SpaceX stock surges 7% in premarket as Tesla merger talks point to $3.5 trillion deal

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SpaceX stock surges 7%

Highlights

SpaceX shares rise 7.25% in premarket trading.
SpaceX and Tesla explore a $3.5 trillion merger.
Strong AI revenue supports SpaceX earnings growth.

According to Bloomberg, both companies have established special committees of independent directors to examine a possible combination. SpaceX shares climbed to $158.50 in premarket trading, up $10.71, or 7.25%, according to the latest market data, extending gains after the company closed Tuesday at $147.79.

SpaceX and Tesla consider historic corporate merger

Musk confirmed the preliminary discussions during a conference call following SpaceX's third-quarter earnings announcement. He indicated that combining the businesses could offer strategic advantages, although neither committee has agreed on transaction terms.

SpaceX carries an estimated valuation of $2 trillion, while Tesla is worth approximately $1.5 trillion. A combination at those valuations would create a technology conglomerate spanning electric vehicles, batteries, rockets, satellites, robotics, and artificial intelligence.

Musk will not participate directly in the committees' deliberations because of his interests in both companies. Any agreement would also face significant governance challenges, including obtaining sufficient support from Tesla shareholders.

SpaceX shares have traded above their $135 initial public offering price since the company went public in June. Tesla, meanwhile, remains down approximately 17% this year despite gaining alongside SpaceX following the merger announcement.

AI revenue drives stronger SpaceX earnings

SpaceX reported third-quarter net income of $4.4 billion, substantially exceeding analysts' average forecast of $1.88 billion. Total revenue increased 161% from the previous year, supported by expansion across artificial intelligence and satellite connectivity.

Revenue from its Super Intelligence division reached $7.56 billion, more than nine times the level recorded a year earlier. The business generated $431 million in operating income, reversing a $1.7 billion operating loss in the comparable period.

SpaceX has expanded its computing infrastructure business through relationships with major AI developers, including Anthropic and Alphabet. Its acquisition of the AI coding platform Cursor in August also broadened its technology operations.

Starlink subscribers reached 13.6 million, although that figure missed analysts' expectations. Connectivity revenue nevertheless increased 69% to $5.25 billion, while the company's launch and spacecraft division generated $1.77 billion, representing growth of 6%.

Merger could reshape competition in AI and space technology

The proposed merger would bring together businesses pursuing increasingly connected technologies. Tesla is developing autonomous vehicles and humanoid robots, while SpaceX is expanding satellite communications and computing infrastructure that could support advanced AI applications.

SpaceX expects quarterly revenue to reach as much as $37 billion early next year. The company is also preparing further Starship tests and plans to demonstrate orbital refueling, a capability important to its lunar ambitions and the deployment of larger Starlink satellites.

Despite the market enthusiasm, the transaction remains preliminary. Independent directors must determine whether combining the companies would benefit their respective shareholders, and any proposal would face substantial financial, regulatory, and governance scrutiny. The central question is whether closer integration would create lasting commercial advantages or introduce additional complexity across businesses with very different operations.

We have previously highlighted that Elon Musk targets a $100 trillion SpaceX valuation despite rising AI infrastructure costs.

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