Which Is the Better Stock Today, Tesla vs SpaceX?

Now that retail investors can buy a piece of either one of Elon Musk’s crown jewels, SpaceX (SPCX) or Tesla (TSLA), the question I keep getting is: which one do I buy?

My answer today is Tesla. And I (Chris Wood) will walk you through why.

First, let me be clear about what I’m not saying. I’m not saying SpaceX is a bad company. It’s one of my favorite companies ever built, and arguably the most exciting company in history. I’m also not trying to guess which stock performs better next week or next month. I’m an investor, not a trader, so I don’t play the short-term game.

I am talking about which stock I’d prefer to buy today and hold for at least the next two years. In that context, I think Tesla simply gives you more today. More profit. More value for your money. More of the same exciting future. And—this is the kicker I’ll get to at the end—probably an automatic upgrade to become a SpaceX owner too.

That’s what I mean by getting the most Musk for your buck.

Here’s the simple case:

Tesla is profitable today, SpaceX is not

This is probably the biggest and easiest reason why an investor might prefer Tesla to SpaceX today.

Tesla earns real profits. It’s not a “someday” profit story. Actual dollars make it to the bottom line quarter after quarter.

In its most recent quarter, which Tesla reported just last week, the company generated operating income of $398 million and net income of $1.1 billion. Cash flow from operations was $4.7 billion.

A few things to note about those numbers:

• This was the smallest quarterly operating profit Tesla’s reported since 2020 because the company is spending heavily on its earlier-stage businesses—robots, robotaxis, batteries, and computer chips—that will drive future growth. This trend will continue for at least the next few years… so the profitability argument I’m making today will lose strength, but it’s still valid. And the spending is necessary in my view, so it’s not a bad thing.

• Net profit was significantly higher than operating profit mostly due to a $1 billion unrealized gain on Tesla’s equity investment in SpaceX.

• While operating cash flow was $4.7 billion, free cash flow was negative about $1 billion because the $5.8 billion in capex to build out several future businesses at once was the company’s highest quarterly capex by far. Again, this investment is necessary, but it will likely translate into negative free cash flow for at least the next few years.

Meanwhile, in its most recently reported quarter (Q1 2026), SpaceX’s operating loss was $1.95 billion, while its net loss was $4.3 billion.

Now—and this matters big time—those losses are the good kind of losses. If you read my piece titled “Why is SpaceX losing money?” you may remember Emily and John, the two kids with lemonade stands. John loses money because his business is broken. Emily “loses” money on paper because she keeps pouring every dollar she makes into building a bigger business that will be more profitable in the future. SpaceX is Emily. It’s choosing to spend billions building rockets, satellites, and AI infrastructure that won’t generate a return on investment for years because it will make the future business much bigger and more profitable. That’s smart. I have zero problems with it.

But all other things being equal, “already profitable” beats “profitable someday” every time.

What’s more, Tesla’s already proven it can be highly profitable, consistently for years, on a company-wide basis absent its current big ramp in spending. If it gets into trouble it can simply take its foot off the spending gas pedal and bigger profits would come back with a vengeance.

SpaceX, on the other hand, has not been able to show the same consistent strong profitability on a company-wide basis, absent a historic spending ramp. There are many valid reasons why it hasn’t been able to show this consistent company-wide profitability yet, but the fact remains that it hasn’t. And that’s meaningful.

Tesla trades at a much smaller multiple for a complementary slice of the same ecosystem—and it already owns a piece of SpaceX

Even with the stock’s significant pullback from its post-IPO highs in mid-June—which brought SpaceX’s market cap down from over $2.4 trillion to around $1.48 trillion—it still trades around 80X trailing twelve month (TTM) revenue.

Tesla, on the other hand—with a market cap around $1.24 trillion—currently trades around 12X TTM revenue. That’s a much more palatable valuation.

And that valuation looks like even more of a bargain when you consider the fact that Tesla isn’t some bystander to SpaceX’s story. It’s woven right into it as a complementary slice of the same ecosystem… and the company already owns a piece of SpaceX.

Lots of folks think Tesla and SpaceX are two separate things Elon happens to run. They’re not. Each company is more like multiple organ systems helping to run the same body.

Musk has built a deeply intertwined ecosystem with his companies. And the power isn’t in any single piece; it’s in how the pieces fit together and reinforce each other like parts of one big machine. (Read my piece “Elon’s Endgame” here.)

Each piece generates data, revenue, energy, connectivity, or hardware that feeds the others, creating self-reinforcing flywheels that accelerate innovation, lower costs, and scale faster than any standalone entity could.

The best way to think about Musk’s empire is like a tech stack with multiple layers. Each layer solves specific problems and feeds the others—creating a vertically integrated infrastructure platform that’s unmatched in scale.

Tesla is like the autonomy, energy, and labor layers of this ecosystem.

The vehicle and robotaxi side of Tesla’s business is the autonomy layer. Tesla’s FSD (full-self-driving) tech—now with 1.5 million subscribers and more than 15 billion miles of real-world driving data powering the world’s most advanced autonomous driving system—isn’t just about selling rides without drivers. It’s also about providing the “brains” for other autonomous robots and systems that can operate anywhere and do anything a human can… and more.

Tesla’s Energy Generation and Storage business—solar, Powerwall, and Megapack (batteries)—is quietly becoming one of the most important pieces of the entire ecosystem. You can’t run giant AI training clusters, charge fleets of autonomous robots, or power off-world bases without abundant reliable energy.

Tesla sold $430 million in Megapack batteries directly to SpaceXAI’s Colossus cluster in 2025. Overall, the company’s energy generation and storage business generated revenue of $3.14 billion just in the second quarter of this year. This is not some sort of side project. It’s foundational to the ecosystem.

Optimus—Tesla’s autonomous humanoid robot powered by the same AI “brain” as FSD—is like the labor layer. This venture could ultimately dwarf everything else in the ecosystem in terms of economic impact. An affordable general-purpose robot that can perform virtually any task you need (dangerous, repetitive, specialized, etc.) would transform the economics of manufacturing, construction, elder care, and off-world building.

Goldman Sachs upped its humanoid robot addressable market estimate by 6X to $38 billion by 2035. And some analysts project over $4 trillion by that time when you include household applications.

In last week’s Q2 earnings update, Musk said, “First-generation production lines for Optimus are being installed in anticipation of production in 2026.” He’s acknowledged that production will be slow and painful at first—partly because the supply chain basically had to be built from scratch—but first-generation production lines are still a big step toward Musk’s goal of mass producing humanoid robots.

SpaceX is like the logistics, connectivity, and intelligence layers.

SpaceX’s Space segment, its launch business, provides the logistics. This is Falcon 9, Falcon Heavy, the Dragon capsule—and most importantly, Starship, the vehicle that can drive down launch costs so the Moon and Mars become practical operating domains for humans and Tesla’s autonomy platform.

SpaceX essentially owns the gateway to orbit. Everybody else operating in space (companies building satellites, sensors, defense systems, lunar landers, etc.) still needs an affordable, reliable ride. And much more often than not, SpaceX sells the ticket.

Starlink provides the ecosystem’s connectivity layer. It’s the largest satellite constellation ever built, with more than 10,000 satellites beaming high-speed internet to over 10 million subscribers across more than 100 countries, from mountaintops to open ocean to aircraft in flight.

Just a few days ago, on July 20, Tesla officially confirmed that Starlink V5 is directly integrated into Tesla’s Cybercab. And broader integration into standard consumer Tesla models is coming.

SpaceXAI, the ecosystem’s intelligence layer, includes the Grok AI models with over 117 million monthly active users (including me), the X platform (formerly Twitter) with about 550 million monthly active users provides real-time AI training data for Grok and a real-time inference engine for the AI so it can ground answers in fresh information, and two of the world’s largest AI clusters called Colossus and Colossus II.

Then there’s Terafab, the joint venture Musk officially unveiled on March 21, which intertwines Tesla and SpaceX even more deeply. Together with Intel, the companies plan to build the largest semiconductor fabrication plant in history—consolidating every stage of chip production under one roof.

The goal: Produce 1 terawatt worth of AI computing power per year. One year of production at that scale would equal about 50X the current global AI compute capacity.

The kicker: Musk expects 80% of that output to go to space, where SpaceXAI will do the AI computing hyperscalers like Amazon, Microsoft, and Google currently do on Earth via orbital AI data centers.

And it’s not just complementary slices of the same ecosystem and shared projects like Terafab. Tesla literally already owns a piece of SpaceX stemming from a $2 billion investment earlier this year. It’s a small stake, but it’s meaningful. As I noted earlier, Tesla booked a $1 billion paper gain on its SpaceX shares in Q2.

The gist of this section’s takeaway is that because Musk’s ecosystem is so deeply connected, a lot of the stuff that makes SpaceX so exciting, you also get through Tesla. The chips to do AI in space. The dream of physical machines that think and move on their own doing useful work here on Earth and off-planet. And the energy systems to power it all, among other things.

So if you opt for Tesla over SpaceX, you’re not choosing between two separate futures. You’re getting a real big chunk of the same multi-planetary, AI-powered vision that makes SpaceX so thrilling—only at about one-seventh the price, with actual profits already flowing, and a direct ownership stake in SpaceX itself.

In other words, more Musk for your buck.

Tesla and SpaceX will likely be brought under the same “roof” relatively soon

What’s more, Musk has good reason to make Tesla appear weaker than it actually is until then—meaning you may only need to buy one of the stocks to get access to both anyway, and Tesla may have a good chance of remaining the better value

I now put the odds at about 90% that Musk combines Tesla and SpaceX into one company within the next three years. (More on how in just a bit.)

Musk loves vertically integrating and consolidating the companies he controls.

For example, Tesla bought SolarCity. After Twitter became X, it merged with xAI, and then SpaceX swallowed xAI whole. That’s a clear pattern. And when an entrepreneur shows you a pattern so plainly, you should weigh it heavily.

What’s more, as we just discussed, Tesla and SpaceX are deeply intertwined already. And bringing them together formally would give him more control over his ecosystem.

The most sensible way I could see this happening is through an all-stock deal. For two reasons: Musk doesn’t want to waste the precious capital of either company—planned for his big infrastructure buildout—on an acquisition. And two, nobody has enough cash lying around to buy a company worth over a trillion dollars.

I could also see SpaceX as the more likely acquirer and Tesla the acquiree. Also for two reasons: SpaceX is bigger in terms of market cap (more valuable). And Musk holds tighter control there through special “super-voting” shares, which would allow him to keep a firmer grip on the whole ecosystem if SpaceX acquires Tesla rather than the other way around.

For a deal like this to go through it would need an independent group of “referees” so to speak as well as shareholder and board approval on both sides and an outside opinion on price. But I could see it getting done.

In a situation like this if you owned Tesla when this combination took place, your Tesla shares would simply convert into shares of SpaceX, or whatever the new combined company is called if the name got changed. You’d wake up one morning owning a piece of the rockets, satellite internet, and AI empire, without ever having to pay 80X sales for SpaceX stock.

Meanwhile, since we’ve already entered the realm of the hypothetical, here’s one for you: Would Elon really want Tesla’s stock to shoot higher right before he sets the terms of a deal between it and SpaceX?

No, a quieter, weaker-looking Tesla in the near term could actually make the future combination easier and more favorable to the side he controls more tightly.

I’m not accusing Musk of anything shady. I just think the incentives are worth noticing.

It’s also worth noticing what Musk said on last week’s conference call when a Wells Fargo analyst asked him point blank if he thought it made sense to combine SpaceX and Tesla.

Here’s Musk’s direct quote:

“Well, I mean, as you can tell from all --- the many collaborations on so many fronts with SpaceX and there’s a lot --- there’s more and more overlap, especially with Terafab, that’s really going to be a gigantic project. So --- but obviously, we can’t talk about combining companies and that kind of thing on an earnings call. It’s got to be done with the appropriate process. And with that, I’ll turn it over to Brandon, our General Counsel.”

To me that sounds like the most thinly veiled “yes” Musk could legally get away with. It’s about as far from a hard “no” as possible.

Tesla’s attorney then briefly talked about the importance of the SpaceX relationship to Tesla. Then Musk took back over and expounded on their deep connection with details like Grok coming into Tesla’s cars and Starlink being integrated into Cybercab and eventually “all” Tesla vehicles.

So when one of my subscribers asks me which is the better buy right now and I add it all up—profits instead of promises, a much more palatable price, a front-row seat to the physical AI future, a built-in slice of SpaceX itself, and a likely automatic upgrade into the combined empire down the road—the answer, for me today, is Tesla.

That’s how you get more Musk for your buck.

Thank you for reading!

Related: Why the AI Selloff Could Be the Best Thing to Happen to Long-Term Investors