Musk plans to integrate SpaceX and Tesla to build a full-stack AI empire

SpaceX is integrating the global communications network, computing infrastructure, and energy supply under the same company at an unprecedented speed. A quarterly earnings report that stunned Wall Street shows that this company, led by Musk, is betting on the core lifeline of the AI era in a more aggressive way than any tech giant.

SpaceX's third-quarter revenue was $14.6 billion, up 161% year over year, exceeding Wall Street expectations by more than $2 billion, and it recorded positive operating profit for the first time. Company CFO Bret Johnsen guided that first-quarter 2027 revenue will reach $33 billion to $37 billion, and that annualized recurring revenue will exceed $100 billion before December of this year. At the same time, Musk confirmed that the independent director special committees of SpaceX and Tesla are discussing a merger of the two companies.

If the merger happens, SpaceX will take in satellite launch, global communications, AI compute, energy supply, as well as Tesla's factories, self-driving cars, and Optimus humanoid robots in one stroke. By then, every layer of the global computer system will be owned by a single company.

Starlink: Approaching the Tipping Point That Could Disrupt the Entire Communications Industry

Starlink's satellite internet service added 1.6 million users in the third quarter, bringing cumulative subscribers to 13.6 million. Although this figure is far below Verizon's 147 million wireless connections and AT&T's 110 million, the growth curve cannot be ignored—from 2.3 million at the end of 2023, to 4.4 million at the end of 2024, to 8.9 million at the end of 2025, and another 4.7 million added in the first three quarters of this year.

By comparison, in the same quarter AT&T added only 379,000 postpaid users, and Verizon added 184,000. In addition, about 12,000 commercial aircraft have been connected to Starlink service, and this coverage capability is becoming a key variable in airline competition—United Airlines has connected, while Delta Air Lines has not yet connected.

Starlink Mobile is another growth curve. This service requires no rooftop antenna and directly connects ordinary mobile phones to satellites through partner carriers such as T-Mobile; monthly active users have reached 22 million, growing 37% in the third quarter alone. SpaceX also recently reached an agreement to acquire EchoStar's wireless spectrum for about $17 billion, and plans to launch a full mobile carrier service in early 2028.

On the technology side, SpaceX's new-generation V3 satellite has a single-satellite download capacity of 1 terabit per second, enough to support about 200,000 simultaneous video streams, while the Starship rocket can carry 60 such satellites per flight. In September of this year, Starship's 14th flight deployed bandwidth of 26 terabits per second in a single mission—more than 8 times the capacity of Viasat's entire ViaSat-3 satellite constellation. According to research firm TeleGeography, global international internet capacity (mainly relying on submarine cables) in mid-2026 will be about 2,259 terabits per second. As Starship plans to achieve one flight per week next year and eventually one flight per day, Musk's network scale may surpass total global internet capacity.

Compute Race: SpaceX Is Becoming the World's Largest Compute Supplier

Compute is becoming infrastructure, and Musk intends to dominate this infrastructure. SpaceX is currently bringing about 220,000 Nvidia GB300 chips online per month, and Musk said this pace will accelerate further next year.

According to Foxconn, it has received an order from SpaceX for about 936,000 GB300 chips, worth about $52 billion, with delivery through the first quarter of 2027. Industry estimates put Nvidia's total Blackwell chip output this year at about 5.5 million to 6 million units, with SpaceX alone accounting for about 40%, making it Nvidia's largest single buyer at present.

SpaceX has already built the world's largest AI data center, Colossus 2, in Memphis, Tennessee, but this is only the starting point. According to the timetable disclosed by Musk and CFO Bret Johnsen on the earnings call, as of the end of September, SpaceX's compute had reached 1.7 gigawatts; it is expected to approach 2 gigawatts by the end of October and reach 2.5 to 3 gigawatts by the end of December; by the end of the second quarter of 2027, it will bring online the "world's strongest training cluster" with 440,000 Nvidia next-generation Vera Rubin chips; the full-year target is to add 10 gigawatts of compute, which Musk said he is "highly confident" about, and said the actual number is "unlikely to be below 13 gigawatts."

Competitors are actively seeking compute from Musk. Anthropic has committed to leasing about $84.5 billion of compute from SpaceX by 2029; Alphabet agreed to pay SpaceX $920 million per month for compute from October this year to June 2029. Even Google, which develops its own chips and has one of the world's largest compute clusters, chose to buy compute from Musk—the fundamental reason is power.

Energy Bottleneck: SpaceX Chooses to Build Its Own Power System and Go Around

Power is the fundamental constraint on data center expansion. GE Vernova is the largest U.S. manufacturer of gas turbines for data centers; its orders are fully booked through 2030, with a current backlog of 116 gigawatts, while annual capacity is only about 20 gigawatts.

SpaceX's solution is to build its own power system. The company has built its own power generation facility in Southaven, Mississippi, equipped with 41 gas turbines and an installed capacity of 1.2 gigawatts; it is also purchasing five 380-megawatt units from South Korea's Doosan Heavy Industries. Musk said its energy solution is "highly proprietary," with the core being that SpaceX has mastered advanced casting capabilities—capabilities derived from rocket engine manufacturing—that can be used to independently produce gas turbine blades, thereby shortening the power deployment cycle by 12 to 18 months.

Musk plans to build 20 gigawatts of power and cooling facilities next year to ensure that compute expansion is not constrained by energy. According to estimates, if SpaceX achieves 20 gigawatts of gas turbine installed capacity by the end of 2027, daily natural gas consumption will reach 3 billion to 4.5 billion cubic feet—equivalent to most of the U.S. Energy Information Administration's projected increase in total natural gas production for 2027.

Financial pressure: the financing logic behind negative free cash flow

Aggressive expansion comes with enormous capital consumption. SpaceX generated about $9.6 billion in cash from operating activities in the third quarter, while capital expenditures reached $19.6 billion, resulting in free cash flow of about negative $10 billion. CFO Bret Johnsen guided fourth-quarter capital expenditures of $35 billion to $40 billion, roughly twice the figure previously expected by investors.

Compared with other hyperscale cloud providers, SpaceX's capital expenditure intensity far exceeds that of peers. Amazon invests about $0.27 in capital projects for every $1 of revenue this year, with Microsoft and Alphabet at similar levels; SpaceX's ratio is about $2.50, roughly 9 times that of Amazon.

As of the end of September, SpaceX held $89.9 billion in cash and short-term investments, $38.8 billion in debt, and quarterly EBITDA of about $8.8 billion, or about $35 billion annualized. Current liabilities are about one times EBITDA, far below the two-times ceiling for S&P to maintain an investment-grade rating.

However, if SpaceX is to complete 10 gigawatts of compute buildout and maintain its investment-grade rating, the funding gap means it must raise additional funds by issuing new shares, having suppliers such as Nvidia provide chip financing, or collecting prepayments from customers. According to reports, S&P Global has projected that SpaceX's borrowing will reach $132 billion by 2028 and that free cash flow will not turn positive until 2030.

Tesla merger: the final piece in building a "full-stack empire"

Musk has confirmed that SpaceX and the special committee of Tesla's independent directors are discussing a merger. If the deal is reached, SpaceX will gain Tesla's manufacturing plants, autonomous vehicle technology, and the Optimus humanoid robot, and its AI compute sold by the watt will in turn drive vehicle driving and factory production.

This implies a complete vertically integrated chain: SpaceX launches satellites, Starlink transmits signals, self-built gas turbines supply power, in-house chips run AI models, Grok provides intelligent services, and Tesla robots perform physical labor—every layer of the global computing system is controlled by the same company.

This logic overturns the basic paradigm of specialized division of labor in American industry over the past century. In the AI era, when the cost of intelligence equals power plus chips plus transmission, the owner of vertical integration will capture profits at every layer of the chain, while competitors that rely on purchasing various inputs face a cost disadvantage at every link and, even if well run, will struggle to sustain themselves.

Looking at the revenue trajectory, SpaceX is expected to report quarterly revenue exceeding $50 billion by the end of 2027, nearly 9 times the $5.6 billion in the third quarter of 2025. Whether this bold bet can be delivered hinges on the continued growth of AI demand for compute—and whether Musk can, at unprecedented speed, truly set this machine spanning the sky, the ground, and the digital world in motion. Risk disclosure and disclaimer

Markets carry risk, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investment based on this is at the user's own risk.