Over the weekend, The Wall Street Journal reported that SpaceX, Elon Musk’s rocket company, had invested $2 billion into xAI, Elon Musk’s artificial intelligence company. Separately, The Financial Times reported that xAI was seeking a $200 billion valuation in a new capital raise.
The SpaceX investment likely relates to changes around the time xAI merged with X, Elon Musk’s social media company. The $200 billion valuation is likely a separate transaction.
Tesla, SpaceX, and xAI, didn’t respond to a request for comment. Musk, however, called the capital raise reference by the FT “false,” adding xAI has “plenty of capital.”
What any of this has to do with Tesla stock is a good question. The answer, of course, comes down to Musk. Tesla investors also need to watch Musk. Anything affecting him can trickle down to stock in their EV maker.
With related, cross-company investments, there is the question of governance. Loans and investments between related companies happen, but can be a red flag.
Figuring out just how big a warning signal is complex. As is often the case with Musk, there is little in the way of historical precedent for investors to study. He runs and effectively controls three of the world’s most valuable companies. Tesla’s market value is almost $1 trillion. SpaceX is valued at about $400 billion, and the X and xAI merger valued the combined entity at $113 billion.
SpaceX, along with TikTok owner ByteDance, are the world’s most valuable privately held companies, according to Rainmaker Securities, which facilitates transactions in shares of privately held firms. xAI competitor OpenAI is valued at about $300 billion.
Musk’s cross-company investments, however, don’t seem to be due to any capital crunch or lack of demand. SpaceX and xAI haven’t had any trouble raising money, despite all of the noise surrounding Musk recently.
That noise, whether it is a public feud with President Donald Trump or something else, has “short-term impacts…everyone’s a little affected,” says Rainmaker managing director Greg Martin. “There is an Elon halo effect to all of these valuations.”
In other words, investors need to take the Musk-good with the Musk-bad. The cross-company investments also fuel the idea that Musk could eventually create a single company holding structure, merging one or others of his companies, like he just did with X and xAI. Those speculations don’t hurt valuations.
Musk’s halo-abilities, however, are partly contingent on him “winning in the court of public opinion,” says Jo-Ellen Pozner, management professor at Santa Clara’s Leavey School of Business. “If he angers enough people who then really don’t want to buy Teslas, really don’t want to invest in Tesla, then [Musk’s position] becomes a lot dicier.”
There is some evidence that Tesla is having trouble selling cars. Sales in the first half of 2025 were down 13%. At the start of the year, Wall Street projected 2025 sales of 2.1 million vehicles, according to FactSet. Now, that estimate is down to about 1.7 million cars.
So far, Tesla’s slow start to 2025 hasn’t hurt enthusiasm for Musk-related stocks. SpaceX and xAI are more valuable now than at the beginning of the year. Even the picture with Tesla isn’t definitive. Entering Monday trading, Tesla shares are down 22% year to date, but they are still up 30% over the past 12 months.
For now, Musk remains “revered by his boards…revered by his investors,” adds Martin. “He’s made so many people so much money.”
As long as it stays that way, questions of governance will stay in the background.
Write to Al Root at allen.root@dowjones.com
