SpaceX and Tesla boards weigh a $3.5 trillion merger over xAI's $40 billion GPU lease
SpaceX marked Elon Musk's AI lab at $250 billion, spent $12.7 billion building its compute last year, and just locked $40 billion of GPU leases while burning cash. Two special committees now weigh a roughly $3.5 trillion merger, and the real question is whose shareholders carry the losses.
Vincent Jiang · 3 min read
Two boards are talking, and Musk is barred from the room
Bloomberg reported on October 27, 2026, that Tesla's−1.44% — Tesla, down 1.44 percent today and SpaceX's−2.66% — SpaceX, down 2.66 percent today boards have each formed special committees of independent directors to weigh a merger combining a SpaceX worth about $1.96 trillion with a Tesla worth about $1.61 trillion 12. Musk, chief executive of both companies, is excluded from the talks. "I'm a conflicted party, I can't actually be in the discussions," he said on SpaceX's earnings call, describing the arrangement as "an odd kabuki dance" 13. Neither committee has agreed on terms, and none are guaranteed 3.
The asset on the table is a $250 billion lab that loses money at scale
What both boards are really dividing is xAI$200B — xAI, private, latest valuation $200B, the unit holding Grok, the X platform and the Colossus data centers. SpaceX bought it in February 2026 in an all-stock deal that marked xAI at $250 billion and the combined company at $1.25 trillion, then took SpaceX public in June at $135 a share, raising about $75 billion 4.
The IPO filing showed the AI segment earned $3.2 billion in 2025, lost $6.36 billion from operations and spent $12.7 billion on capital projects 4. In Q1 2026 alone its capex hit $7.72 billion, more than SpaceX's space and connectivity segments combined 4.
xAI's mark rose tenfold in 21 months before SpaceX folded it in
Data
| xAI valuation | |
|---|---|
| May 2024 | $24B |
| Dec 2024 | $50B |
| Mar 2025 | $80B |
| Jul 2025 | $150B |
| Jan 2026 | $230B |
| Feb 2026 | $250B |
A $40 billion lease is waiting for whoever wins
On October 26 SpaceX filed an 8-K committing to roughly $40 billion of GPU finance leases: an Apollo-managed entity−0.96% — Apollo-managed entity, down 0.96 percent today buys Nvidia's−0.31% — Nvidia, down 0.31 percent today Vera Rubin chips and leases them back in tranches over about five years, the largest committed GPU financing on record, ahead of the $36 billion Broadcom+1.53% — Broadcom, up 1.53 percent today-backed Anthropic$350B — Anthropic, private, latest valuation $350B deal 56. Goldman Sachs+1.41% — Goldman Sachs, up 1.41 percent today structured it, and BlackRock+1.71% — BlackRock, up 1.71 percent today, Goldman Sachs Asset Management and KKR took commitments 6. Pimco alone is absorbing $4 billion of the debt 7.
Debt markets shut everyone else out, Starlink revenue got SpaceX in
Musk was blunt about why SpaceX got terms nobody else can: debt markets have "almost entirely shut off" companies whose revenue depends on AI data centers, and SpaceX qualified on Starlink and launch revenue 8. CFO Bret Johnsen said the AI segment produced $7.6 billion of SpaceX's $14.6 billion in Q3 revenue while company-wide capex ran near $20 billion 6.
The AI segment's capex runs at several times its revenue
- AI segment revenue
- AI segment capex
Data
| AI segment revenue | AI segment capex | |
|---|---|---|
| FY2025 | $3.2B | $12.7B |
| Q1 2026 | $0.82B | $7.72B |
Capex has outrun SpaceX's revenue for three straight quarters
- Revenue
- Capex
Data
| Revenue | Capex | |
|---|---|---|
| Q1 '25 | $4.07B | $4.14B |
| Q2 '25 | $4.07B | $2.83B |
| Q3 '25 | $5.58B | $6.88B |
| Q4 '25 | — | — |
| Q1 '26 | $4.69B | $10.11B |
| Q2 '26 | $7.81B | $18.37B |
| Q3 '26 | $14.58B | $19.59B |
The argument is over who bleeds
In the first nine months of 2026 SpaceX took in $27.08 billion of revenue and burned nearly $35 billion of cash; Tesla earned $78.67 billion with positive free cash flow 9. Scott Galloway, the NYU professor and investor, calls Tesla "the patient" and SpaceX "the organ donor" 9.
The bull case answers with growth: AI segment revenue rose 830% year over year to $7.6 billion last quarter 2, and Anthropic pays $1.25 billion a month for Colossus capacity through May 2029 4. RBC sketched a hypothetical $480-per-Tesla-share offer and JPMorgan's premium math lands near $500 92. Investor Gary Black warns dilution eats the gain, and AEI's Derek Scissors flags a merger Washington could unwind in 2029 over Pentagon contracts and Tesla's China exposure 9.
The door that decides it
No offer exists. Musk calls the merger "a good idea" but set the bar himself: any deal needs a 50% vote of all Tesla shares, not just those cast 3. Prediction traders give a 52% chance of announcement by June 2027 2. The document to watch for is the first formal exchange ratio from either committee. Until then, the $40 billion lease already has its collateral, SpaceX shareholders; what the committees are weighing is whether Tesla shareholders join them 2.
Related from The Inference: Tesla's $1.53 billion cash beat was unpaid bills, and it lands in the $3.5 trillion SpaceX merger talks.
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