A Potential Tesla-SpaceX Merger Could Create ‘Orbit-To-Ground’ AI Powerhouse With Over $1 Trillion In Chip Savings, Says Analyst

UBS estimates SpaceX could spend about $135 billion on wafer-fab equipment over five years for Terafab.

• RBC sees Terafab as the clearest near-term source of synergy, with over $1 trillion in potential chip cost savings by 2050.
• Musk said Tesla and SpaceX already have “more and more overlap,” including Terafab, Starlink and Digital Optimus.
• Tesla says Terafab is “necessary” to scale Optimus as AI-chip demand rises, with AI5 and AI6 development also underway.

Shares of Tesla, Inc. (TSLA) and SpaceX (SPCX) slipped in overnight trading heading into Wednesday, but RBC Capital sees a potential combination of Elon Musk’s two companies creating an “orbit-to-ground” platform with more than $1 trillion in long-term chip savings.

SPCX stock is down about 2% in overnight trading heading into Wednesday, while TSLA shares are off more than 1%. SpaceX snapped a two-session losing streak with a 3% gain on Tuesday, while Tesla extended its decline to a fifth consecutive session.  

Analyst Sees Over $1 Trillion Terafab Opportunity

RBC Capital lowered its Tesla price target to $480 from $500, implying a 56% upside from current levels, while maintaining an ‘Outperform’ rating. The brokerage said that a potential Tesla-SpaceX merger could create a compelling “vertical integration from orbit to ground” ecosystem spanning connectivity, autonomous vehicles and humanoid robotics that would be difficult to replicate. 

RBC sees Terafab, Musk’s vertically integrated semiconductor manufacturing complex for AI chips used across Tesla and SpaceX, as the most tangible near-term synergy, estimating it could generate well over $1 trillion in chip-cost savings by 2050 compared with relying on external suppliers. Earlier this month, UBS estimated SpaceX could spend about $135 billion on wafer-fabrication equipment over the next five years, assuming 20% of its projected $1.1 trillion capital-spending program goes toward Terafab. 

Tesla Says SpaceX Overlap Is Already Growing

Musk said in Tesla’s latest earnings call that there was “more and more overlap” with SpaceX and singled out Terafab as a “gigantic project.” Tesla General Counsel Brandon Ehrhart said the companies had deepened their relationship earlier this year through an investment and framework agreement covering projects including Terafab and Digital Optimus.

However, Musk declined to discuss a combination directly, saying any such transaction would have to follow the appropriate process. But, the overlap already extends well beyond chips. Musk said Starlink is being integrated into Cybercab and is expected to reach Tesla vehicles in markets where the satellite service operates, arguing reliable connectivity is essential for Robotaxis that cannot afford coverage gaps.

Tesla is also working with SpaceX on Digital Optimus, with Grok serving as a higher-level model that assigns tasks to the system. Tesla is developing Megapod compute systems that pair its AI hardware with conventional processors and can be deployed near available power infrastructure.

Musk said Terafab is “necessary” to scale Optimus because Tesla otherwise risks running short of AI chips, adding that the project will need to address memory, logic and packaging. The company has already placed equipment orders for an Austin development fab designed to combine mask production, logic, memory, packaging and testing under one roof. Tesla is also advancing its AI5 and AI6 chips, with AI5 expected to initially go into Optimus.

How Do Retail Traders Feel About TSLA?

On Stocktwits, retail sentiment was split despite 'high' message volume, with Tesla traders turning 'bearish' while SpaceX sentiment remained 'bullish.' 

One user said, “$SPCX mega short term bullish calls hitting the tape we over 125 tomorrow easy”

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Another user said, “$TSLA I wouldn’t touch this until we get confirmation of a reversal. This stock is dangerous.”

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SpaceX shares are down about 24% over the past month, while Tesla has fallen roughly 32% year to date, making it the worst-performing member of the “Magnificent Seven.”  

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