The earnings that started it
SpaceX has reported its first profit as a publicly listed company. In the July–September quarter, revenue jumped 161% year-on-year to $14.58 billion, with net income of $4.4 billion — a swing from a $1.1 billion loss in the same period last year (Financial Express). The numbers comfortably beat Wall Street’s revenue estimate of $12.87 billion.
But the headline inside the headline is where the money came from. SpaceX’s artificial intelligence division — its “superintelligence” business — generated $7.56 billion in the quarter, almost ten times its level a year earlier (Financial Express). That makes AI, not rockets and not satellite internet, the company’s biggest earner: the connectivity segment led by Starlink brought in $5.2 billion in the same quarter (Financial Express). According to the New York Post, the AI division accounted for roughly 52% of SpaceX’s total revenue — up from just $818 million in the first three months of the year.
Much of that AI revenue comes from renting out computing capacity to other AI companies, including Anthropic, Google’s parent Alphabet and Reflection AI, through SpaceX’s Colossus II data centre (Financial Express). In other words, SpaceX is now a landlord for the AI boom — it is no surprise that AI labs keep running into safety and governance questions, as we covered in our explainer on Anthropic’s AI safety bill pitch.
Starlink, meanwhile, is hardly struggling. Its subscriber base reached 13.6 million in the quarter, ahead of analyst expectations (New York Post), although average monthly revenue per subscriber has fallen from $99 in 2023 to $69 as the service expands into cheaper markets (Financial Express).
Then came the merger bombshell
The results were almost overshadowed by what Musk said on the earnings call. Both SpaceX and Tesla have formed special committees of independent directors to discuss a possible merger — the first official confirmation that the two companies are formally exploring a combination. The New York Post reports the committees were set up “at the request of shareholders.”
Musk, who runs both companies, made clear he is staying out of the room: “Because I’m a conflicted party, I can’t actually be in the discussion of the special committees,” he told investors (Financial Express). He did not hide his own view, though. “I think it would be a good idea, but it’s really up to the special committees of both companies,” he said, adding that shareholders would ultimately have to approve any deal (Financial Express).
Investors liked what they heard. SpaceX shares rose in extended trading after the announcement (Financial Express), and the company closed Tuesday with a market value of about $2.01 trillion (New York Post). Barclays has suggested a deal could even be announced before Tesla’s annual meeting in December (Financial Express).
The spending behind the story
This growth is not cheap. SpaceX spent $19.6 billion on capital expenditure in a single quarter — nearly three times the amount a year earlier — with $16.4 billion of that going into computing infrastructure, taking its installed computing capacity to 1.7 gigawatts (Financial Express). Spending is forecast to climb further, to between $35 billion and $40 billion in the fourth quarter.
Musk is thinking in even bigger numbers. CFO Bret Johnsen reiterated that SpaceX expects annual recurring revenue of around $100 billion by the end of 2026, and Musk posted afterwards that “$1T in SpaceX revenue in 2028 is no longer impossible” (Financial Express).
What this means
Three things stand out.
First, SpaceX has quietly become an AI infrastructure company. Rockets made it famous and Starlink made it rich, but renting compute to AI labs is now its largest business. That reframes the merger logic: Tesla brings cars, energy storage and factories; SpaceX brings satellites, launch and an AI cloud. The overlap Musk’s investors keep pointing to is real.
Second, the process matters as much as the idea. A merger between two companies controlled by the same person is exactly the kind of deal governance rules exist for. The independent committees, Musk’s recusal, and a shareholder vote are not formalities — they are the story. Any deal will be scrutinised for whether Tesla shareholders are getting fair value, and Tesla’s own third-quarter results, due tonight (21 October) after the US market close (OANDA), will shape that debate within hours.
Third, nothing is decided. Committees “discussing” a merger is not a merger. There is no price, no timeline, and no guarantee shareholders say yes. But when the world’s most valuable private-turned-public space company posts a $4.4 billion profit and its CEO calls merging with his car company “a good idea” on the record, the conversation has officially moved from rumour to process.
For more on where AI businesses are heading, read our piece on how AI agents are doing people’s chores now.