Quick Read
Tesla’s Optimus robot program and Terafab hardware reframe it as a physical AI empire, making it the stronger near-term Musk stock.
Trading near 300x trailing P/E, Tesla’s bull case rests entirely on robotics and AI potential, not its car business.
SpaceX’s $1.5 trillion valuation, which spans Starlink, Colossus data centers, and asteroid mining, defies standard financial modeling.
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It’s been a pretty rough couple of weeks for the Elon Musk fans, with shares of Tesla (NASDAQ:TSLA) and Space Exploration Technologies (NASDAQ:SPCX) both moving lower — and fast. Indeed, both publicly traded Elon Musk companies do not come cheap. And both are incredibly difficult to evaluate, especially as they spend heavily to bring in the new age of AI and beyond.
In my view, Tesla has already taken the steps to go above and beyond electric vehicles (EVs) and even robotaxis. With sights set on AI, Optimus robots, and the guts that go into them (think the Terafab), I do view Tesla as more of a physical AI empire than a firm selling cars.
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As far-fetched as it might sound, Mr. Musk has already shifted gears to floor it with the physical AI revolution. As the man spends a ton on the infrastructure needed to power the profound innovations in the near future, perhaps investors should view his company not as a black hole for cash, but as a firm that knows what it takes to build the foundational economic moats to excel in the AI age.
Elon Musk’s companies are tough to value. That makes it easy to panic amid volatility
Of course, it’s going to be really hard to value a company like Tesla that goes for just shy of 300.0 times trailing price-to-earnings (P/E), given the uncertainties surrounding the timeline for robotics and agentics.
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Either way, Tesla stock is a buy for robots, not the car. And while there’s going to be a lot of spending pain to transform robotics into a cash flow-generative business, Mr. Musk has the track record and, with that, it’s going to be tough to bet against the man, even when the odds seem heavily out of his favor.
As for SpaceX, I view the $1.5 trillion (that could change rapidly depending on how the firm’s earnings go) company as also a name that even the pro analysts will have a tough time valuing. How does one even factor in asteroid mining and lunar manufacturing into one’s financial models?
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As far-fetched as some of the man’s ideas are, one thing, in my view, is a certainty: he’s going to try his best to make his outlandish projects work. And many of them might just work, unlocking a new market and allowing the firm to make considerable sums of cash.
SpaceX stock falls back to Earth
Whether it’s Starlink, which is shaping up to be a monster cash cow for the firm, or its Colossus data centers and Terafab, I do think that the man’s ambition combined with relentless effort to do whatever it takes (including spending a fortune) could make SpaceX a colossal success or, at the very least, a firm that has a pretty good satellite connectivity business and the means to produce chips and AI compute that can also rake in quite a bit given the current chokepoints in the AI buildout.
It takes a lot to build a monopoly with sky-high barriers to entry. Mr. Musk probably knows this, and that’s a major reason why he’s been so aggressive with the trajectories of both companies.
In the meantime, I think SpaceX could continue to be a wild ride, as Starship launches get put under the magnifying glass while the firm looks to do its best to not startle investors come earnings season. In the meantime, I think AI and robotics could be the closer frontier. And that means Tesla might be able to catch that bid higher ahead of SpaceX, especially since Optimus needs to go right before it can start unlocking value for SpaceX.
The bottom line
Robots on the moon sound like a work of science fiction, but, in my view, it all hinges on whether Tesla can get Optimus to where it needs to be.
In my humble opinion, the raw ingredients are there to make it all work in time. The intelligence (xAI), the compute (Colossus data centers), the hardware (Terafab in due time), and, perhaps most importantly, the bold visionary leader in Elon Musk. It’s going to be an interesting ride for both Musk firms. But if I had to place a bet, I’d go for Tesla over SpaceX, at least at this juncture. Either way, I think the case for merging the two companies makes the most sense, given their shared vision of the future.
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