SpaceX and Tesla Form Board Committees to Explore a Merger as SpaceX's AI Unit Turns a Profit

SpaceX on October 20, 2026 reported third quarter revenue of $14.6 billion, up 161% from a year earlier, with its AI segment bringing in more than half of it. On the earnings call that evening, Elon Musk said the boards of SpaceX and Tesla have formed special committees of independent directors to discuss a merger, CNBC reported.

It was SpaceX's second quarterly report as a public company and its first since closing the $60 billion acquisition of the AI coding startup Cursor on August 14. SpaceX absorbed Musk's AI lab xAI in February 2026 and listed on the Nasdaq on June 12 at $150 a share, according to CNBC. Its first report, in August, showed $18.4 billion in quarterly capital spending, 80% of it on AI, and the shares fell.

What did SpaceX report for the third quarter?

SpaceX said in its earnings release, filed with the SEC on October 20, 2026, that it earned $2.8 billion in operating income and $4.4 billion in net income in the quarter, after a net loss of $1.1 billion a year earlier. Revenue of $14.6 billion beat the LSEG consensus of $12.72 billion, according to CNBC.

The net income figure was lifted by items below the operating line. TechCrunch notes about $1 billion of other income tied to a recovery in Bitcoin prices and related party income, and the release shows that SpaceX still posted a net loss of $413 million for the first nine months of 2026. SpaceX shares rose about 8% in after hours trading on October 20 and were up 10% on October 21, CNBC reported.

How big is SpaceX's AI business now?

SpaceX's AI segment, which it renamed Super Intelligence (SI), had $7.56 billion in third quarter revenue, up 830% from $813 million a year earlier, the release shows. SpaceX credits new cloud deals, Cursor and wider Grok adoption.

Most of that money comes from renting out infrastructure: $7.02 billion of SI revenue was "solutions and infrastructure", while $538 million was advertising. SpaceX rents capacity to Google, Anthropic and Reflection AI, among others, according to CNBC, and Cursor added $608 million of revenue between the August 14 close and September 30, the release says. The segment's nameplate compute, a measure of the rated power capacity of its data centers, reached 1.7 gigawatts on September 30, up from 0.6 gigawatts a year earlier.

The segment swung to an operating profit of $431 million, after a loss of $1.26 billion in the second quarter. That figure already absorbs $1.2 billion of share based compensation tied to the Cursor deal, SpaceX said.

Set side by side, the segments tell different stories. By this site's arithmetic, SI produced about 52% of SpaceX's revenue (TechCrunch puts it at the same 52%) but only about 15% of its operating income, while taking about 84% of its $19.6 billion in capital spending. SI spent roughly $2.20 on new equipment and buildings for every dollar of revenue it booked; Starlink still earned about five and a half times as much operating income.

What did Musk say about merging SpaceX and Tesla?

Elon Musk, CEO of both SpaceX and Tesla, said on the October 20, 2026 call that the two boards have formed special committees "at the request of shareholders" to discuss a merger, CNBC reported. The committees consist of independent directors, and Musk, who called himself a "conflicted party", is not part of the talks.

The companies are already linked. Tesla invested $2 billion in xAI, which later converted into SpaceX shares, and Terafab, an existing chip venture between the two, aims to test its first SRAM memory chip by June 2027, according to CNBC.

Kimbal Musk, Elon Musk's brother, is also excluded from the talks, Engadget reported, and the committees have not reached any agreement. Going by CNBC's market values of about $2 trillion for SpaceX and almost $1.5 trillion for Tesla as of October 20, a combined company would be worth about $3.5 trillion, by this site's arithmetic, the figure Bloomberg also used in a headline.

Who would have to approve a deal?

On the Tesla side, a merger would need a vote of 50% of all Tesla shares, not only of those cast, which Musk called "quite a high hurdle", according to CNBC. At SpaceX the outcome rests largely with Musk, who controls about 82% of the voting power (Fortune via Engadget).

What comes next for SpaceX's AI spending?

SpaceX chief financial officer Bret Johnsen forecast first quarter 2027 revenue of $33 billion to $37 billion, well above the $22.2 billion analysts expected on average, according to LSEG data cited by CNBC. He tied the forecast to better visibility into the company's pipeline of compute contracts.

Johnsen said SpaceX would put $35 billion to $40 billion into capital investments in the fourth quarter, TechCrunch reported. Musk claimed on the call that annual recurring revenue across infrastructure, cloud deals and paying Grok users will reach $500 billion to $1 trillion by the end of 2027.

What we don't know yet

• How far the committee talks have gone, which advisers they use, and whether either board will put a proposal to shareholders.
• What exchange ratio or structure a merger would use, and how Tesla's other shareholders would be treated.
• Whether Tesla's board or management will say more about the committee talks.
• Which customers signed SpaceX's new cloud services agreements in the third quarter, and on what terms.