A combined total addressable market exceeding $28 trillion is driving Wall Street analysts to assign an 80% to 90% probability that SpaceX and Tesla merge before the end of 2027.
Yorkville Ives analyst Dan Ives put those odds in writing, calling the potential combination “the right move for Musk” on the basis of what he described as strategic AI and data-driven rationale.
Committees at both companies are already said to be working toward a deal, with Elon Musk, who serves as chief executive of both SpaceX (SPCX) and Tesla (NASDAQ: TSLA), actively pushing for an agreement.
JPMorgan analyst Doug Anmuth more than doubled his price target on SpaceX to $500 following the company’s better-than-expected quarterly results last week, with shares trading at $146 on Friday.
Anmuth framed the company’s scale in sweeping terms, writing that “SpaceX’s ambitions are bigger than any company’s we’ve seen — to make life multi-planetary, leverage the Sun to build out AI in space, and build bases on the Moon and cities on other planets.”
He added that “no other company is as well-positioned to go after the combined anticipated [total addressable market] of $28T+,” a figure that underpins the growing conviction around the merger thesis.
Over at Canaccord Genuity, analyst George Gianarikas lifted his Tesla price target to $442 from $410 after the EV maker’s latest quarterly results, grounding his call almost entirely on the merger scenario.
“If they merge, you are buying the future of the physical world,” Gianarikas wrote on Thursday, describing the combined entity as “the Berkshire Hathaway of tomorrow’s physical technology.”
Beyond the financial mechanics, a Tesla-SpaceX combination would fold in the Optimus humanoid robot program, the Cybercab autonomous ride business, and Terafab, Musk’s plan to manufacture chips in-house and cut production costs by as much as 90%.
RBC Capital Markets lead equity analyst Tom Narayan flagged the chip ambition as particularly consequential, saying “this is their way of bypassing Nvidia and bypassing TSMC — if they can do that, it’s huge.”
Tesla has set a target of producing 20,000 Optimus robots per week by the close of 2027, with those units and future data centers all requiring the kind of custom silicon Terafab is designed to supply.
Musk has projected SpaceX’s annual recurring revenue will land somewhere between $500 billion and $1 trillion by the end of 2027, a range that has intensified speculation about the company’s trajectory as a standalone business.
That growth is being powered in large part by a surging AI compute division, which analysts say positions SpaceX to enter the hyperscaler tier alongside Meta, Alphabet (NASDAQ: GOOG), Microsoft, and Amazon (NASDAQ: AMZN).
Futurum Group CEO Daniel Newman, speaking after SpaceX’s quarterly results, captured the broader thesis succinctly: “This doesn’t only become the fifth hyperscaler, this becomes the world’s super company.”
SpaceX is simultaneously expanding into mobile carrier services and orbital data centers, broadening its revenue base well beyond its original rocket and satellite operations.
Newman noted that “they have a satellite business that’s growing, they have a lucrative space business that the AI profits can continue to underwrite, and now we have a possible merger with Tesla,” making the combined picture difficult for investors to ignore.
