Elon Musk is reportedly in advanced talks to unify his artificial intelligence company xAI and aerospace giant SpaceX under one public IPO. The plan would give fresh momentum to SpaceX’s effort to launch data centers into orbit as Musk battles for supremacy in the rapidly escalating AI race against tech giants like Google, Meta, and OpenAI. Should the merger become official, there’s speculation amongst investment experts that Musk’s biggest public company, Tesla (TSLA), could reap a benefit.
Musk’s rocket and satellite group and his artificial intelligence firm have informed some of their investors about the plans, sources told Bloomberg on Monday. They may announce an agreement as soon as this week, the anonymous sources added. Under the proposed merger, xAI shareholders would exchange their shares for SpaceX shares.
Two entities have been set up in Nevada to facilitate the transaction, another source close to the deal told Reuters last week. Furthermore, SpaceX, which is looking toward a potential initial public offering that could value it at about $1.5 trillion, has also discussed the feasibility of a tie-up with Tesla Inc., Bloomberg News has reported.
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Typically, when one of Elon Musk’s companies performs well or shares a promising update, the institutional interest and support spread across all of them. Tesla (TSLA) stock has shown price volatility in recent years, especially when Musk announces an update for X (formerly Twitter), xAI, or SpaceX. However, this time around, the positive-sounding merger has sent TSLA shares down. After the report first emerged last week, TSLA fell 3%, and the stock is now down nearly 4% in the past month.
With Tesla (TSLA) trading at the $420 rang at the time of writing, investors are looking for a catalyst for the stock in 2026. Tesla’s growth potential remains a focal point for investors, as can be seen by the recent focus on the xAI/SpaceX merger. Current forecasts for the stock are split across Wall Street. However, most analysts hold an optimistic outlook for Tesla, with Piper Sandler targeting $500, Wedbush aiming for $600, and Truist Securities offering a more conservative $439 target.