Elon Musk stated on Tuesday his support for a potential merger between SpaceX and Tesla, following the rocket and AI company’s report of its first quarterly profit since the initial public offering. These remarks were made during a conference call with analysts after financial results were disclosed, revealing a net income of $4.4 billion for the July-September timeframe, compared with a $1.1 billion deficit in the same period last year.
Revenue surged by 161 percent, reaching $14.6 billion. The quarterly earnings come after a challenging beginning on Wall Street. SpaceX launched on the Nasdaq on June 12, with an IPO priced at $135 per share, raising approximately $85.7 billion. Its initial earnings report as a public entity showed second-quarter revenue of $7.8 billion and a net loss of $541 million.
AI Revenue Surges Ninefold
The AI segment, now termed “Super Intelligence” by SpaceX, was key to the positive shift. Super Intelligence represents the preferred terminology for artificial intelligence used by U.S. President Donald Trump. The unit’s revenue climbed over ninefold from the prior year, hitting $7.6 billion, surpassing Starlink as the top revenue generator. SpaceX attributed growth to new cloud service agreements, broader adoption of its Grok chatbot, and its acquisition of Cursor, an AI coding startup.
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Cloud clients of SpaceX include Anthropic, which committed in May to a nearly $45 billion agreement over three years for computing resources at the company’s Colossus data centers. Google also partnered in June, securing $920 million in monthly payments from October through June 2029. The AI division achieved an operating profit of $431 million, reversing a $1.7 billion loss from a year prior. Similar to other AI firms, expenditures continue to rise.
SpaceX allocated $19.6 billion in investments during the quarter, with $16.4 billion focused on AI, bringing total capital expenditures for the first nine months to $48 billion. Computing capacity expanded to 1.7 gigawatts, up from 0.6 gigawatts the previous year. Musk expressed confidence that an additional 10 gigawatts of computing capacity could be operational by 2027, building on an expected 2.5 to 3.0 gigawatts by year-end. He noted that power, cooling, and electrical infrastructure remain “somewhat of a limiting factor.”
Musk Calls Merger a Good Idea
During the analyst call, Musk acknowledged complexities in considering a merger, describing the situation as handling “a minefield,” while stating that consolidation “would be a good idea.” SpaceX shares rose nearly five percent in after-hours trading following his comments. Musk clarified that independent director committees at both SpaceX and Tesla have been established to evaluate the proposal at shareholders’ request. He recused himself from discussions due to a conflict of interest, as he serves as CEO of both companies and holds dual roles at SpaceX. As of June 30, Musk owned 48.4 percent of SpaceX and controlled over 82 percent of its voting power via super-voting shares, while holding roughly 20 percent of Tesla.
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Neither committee has finalized deal terms, and Musk cautioned against assuming a merger is likely. Any agreement would require support from a majority of Tesla’s total shares, not just voting shares, a threshold Musk described as “quite a high hurdle.” The companies could benefit from collaboration in AI software, chip design, robotics, and space-based computing.
Starlink Grows, Shares Rise
Starlink revenue increased 69 percent to $5.2 billion, with consumer subscribers reaching 13.6 million. However, average monthly revenue per consumer declined to $69 from $83 in the prior year. SpaceX also completed its first revenue-generating Starship mission, a launch critical to Musk’s Mars strategy and satellite deployment at scale. The flight deployed 26 next-generation Starlink satellites.
