceX-xAI Merger Creates $1 Trillion Tech Behemoth with Tesla Connections
Elon Musk's SpaceX has merged with artificial intelligence startup xAI in a deal valuing the combined entity at over $1 trillion. The aerospace company filed plans with the FCC to deploy a million-satellite 'space cloud' network—100 times larger than Starlink—to support AI computational needs.
Tesla emerges as both supplier and investor in this venture, having sold $430 million worth of Megapack battery systems to xAI in 2025 while committing $2 billion in capital. The electric vehicle maker's stock faces valuation concerns at 200x projected 2026 earnings, compared to SpaceX's 400x multiple.
Analysts maintain a Hold rating on Tesla shares with a $393.51 average price target, suggesting 6.7% downside potential. The merger creates a vertically integrated technology powerhouse preparing for a mid-2026 IPO targeting $1.5 trillion valuation.