Where Will Elon Musk Take SpaceX Next?

TradingKey - Musk is considering how to integrate his tech empire, as reports emerge that SpaceX is weighing a business integration with Tesla ( TSLA) or xAI.

According to sources familiar with the matter, both integration plans are currently in the early stages of discussion, and no specific agreements have been reached.

As news of the developments broke, investors began evaluating various possible combinations of businesses such as space, autonomous driving, and artificial intelligence, attempting to determine which integration path holds the greatest strategic value.

A SpaceX–xAI Merger Looks More Likely

Currently, the potential integration between SpaceX and the AI company xAI shows clearer signs of progress; compared to the proposed SpaceX-Tesla integration, these talks have a more realistic foundation in terms of feasibility and business synergy.

Analysts generally believe that a business integration between SpaceX and xAI is clearer and more realistic in terms of strategic logic.

Industry analysis points out that with the accelerated deployment of the Starlink satellite network, SpaceX's demand for data processing and computing power continues to rise, and xAI's artificial intelligence technology serves as a perfect complement. Incorporating xAI into the SpaceX architecture would not only help enhance its technical capabilities and operational efficiency but also help tell a more forward-looking growth story to capital markets ahead of an initial public offering (IPO).

If a merger between SpaceX and xAI materializes, key assets including Musk’s rocket business, Starlink satellite internet, social media platform X, and the Grok AI chatbot would be brought under a single architecture. This integration would fully link the data, application, and infrastructure chains, and provide momentum for SpaceX to implement its "data centers in orbit" space computing strategy.

Amid the rapid evolution of AI technology, this structural adjustment is significant for Musk in securing a strategic high ground in his competition with tech giants like Google, Meta, and OpenAI.

In contrast, a potential merger between SpaceX and Tesla currently remains more of a concept within capital markets. These discussions are primarily driven by certain investors rather than formal internal leaks or negotiation progress, and the industry generally believes the likelihood of this happening is far lower than an integration with xAI.

If a merger with Tesla is chosen, Tesla, as a publicly traded company, could potentially absorb SpaceX using its market position and existing capital structure, thereby eliminating the need for SpaceX's independent listing plan.

Perhaps from an investment perspective, combining the world's most valuable automaker (Tesla) with the most valuable private aerospace firm (SpaceX) would indeed appeal to large long-term institutional funds. However, such a cross-industry, cross-capital-structure integration would involve highly complex issues across multiple levels, including regulatory approvals, valuation reconciliation, and the unification of governance structures.

Since Tesla is a publicly traded company while SpaceX remains a privately held enterprise, any merger or acquisition involving the two would trigger intense scrutiny from securities regulators and the investment market. This would bring more stringent disclosure requirements, corporate governance restructuring, and the challenge of balancing shareholder interests.

According to the latest data from the prediction market platform Polymarket, as of Thursday evening, the probability of SpaceX and xAI merging before mid-year was estimated at 48%, while the predicted probability of a Tesla-xAI merger was only 16%.

Musk and His Business Empire

Elon Musk currently holds his position as the world's richest person, controlling several strategic tech enterprises, including electric vehicle giant Tesla, aerospace company SpaceX, AI startup xAI (which also manages the social media platform X he acquired), neural interface company Neuralink, and the tunnel construction firm The Boring Company. His horizontal expansion across various industries continues to spark interest and speculation in capital markets.

Among them, Musk's SpaceX has become the world's most valuable private company. According to a recent round of internal share trading, its valuation has reached $800 billion.

SpaceX is expected to launch its IPO around June 2026, with a target valuation that could exceed $1.5 trillion. Notably, the timing of this listing may coincide with Musk's birthday, and the fundraising scale is expected to reach up to $50 billion, which could break the record for the largest IPO in history.

Since its founding in 2002, SpaceX has reshaped the global aerospace industry with its reusable Falcon rocket technology, laying the foundation for its rapidly expanding Starlink satellite network. Today, Starlink consists of thousands of satellites in orbit, providing low-Earth orbit internet services to multiple regions worldwide.

This is not the first time Musk has pushed for a strategic integration of his companies. As early as 2016, he used Tesla shares to acquire the solar power company SolarCity, completing an "energy integration" deal that sparked widespread controversy but was forward-looking.

Last year, he again pushed for a merger through unconventional means, integrating social media platform X into xAI via a stock swap, allowing the latter direct access to user data and distribution channels.

For years, speculation has circulated in the market that Musk would integrate his business empire. Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management and an investor in both Tesla and xAI, stated publicly that he sees this integration as a "predictable trend," adding candidly:

"It's like a bunch of overvalued companies merging together into one big overvalued mess run by Elon. But it's a pure play now. It's like, you want to invest in Elon? Here ​you go. Like, you get all this. And it's much more attractive, actually, as an investment."