A Musk Merger?

The big news that created a stir in high tech and finance in the last 48 hours was rumors and speculation that Elon Musk is gearing up to merge all – or at least two – of his companies together.

The two scenarios that are being discussed:

• Tesla – SpaceX – xAI all merge into one public company.
• SpaceX merges with xAI into one company.

Years ago, Musk talked about creating one holding company, with the likely name of X, but nothing had been said about that recently.

The discussion since the beginning of the year had been focused on preparations for taking SpaceX public this year, perhaps as early as June. But something clearly shifted this week as a larger possible merger has received a lot of airtime.

As more details emerge, I’ll probably dig a little deeper on this topic next week.

Musk’s projects and companies are literally some of the most impactful contributions to humanity and economic growth in history. They are certainly worth our attention.

Have a great weekend,

Jeff

Bye-Bye, Biotech Winter

Jeff and Team,

Jeff, I have been following you for quite some time now. Started out before the pandemic and got burned like most in the biotechs. So much promise and hope, just withered on the vine. Cleaned up and rebalanced, was so excited when you came back.

I am a big fan of Musk’s companies and see them as a complete stack, not individual companies working in silos. You may have been a part of that.

I played with all the frontier AIs and have found Grok to be the best to suit my personality. I know that sounds weird, but if you have challenged all of them, you can feel the difference.

I frequently copy The Bleeding Edge and all of your research into Grok to help me learn more and dive deeper. It has been helpful professionally as an ER doc, personally for issues in the home, and with things like crypto and taxes, as well as how to deal with reframing and dealing with issues with in-laws. Very positive.

I use tonight’s Bleeding Edge and went a bit deeper on biotech. Just wonder what you think about the five companies in the Grok discussion that I have attached.

I would also like to hear what you think about the Musk stack of Tesla, Optimus, Starlink, Neuralink, X, xAI, and how they will all go together. My bet is in the next year, this group of companies will explode into or onto something nobody ever expected or even saw coming. In deep conversations, Grok agrees with me!!!

(Brownstone Unlimited, and so happy to be here).

– Dan K.

Hi Dan,

It’s great to have you with us as an Unlimited member. And thanks for the feedback, it has been great to be back and re-energized on my mission and vision for Brownstone Research.

Since the time that you wrote in, I’m very happy to say that I have re-launched coverage of the biotech sector with Early Stage Trader. Like you, it was painful to see the biotech market shrivel up due to the pandemic policies. The four-year biotech winter made no sense at all and was detrimental to advancing important therapies for a wide range of diseases.

Happily, those days are over, and I’ll be increasing biotech-related investment research in The Near Future Report (large-cap biotech), Exponential Tech Investor (think picks and shovels, IP, devices, and AI), and Early Stage Trader which is exclusively focused on early stage biotech companies in the pre-clinical or clinical stages with forthcoming catalysts that create high probability trading opportunities.

As an Unlimited member, you now have access to all my most recent research related to Early Stage Trader, including my first three alerts, and also three compelling biotech companies that I believe are most likely to be acquired by larger biopharma companies in 2026.

For anyone interested in learning more about the new and improved Early Stage Trader – our biotech-focused trading advisory – you can go here to catch the replay of our relaunch event from earlier this week.

As for the list you reference in your Grok conversation, I’m unable to provide any personalized investment advice on these companies, and I can’t perform my typical in-depth research on all these companies in The Bleeding Edge. So, I’ll just provide some general comments…

One of the companies I can’t mention, as it is already in our model portfolio in The Near Future Report. You – and any other Near Future Report subscribers – can find my full research on that company on our website right here.

As for Eli Lilly, I like the company, but don’t like the valuation right now. I simply believe that there are better companies to allocate to. Intellia and Denali are also two companies that I like, but I would need to perform a full analysis – and also do some work on valuation – before I could offer a strong position on either company.

As for Musk and his “stack” of technologies embedded within his various companies, there have been some developments in the last 48 hours that make this a very timely issue.

Musk has long alluded to a conglomerate model – most likely named X – to hold all of his businesses. But in the last two years or so, it hasn’t been mentioned at all, and the clear intentions to take SpaceX public in 2026 seemed to suggest those plans had changed. Musk, it appeared, would have two publicly traded companies and keep his artificial intelligence business, xAI, private.

This actually made a lot of sense. After all, xAI is developing artificial general intelligence (AGI), which confers an incredible competitive advantage. Not having to disclose the inner workings of xAI in SEC filings would be advantageous. Keeping xAI private for now is the smart move.

Prior to these merger talks, the silos that made sense to me were:

• xAI – the home of frontier AI models, AGI, and ultimately ASI. X remains the most important social network of real-time information and analysis, critical as a dataset for AI models. This is where it would make sense to merge Neuralink for brain-computer interface technology (which is all AI).
• Tesla – this remains the home for energy/transportation/robotics/autonomy initiatives. The Boring Company could be rolled up into Tesla, and Tesla’s free cash flows could be used to build out the next generation of transportation infrastructure, which will be very capital-intensive (think tunneling and perhaps hyperloop technology). Musk will also lean more heavily into energy production. Large solar production will be primary, but I can’t help but think that he will jump into fusion at some stage (power of the sun). The best way would be to acquire an existing fusion company with an engineering team that he really likes and build from there.
• SpaceX – all things space-bound. Rockets, orbital data centers, orbital internet infrastructure, next-generation propulsion technology, and, of course, space exploration (and potentially resource mining in space).

Another framework that is useful and fun for us to use is that all of his technologies are relevant in the context of making the human race a multiplanetary species:

• Tesla for EVs to roam the surface of Mars
• The Boring Company to dig tunnels for habitation under the surface of Mars
• Optimus for labor in the harsh Martian environment
• AGI to assist in operating the Martian outpost and providing what we can think of as an extraterrestrial civilization operating system on Mars
• SpaceX for transportation to the Moon and Mars
• SpaceX for mining resources extraterrestrially
• Neuralink for real-time communications with computing systems in space and on Mars
• Tesla for the power of the sun (solar and perhaps fusion in the long run)
• xAI for orbital data centers (note: there are also some rumors of possibly merging xAI into SpaceX, given the interest in orbital data centers)
• SpaceX for next-generation propulsion to get to Mars, and eventually other places in our solar system

Either way, Musk’s companies are destined to be the most important companies of our time. And combined, they will be the most valuable group of companies in history, which I believe will become worth tens of trillions of dollars.

No matter what happens, you can be sure that I’ll be on top of it with updates in The Bleeding Edge and in our model portfolios.

Love how you’re using Grok, really cool, proactive, and a great way to engage this incredible technology. And you are right, Grok is the best of them.

Tracking the Trend of Data Centers in Space

Hi Jeff, as a longtime subscriber, I enjoy your engineering insight. However, since Google launched the idea of data centers in space, I would have expected that you would address the idea and research the most capable companies to engineer such a space system and provide essential components: radiation-hardened chips/servers, optical communications, ground stations, physical/ cybersecurity, besides satellites and rockets. As I imagine only big and certified companies will do this, I think it fits perfectly in the Near Future theme.

Regards.

– Wolfgang B.

Hi Wolfgang,

This has definitely been a keen area of interest of mine as an emerging growth market to help solve some of the challenges and expenses of powering and cooling data centers here on Earth.

I covered Google’s Project Suncatcher last November in The Bleeding Edge – Space-Based Intelligence. In mid-December, in The Bleeding Edge – Necessity is the Mother of Invention, we had a look at Relativity Space and Starcloud, two companies working towards orbital data centers. And later that month, in The Bleeding Edge – NVIDIA Acquires” Groq, we dug a little deeper with looks at Star Catcher and Sophia Space. I recommend these issues to gain some additional perspective.

We also already have several companies in The Near Future Report and Exponential Tech Investor portfolios that will almost certainly feed into the orbital data center industry once it takes off. These companies range from semiconductor manufacturing to semiconductors, cybersecurity, and lasers/optics.

One thing to keep in mind, however, is that volumes of things like optical components or radiation-hardened semiconductors will be relatively low, especially in the next couple of years.

We can use Starlink as an example. Despite years of launching Starlink satellites, there are “only” about 9,400 in orbit today. While it’s the largest satellite constellation in history, the actual amount of semiconductor and optical content is rather small because there are only 9,400 satellites – not 9 million or 90 million satellites.

Gross margins for radiation-hardened components are typically much higher in the 70–80% range, but the volumes are much lower. This is why I didn’t include orbital data centers in my investment thesis for the companies in our model portfolios.

The key gating factor for the growth in orbital data centers is one company – SpaceX. Once SpaceX gets its Starship into commercial operations and launch costs per kilogram down to around $200, the economics make a lot of sense to launch data server satellites into orbit.

2026 will mark the beginning of this trend, and I am confident Starship launch costs will drop to attractive levels no later than 2027, so we’ll see a lot more investment next year in orbital compute.

This is definitely an industry we’ll track closely.

Jeff