SpaceX posts record revenue while Tesla margins compress on AI spend

SpaceX reported record third-quarter revenue of $14.6 billion, up 161% year-over-year, and net income of $4.4 billion, reversing a loss of over $1 billion a year earlier. The company's AI business now constitutes more than half of revenue, up nine times, while Starlink generated $5.2 billion in revenue at a 45% operating margin with 14 million subscribers. Capital expenditure was nearly $20 billion, and two customers account for 38% of revenue. Tesla reported $28 billion in revenue, beating expectations, but core automotive revenue fell 3% and net income dropped 29% to $787 million due to increased spending on AI and Optimus robots. Operating income fell 56% to a 3% margin, and regulatory credits dropped 73%. Tesla trades at a P/E of 330, compared to an industry average of 18, with a market cap of approximately $3 million per car delivered. A special committee was formed to explore a merger between SpaceX and Tesla. Scott Galloway argues that both companies carry an enormous narrative premium and that the proposed merger is a "kabuki dance" to justify Tesla's high valuation. He highlights the existential risk of regulatory intervention and AI market downturns. SpaceX reportedly slowed Ukraine's military-grade Starlink service, drawing criticism from Delta and European partners. Analysts warn of concentration risk and the potential for regulatory backlash or nationalization of Starlink if political dynamics shift after the November 4 elections.