Elon Musk’s next move could be a SpaceX-Tesla merger big enough to challenge Nvidia Corp. (NASDAQ:NVDA) for the title of most valuable company on Earth.

Just three sessions into its IPO, SpaceX (NASDAQ:SPCX) has already surged nearly 50% to roughly $2.6 trillion, leaving Tesla Inc. (NASDAQ:TSLA) and its $1.5 trillion behind.

The wider that gap runs, the cheaper Tesla gets to absorb, and the more control Musk keeps over whatever emerges.

The Math On A $5 Trillion Giant

The case for a merger, laid out this week by Bloomberg columnist Liam Denning, is about control as much as size. Any deal would be all-stock, so SpaceX would absorb Tesla by issuing new SpaceX shares to Tesla’s holders.

The more SpaceX is worth relative to Tesla, the fewer shares it has to print to get the deal done.

SpaceX could offer Tesla a one-third premium, valuing it north of $2 trillion, and Musk would still end up with about 74% of the votes.

That premium does three jobs at once. It gives Tesla holders a reason to approve the deal despite the company’s sliding numbers, it locks in Musk’s control, and it triggers the first slice of his $1 trillion Tesla pay package, which converts into yet more SpaceX stock.

Add it up and the combined company lands near a $5 trillion headline valuation, right in Nvidia’s neighborhood.

SpaceX would be paying about 138 times forward EBITDA for a cash-burning carmaker, and its own outside investors would watch their stake shrink from roughly half the company to under a third.

Morningstar pegs SpaceX’s fair value at $780 billion, less than a third of what the stock fetches on a 4% float.

The Real Threat Is The Stack, Not The Market Cap

SpaceX has already absorbed xAI at a $250 billion valuation and agreed to buy coding startup Cursor for $60 billion. Folding in Tesla would add real-world robotics data from Full Self-Driving and the Optimus robot, layered on top of Starlink’s orbital footprint.

For Nvidia, the real risk is what these customers are trying to become. Tesla, xAI and SpaceX are among its biggest chip buyers today, but Musk has pitched building his own fab to cut that cord. He calls it Terafab, a roughly $25 billion plant he says would be like TSMC’s gigafab “but way bigger,” producing Tesla’s AI5 chips and custom silicon for orbital satellites.

Polymarket thinks there is a 69% chance NVDA retains its crown as largest company by the end of the year.

Kalshi traders price a SpaceX-Tesla merger before May 2027 around 45% to 55%, up from the mid-20s earlier this year.

SpaceX is a national security asset with classified satellite work, and Tesla carries deep manufacturing and consumer exposure in China. Regulators may balk at parking defense infrastructure and a global automaker under one untrammeled umbrella.

Image: Shutterstock