Elon Musk used SpaceX’s latest earnings call to talk up two things: a cloud computing business that’s growing fast, and a possible merger with Tesla. The Information reports that Musk praised the rocket company’s “soaring” cloud unit while openly backing a combination of his two biggest companies. Both happened on the October 20 call, where SpaceX also posted its first quarterly profit since going public.
⚡ The Quick Version
- What happened: Musk confirmed that SpaceX and Tesla have each set up special committees to look at a merger.
- What’s driving SpaceX: The company rents computing power to AI firms, and that business pushed it into profit.
- Deal status: Nothing is agreed. Musk said there are no terms yet and no guarantee of a deal.
- Biggest obstacle: A majority of all Tesla shares would have to approve, not just the shares that vote. Musk called that “quite a high hurdle.”
- Why you should care: This would put rockets, satellites, AI models, chips, robots and cars under one roof, all competing for AI compute customers.
☁️ SpaceX Now Sells Compute
The real news here is how much SpaceX has changed. A year ago, most people saw it as a launch company with a satellite internet business on the side. Now a big part of its growth comes from renting computing capacity to AI companies.
Several outlets put the quarter’s revenue at $14.6 billion, up 161%. They point to the compute deals and Starlink growth as the main drivers. That puts SpaceX up against AWS, Microsoft Azure, Google Cloud, Oracle and specialist GPU clouds like CoreWeave, all chasing the same customers who need training and inference capacity.
The xAI deal explains how it got here. SpaceX took over xAI earlier this year, and with it came xAI’s large data center buildout. In practice, SpaceX now owns a frontier AI lab plus the infrastructure underneath it, and it sells that extra capacity to other companies.
🤝 The Tesla Merger Case
Musk listed four areas where he thinks the companies would work better together:
- AI software: Grok and Tesla’s driving and robotics models could share talent and training infrastructure.
- Chip design: Tesla already designs its own AI chips, and a merged company could use them across both businesses.
- Robotics: Optimus humanoid robots and SpaceX’s manufacturing and space operations seem like an obvious fit.
- Space-based computing: Musk has repeatedly pitched data centers in orbit, powered by sunlight and cooled by the vacuum of space.
He also said he’s a conflicted party and can’t sit in on the committees’ discussions. That matters. Tesla shareholders have already sued over Musk-related deals, and an independent process will be the first thing any regulator or court checks.
🧭 Why It Matters
This is about vertical integration in AI. The companies doing well right now control the full stack: chips, power, data centers and models. Microsoft has OpenAI, Google has DeepMind and TPUs, and Amazon has Anthropic and Trainium. A merged Musk company would try to own every layer, from custom chips to launch vehicles.
The risks are real too. Tesla investors who bought a car and energy company would end up holding a lot of AI infrastructure and launch exposure. Governance concerns will grow, since Musk sits on both sides of the deal. And it’s still unclear whether orbital compute can ever make money.
🔭 What to Watch
- Committee findings: Watch for valuation ranges and whether either committee hires outside advisers who push back.
- Shareholder math: Winning a majority of all outstanding Tesla shares is a real test, especially because many retail holders don’t vote.
- Compute customers: If SpaceX names big AI tenants, that would show the cloud business can stand on its own.
- Rival responses: GPU cloud providers and hyperscalers may cut prices or lock customers into longer contracts.
If you buy AI infrastructure, add Musk’s companies to your list of compute vendors to check. If you’re a Tesla shareholder, a vote that could reshape the company may be coming. The Information has the full report with more detail from Musk’s comments.