Tesla Shares Surge on Speculation of Musk’s Broader AI Ambitions

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Tesla's stock closed the trading week with a substantial 3.3% gain, driven not by its core automotive operations but by market chatter regarding a potential future combination with Elon Musk's other private ventures, SpaceX and xAI. The speculative vision centers on transforming Tesla into the publicly traded cornerstone of a comprehensive "Physical AI" conglomerate.

The company's recent strategic shift is already evident in its financials. While Tesla reported better-than-expected results for the fourth quarter of 2025, with earnings per share of $0.50 beating the $0.45 analyst consensus, a year-over-year revenue decline of 3.1% was also recorded. Revenue reached $24.90 billion, slightly above expectations of $24.75 billion. This dip is viewed as a reflection of Tesla's deliberate move away from pure volume growth in vehicles and toward higher-margin future technologies.

The focus is increasingly on robotics and autonomous systems, with the humanoid "Optimus" robot as a central pillar. Reports suggest Tesla may scale back production capacity for older models like the Model S and Model X to make room for Optimus mass production, currently slated for 2027.

The Conglomerate Speculation and Institutional Sentiment

Market speculation is heating up around the possibility of integrating the privately-held SpaceX, which carries a potential IPO valuation of approximately $1.5 trillion, with Tesla. The concept involves creating a unified technology empire spanning electric mobility, space technology, and artificial intelligence.

Institutional investors appear to be positioning themselves for this evolving narrative. In Q3 2025, South Korea's National Pension Service increased its Tesla holding by 3.0%, bringing its total to over 5.6 million shares. Similarly, Everhart Financial Group expanded its position by 9.3%.

This forward-looking optimism is baked into Tesla's valuation, which trades at a price-to-earnings ratio of around 398. The current share price also sits above the average analyst target of $409.58, indicating the market is pricing in significant growth beyond the traditional car business.

Regulatory Roadmaps and Near-Term Catalysts

On the practical front, Tesla's "Cybercab" robotaxi service faces regulatory milestones. While testing is underway in Texas, crucial permits for autonomous driving in key markets like California and Nevada are still pending, which could impact the project's timeline.

The coming weeks will determine whether the rumors of a SpaceX integration hold substantive weight or remain short-term market fantasy. Investors will first turn their attention to the U.S. jobs report on February 6th, a key sentiment indicator for the broader technology sector.