SpaceX (SPCX.US) targets US$1 trillion ARR + teams up with Tesla, Inc. (TSLA.US)! Wall Street bets on a "global supercompany" that speaks for the future of the physical world

Elon Musk's outlook for SpaceX (SPCX.US) is prompting Wall Street to assess a giant company of potentially unprecedented scale. Add in a possible tie-up between SpaceX and Musk's electric vehicle giant Tesla, Inc. (TSLA.US), and investors could be facing a "behemoth"-level deal. Musk expects SpaceX's annual recurring revenue (ARR) to reach "somewhere between US$500 billion and US$1 trillion" by the end of 2027. Its booming artificial intelligence (AI) computing business is driving market bets that SpaceX could become the fifth hyperscaler after Meta (META.US), Alphabet (GOOGL.US), Microsoft Corporation (MSFT.US) and Amazon.com, Inc. (AMZN.US). "Considering SpaceX has a growing satellite business, a highly profitable space business whose profits can continue to fund the AI business, and now a potential merger with Tesla, Inc., this doesn't just mean it will become the fifth hyperscaler it will become a global supercompany," Futurum Group CEO Daniel Newman said in an interview. Wall Street strategists have begun viewing SpaceX and Tesla, Inc. as a single entity. As Musk continues to expand into areas including AI, Siasun Robot&Automation, advanced manufacturing, satellite communications and computing infrastructure including data centers on Earth and potentially in orbit in the future the business boundaries between the two companies have gradually blurred. Speaking on SpaceX's third-quarter earnings call in response to an analyst question, Musk said both SpaceX and Tesla, Inc. have set up special committees to discuss a merger. He also said a merger of the two companies would be a good idea. Wall Street is increasingly betting this will become the largest merger in history. Dan Ives, a well-known tech analyst at Yorkville Ives, said: "We believe there is an 80% to 90% probability that Tesla, Inc. and SpaceX merge by the end of 2027, driven by a series of strategic AI and data factors, and this is also the right step for Musk." If a deal with Tesla, Inc. is reached, SpaceX would participate in the electric vehicle maker's rollout of Optimus humanoid Siasun Robot&Automation, development of the Cybercab business and eventual advancement of the Terafab plan (Terafab is Musk's ambitious chip manufacturing plan aimed at cutting production costs by up to 90%). "This (the Terafab plan) is how they bypass NVIDIA Corporation and bypass Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR. If they can pull this off, it would be a massive breakthrough," said Tom Narayan, chief equity analyst at RBC Capital Markets. These chips would be used in everything from data centers to hundreds of thousands of humanoid Siasun Robot&Automation, and Tesla, Inc. plans to produce 20,000 Optimus units per week by the end of 2027. Canaccord Genuity Capital Markets analyst George Gianarikas raised his Tesla, Inc. price target to US$442 from US$410 after the company reported quarterly results, with the core logic behind that target being a merger of the two companies. "If the two companies merge, then what you're buying is the future of the physical world. This is a company trying to build Tomorrowland, and not just through programming. You're buying the Berkshire Hathaway of the future physical technology sector," George Gianarikas said. Meanwhile, JPMorgan analyst Doug Anmuth more than doubled his price target for SpaceX to US$500 after the company reported better-than-expected quarterly results last week. SpaceX's business has already gone far beyond rockets and satellites, and the company plans to become a leading mobile communications operator and build data centers in space. "SpaceX's ambitions are bigger than any company we have ever seen enabling humans to become a multiplanetary species, using CECEP Solar Energy to scale AI in space, and establishing a base on the moon and cities on other planets," Doug Anmuth said. "No other company is as well positioned as SpaceX to pursue a combined expected total addressable market (TAM) of more than US$28 trillion."