‘The world’s super company’: Wall Street weighs SpaceX profits and the company’s likely tie-up with Tesla

Elon Musk’s vision for SpaceX (SPCX) has Wall Street valuing a potential giant like nothing we’ve seen before. Add to that a possible tie-up with Musk’s electric vehicle giant Tesla (TSLA), and investors could be looking at a monster play.

Wall Street strategists already view SpaceX and Tesla as one and the same.

Musk, who is CEO of both companies, predicts that SpaceX’s annual recurring revenue by the end of 2027 will fall “between $500 billion and $1 trillion.” Its booming AI computing business is fueling bets that SpaceX could become a fifth hyperscaler alongside Meta (META), Alphabet (GOOG, GOOGL), Microsoft (MSFT) and Amazon (AMZN).

“Add to that the fact that they have a growing satellite business, they have a lucrative space business that AI profits can continue to underwrite, and now we have a possible merger with Tesla,” Futurum Group CEO Daniel Newman told Yahoo Finance after the space company reported better-than-expected quarterly results.

“It’s not just becoming the fifth hyperscaler, it’s becoming the world’s super company,” he added.

A deal with Tesla would integrate SpaceX into the electric vehicle maker’s plans to deploy Optimus robots, its Cybercab business and, ultimately, Terafab, Musk’s ambitious plan to make chips and reduce production costs by up to 90%.

“This is their way of getting around Nvidia and TSMC,” Tom Narayan, senior equity analyst at RBC Capital Markets, told Yahoo Finance. “If they can do that, that’s huge.”

These chips would power everything from data centers to hundreds of thousands of humanoid robots. Tesla plans to produce 20,000 Optimus per week by the end of 2027.

Canaccord Genuity Capital Markets analyst George Gianarikas raised his price target on Tesla from $410 to $442.00 following the electric vehicle maker’s quarterly results, with the call fundamentally based on a merger.

“If they merge, you are buying the future of the physical world,” Gianarikas wrote Thursday. “A company that is trying to create, not just program, Tomorrowland. You are buying the Berkshire Hathaway of tomorrow’s physical technology.”

Meanwhile, JPMorgan analyst Doug Anmuth more than doubled his price target on SpaceX to $500 after the company reported better-than-expected quarterly results last week. As of Friday, shares were trading at $146.

SpaceX has expanded well beyond rockets and satellites with plans to become a leading mobile carrier and build data centers in space.

“SpaceX’s ambitions are bigger than any company we’ve seen: making life multiplanetary, harnessing the Sun to develop AI in space, and building bases on the Moon and cities on other planets,” Anmuth wrote.