Investor's Corner
Wall Street explains why they are bullish on Musk-Trump alliance
Morgan Stanley analyst Adam Jonas released a new research note clarifying why he raised the target price for Tesla Motors (TSLA) to $305 per share. Jonas warns investors who have equated Elon Musk’s new relationship with Donald Trump with a higher stock price. “There is no way to quantify the value (if any) of Tesla management’s advisory relationship with the new administration,” Jonas said.
Instead, Jonas emphasized the congruence between Trump’s desire for American workers to build products in American factories and Tesla’s business model which does both. Tesla is a leader in the automotive segment in both categories. “When you look at the businesses Tesla is in, you see many areas of overlapping interest” with the Trump administration, Adam Jonas told New York Times correspondent James Stewart on Friday. “To the extent the new administration prioritizes the creation of valuable, innovative high tech and manufacturing jobs, Tesla stands at the epicenter of that.”
In fact, the auto industry manufactures relatively few cars that can be truly called “US Made.” According to a chart compiled by Cars.com last year, the number of models of light duty vehicles that qualify for that label has fallen precipitously in recent years from nearly 30 in 2010 to only 8 in 2016.
Another analyst weighing on the Musk-Trump connection is Andrew Hughes, an alternative energy analyst for Credit Suisse. Hughes said solar investors “aren’t nearly as negative as they were the day after the election.” In part, that is because solar power — which up until now has needed significant federal incentives to survive — has become so inexpensive, particularly with regard to coal, that many industry observers think it will survive on its own even if those incentives are eliminated by the Trump administration.
Despite Donald Trump’s antipathy to renewable energy, business is all about the bottom line. If solar costs less than coal, then business is going to switch to solar no matter what the president has to say. Elon Musk is also heavily involved in re-imagining the role of the electrical grid. He sees battery storage as the key to making the grid compatible with renewables like solar and wind.
Musk has gone head-to-head with utility companies, including NV Energy, which is owned by Warren Buffett’s Berkshire Hathaway company. In 2016, Musk and SolarCity lost a round when the Nevada PUC enacted new rules imposing monthly assessments on people with rooftop solar systems. In return, SolarCity terminated its operations in the state, laying off hundreds of local workers.
Nevertheless, Musk expects both Tesla with its grid scale batteries and SolarCity with its rooftop systems — including the revolutionary Solar Roof — to play an ongoing part in how people get their electricity in the future. Last fall, just prior to unveiling the Solar Roof, Musk said, “The solution is both local power generation and utility power generation — it’s not one or the other”. He went on to suggest that the proper mix would be about one third residential rooftop power and two thirds power from traditional utility companies.
The US Energy Department stated in its annual energy and jobs report issues earlier this month that “solar technologies, both photovoltaic and concentrated, employ almost 374,000 workers, or 43 percent of the electric power generation work force.” Compare that to the number of workers employed to make electricity from coal. That number is just 86,000 workers. “The jobs data is a compelling argument in favor of the tax credits,” Andrew Hughes said. “I want to believe that Trump won’t kill solar, but there’s still a lot of uncertainty. The big question: Will he take away the tax credits?”
Musk received plenty of blowback when he decided to endorse former CEO of ExxonMobil Rex Tillerson for the position of Secretary of State. That makes him the public face of the fossil fuel industries and theoretically a natural adversary for Musk and his commitment to zero emissions energy. But Elon thinks Tillerson can temper some of the president’s more outrageous plans to extract every last molecule of fossil fuel that can be found on the planet.
Tillerson also advocates for a carbon tax, an idea that Musk strongly supports. According to reports, Musk floated the carbon tax idea at last week’s meeting of business advisors to the president. While Donald Trump did not dismiss the idea out of hand, Musk found little to no support from others in the room.
Trump likes to think big and take bold actions. So does Elon Musk. In some ways, it’s easy to see why the two men might take a liking to each other. Trump is especially interested in space exploration, something that fits perfectly with Musk’s passion for establishing a human colony on Mars.
Job creation in America for American workers, rebooting the traditional utility grid to use modern technology, sending people off to live on other planets. These are all things that interest both men. But cozying up to Trump also exposes Musk to dissatisfaction with some of the president’s less popular plans, like building walls with neighboring countries, sending federal troops into American cities, and banning immigration by people who espouse certain religions. To be successful, Tesla will need a broad base of customers. Musk has been careful to avoid political involvement so far. His association with the new president exposes him to new dangers.
One gets the sense that Musk is willing to accept some of the negatives if he can make progress on his passion for a carbon tax. But if that idea is stymied by Trump and his advisors, Elon’s desire to work with the new administration may cool considerably. Perhaps the most danger comes from the unpredictability and volatility of the new president, who can change course in a heartbeat. Musk will be need to be nimble to avoid getting rolled over by Trump in the future.
The president is scheduled to meet with his council of business leaders today, at which time he says he will provide details about his plant to cut government regulation of business by “75% or more.” That will give Musk yet another chance to evaluate the business acumen of Donald Trump and decide whether his involvement with his plans will pay dividends for him and the companies he leads. As Adam Jonas said in his report, it is impossible to predict how the association between Trump and Musk will benefit either.
SpaceX reported its third-quarter 2026 financial results on October 20, posting the company’s first solidly profitable quarter since going public earlier in the year under the ticker $SPCX.
Revenue reached $14.58 billion, up 161 percent year-over-year from $5.6 billion, and well ahead of consensus estimates in the $12.7 to $12.9 billion range. The results highlight a rapid shift in SpaceX’s center of gravity toward artificial intelligence/super intelligence, while Starlink and traditional space operations continue to show robust progress.
Here are the key financial results for the quarter:
- Revenue of $14.58 billion (+161% YoY)
- Adjusted EBITDA of $8.8 billion (+306% YoY)
- GAAP net income of $4.4 billion (versus a $1.1 billion net loss in the prior-year quarter)
- Adjusted EPS of approximately $0.35 (versus roughly $0.13–0.16 expected)
- Income from operations of $2.8 billion
The AI/SI segment generated $7.56 billion in revenue, an 830 percent year-over-year increase, making it the company’s largest segment for the first time. Growth was primarily driven by the activation of major cloud services agreements, the integration of Cursor (acquired earlier in 2026), and rising usage of Grok models and the newly introduced Grok Bot personal agent.
🚨 SpaceX just reported earnings! Here are some highlights:
Financial:
Revenue $14.58B (+161% YoY) vs. consensus ~$12.7–12.9B
Adjusted EBITDA $8.8B (+306% YoY)
GAAP net income $4.4B (vs. prior-year loss; first solidly profitable quarter post-IPO)
Adjusted EPS ~$0.35 vs. ~$0.13–0.16 expectedSegments:
Super Intelligence (SI, formerly AI): $7.56B (+830% YoY) — now the largest segment, driven by cloud contracts, Cursor, and Grok.
Connectivity (Starlink): $5.25B (+69% YoY).
Space: $1.77B.Other highlights:
Starlink subscribers: 13.6M (+89% YoY).
Nameplate compute: 1.7 GW.
Capex: $19.6B (majority AI infrastructure).
Cash & marketable securities: ~$90B.
First revenue-generating Starship mission (26 V3 Starlink satellites, ~10× Falcon 9 downlink capacity per launch).— TESLARATI (@Teslarati) October 20, 2026
SI adjusted EBITDA reached $5 billion, and nameplate compute capacity stood at 1.7 GW at quarter-end, up from 1.4 GW in June and 0.6 GW a year earlier. Capital expenditures totaled $19.6 billion, with the majority allocated to AI infrastructure, including continued expansion of the Colossus facilities.
The Connectivity segment, which primarily surrounds Starlink, produced $5.25 billion in revenue, a 69 percent year-over-year and 22 percent sequentially. These are pleasant results to see and expected, considering how many airlines have adopted Starlink over the past year.
Starlink consumer subscribers reached 13.6 million, an 89 percent increase from the prior year, and a sequential gain of 1.6 million. Consumer average revenue per user improved to $69. Meanwhile, Enterprise and Government revenue also grew strongly, and Starlink is now installed on more than 3,800 aircraft, making internet more accessible and better performing than previous options.
The Space segment also performed well and contributed $1.77 billion in revenue, up 6 percent year-over-year and 84 percent sequentially. A major milestone was the successful first revenue-generating Starship mission (Flight 14), which deployed 26 V3 Starlink satellites. Those satellites added roughly 10 times the downlink capacity of a typical Falcon 9 Starlink launch.
SpaceX completed 12 customer launches during the quarter, including NASA’s Nancy Grace Roman Space Telescope mission, and continued to grow its backlog of crewed, national security, and commercial flights.
CFO commentary noted that the combination of launch leadership, recurring Starlink revenue, and rapid SI expansion is producing meaningful operating leverage.
The company ended the quarter with roughly $90 billion in cash and marketable securities, providing substantial resources for ongoing investment while targeting an investment-grade balance sheet. Sequential revenue nearly doubled from the $7.81 billion reported in the second quarter, illustrating the pace of the AI-driven acceleration. Things are looking strong for SpaceX.
What’s incredibly striking is the fact that SI has grown to be larger than the rest of the company in such a short amount of time. CEO Elon Musk said on the earnings call that Grok Bot is the “fastest-growing product I’ve ever seen,” so it seems that it could be a true keystone of SpaceXSI over the next few years.
SpaceX (NASDAQ: SPCX) will report its second public earnings call today since its IPO earlier this year, and there are a few things we expect to hear about, as well as Wall Street analysts, who have already outlined their expectations for the call.
Wall Street analysts have a consensus of $12.72 billion in revenue and an earnings per share (EPS) of $0.13. These are broken down into three sectors: Space, Connectivity, and AI/SI, which are perceived in this way:
- Space: $1.41 billion
- Connectivity: $4.84 billion
- AI/SI: $6.47 billion
Other outlets cluster near $12.8 or $12.9 billion in revenue and $0.14 – $0.15 EPS. This implies a roughly 65 percent sequential growth from Q2’s $7.81 billion, driven mostly by AI/SI, with the first post-IPO positive EPS expected.
Here are the three things to watch for on the call:
AI Revenue Ramp and the $100B+ ARR target
AI is truly the swing factor for SpaceX, and analysts expect it to roughly double from Q2’s $2.56 billion and become about half of total revenue. Management previously guided to a $100 billion+ annualized run rate by December, including the Cursor acquisition, which was $60 billion, to close the quarter.
Listen for updates on SpaceX’s compute capacity, especially pertaining to its contracts with Google, Anthropic, and others, revenue per watt, any new deals, and Cursor’s early contribution.
Starlink/Connectivity Metrics and Mobile Expansion
Connectivity remains a main profit engine for SpaceX. Subscriber additions will be something to pay attention to, as Q2 ended at 12 million and previews are looking at 14 million for this quarter. Additionally, ARPU trends, enterprise and government growth, and any commentary on Starlink Mobile will be something to pay attention to, especially following the recent low-band spectrum deal and FCC-related constellation approvals.
Capex Trajectory, Cash Burn/FCF, and Starship/Operational Updates
Q2 capex of roughly $18.4 billion weighed on the stock. Investors will look to scrutinize Q3 spending levels, any guidance on the pace into Q4/2027, free cash flow, backlog, and liquidity. Operational color on Starship (Flight 14 milestones and Flight 15 timing/reusability progress), Falcon cadence, and government/NASA contracts are also in focus.
Of course, there will also be some speculation on the potential Tesla-SpaceX merger, but there was nothing mentioned in the company’s proxy it sent earlier this week.
SpaceX will report earnings after market close today and will stream the call on X.
Watch live as SpaceX discusses our Q3 2026 earnings at 3:30pm CT today → https://t.co/Qrb0qeVG15
— SpaceX (@SpaceX) October 20, 2026
Interested in ordering a Tesla? Use my referral code for three free months of Full Self-Driving (Supervised) here
Elon Musk said he is planning to give “every one of his SpaceX shares to every kid in America” in 2027, stating that “this will be the first of many.”
SpaceX went public earlier this year, and its stock price has been relatively stable since leveling off shortly after its IPO. Based on its current price, it’s a gift of just over $10 billion to children across the United States.
It appears to be closely related to President Donald Trump’s bank accounts for children, which were set up earlier this year as Trump Accounts.
Just hours earlier, Anthropic had announced the establishment of its Anthropic Public Benefit Fund, “a new wholly-owned entity dedicated entirely to public benefit.” Musk responded by stating he recommended “giving the shares directly to the public,” and that he would be doing it that way.
Just a little bit later, Musk said children across the U.S. would be getting a share from him:
Next year, I will give one of my SpaceX shares to every kid in America.
This will be the first of many.
— Elon Musk (@elonmusk) October 19, 2026
There are roughly 70 million children, meaning someone under the age of 18, in the United States, according to the Federal Interagency Forum on Child and Family Statistics. Musk’s ownership of SpaceX stock shows he has around 849 million Class A shares of SpaceX stock, according to filings with the SEC.
SpaceX delivers blockbuster Q3 results as Super Intelligence segment booms
SpaceX reports its second earnings today: here’s what to expect
SpaceX just launched its secret Starfall saucer again
SpaceX reveals how its 1 Million AI satellite network will work and prevent space collisions
Tesla Roadster: Three configs, one can fly, 0-60 in 0.8 seconds
