SpaceX's astronomical rise: Unveiling the secrets behind its trillion-dollar valuation
Elon Musk's empire strikes back, and this time, it's out of this world!
SpaceX, the rocket company founded by the visionary Elon Musk, has soared to new heights with a valuation of $1.25 trillion (€1.06tn) after merging with xAI, an artificial intelligence venture. This merger has not only narrowed the gap between SpaceX and Tesla but has also shifted the power dynamics within Musk's business empire.
But here's where it gets controversial... Tesla, the electric carmaker, still holds a slight edge with a market capitalization of $1.58 trillion (€1.34tn), but only by a slim 26%. On the surface, it might seem like a close call, but dig a little deeper, and you'll find that Musk's wealth is now more closely tied to SpaceX than Tesla.
And this is the part most people miss... Tesla's value took a hit at the start of 2026, with a 6% decline in its stock price. The reasons? A 16% drop in vehicle deliveries and a 3% drop in total revenue for 2025, marking its first annual decline on record. The core car business is facing increased competition, especially in China and Europe, and the loss of a federal tax credit for electric vehicles in the US hasn't helped.
Musk's political ties and support for controversial figures have also taken a toll on the brand. So, what's next for Tesla?
Electric vehicle sales drop, and Musk's master plan unfolds
As EV sales soften, Musk has a new vision. He's shifting Tesla's focus towards robotaxi services and its Optimus humanoid robots, areas where the company is yet to establish a strong presence. Last week, he announced the end of production for the Model S and X vehicles, which accounted for a mere 3% of deliveries in 2025, to make way for Optimus.
Meanwhile, SpaceX dominates its core markets. It's the leading provider of orbital launch services, with multi-billion-dollar contracts from NASA and the US Department of Defense. And let's not forget Starlink, its satellite internet network, with over 9,000 satellites in orbit and approximately nine million customers.
The merger values SpaceX at $1 trillion (€847bn) and xAI at $250 billion (€212bn). But the story doesn't end there. This week's merger follows a previous deal where xAI acquired the social media platform X (formerly Twitter) in a stock transaction. Musk sees this SpaceX-xAI tie-up as a step towards developing data centers in space, a move he believes could overcome energy constraints on Earth.
However, there are challenges. A full-scale rollout is unlikely in the near term due to technical, supply-chain, and financial hurdles. The project demands innovative solutions for radiation protection and cooling in space, not to mention the cost of launching and assembling heavy equipment.
Political and regulatory risks: A potential game-changer?
Despite the impressive valuation, the merger could introduce new risks for investors. SpaceX profits might be redirected to fund xAI's infrastructure, and the AI company faces regulatory scrutiny in several markets. Authorities in Europe, India, Malaysia, and the US have launched investigations into xAI's Grok image generator, which was used to create explicit deepfake images of women and children. French investigators even raided X's offices this week as part of an algorithmic abuse probe.
Legal experts warn that these risks could impact SpaceX, especially as its Starlink business operates internationally. For now, these complications are more manageable while SpaceX remains privately held and under Musk's control. But a future public listing could raise questions about investor support for such a high valuation, especially with the added layer of regulatory and political risks.
So, what's your take on this? Do you think SpaceX's merger with xAI is a brilliant move or a risky venture? Share your thoughts in the comments below!
