It is never dull in the Elon Musk economy, and Tesla investors' dreams that his various businesses might converge into a single entity have never been closer to being fulfilled.

In a bold move, Elon Musk's rocket company, SpaceX, acquired his AI company xAI on Monday, combining two of the world's most valuable privately held companies. That came ahead of what investors expect will be a midyear initial public offering of SpaceX stock.

Together, the pair is worth about $1.25 trillion based on reported transaction prices. SpaceX didn't respond to a request for comment about the valuation.

The value means Tesla owns about 2% of the combined SpaceX-xAI. Tesla disclosed a $2 billion stake in xAI on its fourth-quarter earnings conference call.

Investors have long wondered whether and when Musk could consolidate his business empire under one roof, creating a kind of supertech conglomerate centered on AI.

Tesla, Musk's car company, is developing physical AI applications such as robots and robo-taxis. xAI develops large language models that can train AI applications, and SpaceX wants to put and run AI data centers in space, using the power from the sun, the cold temperature of space, and its ability to take huge quantities of goods into orbit to gain a cost advantage.

Now, two of the three are merged, and the third, Tesla, has a small piece of the newly combined entity. That makes the ties between Musk's three most valuable companies, roughly worth a combined $3.5 trillion, official.

Investors seem fine with the idea. Tesla stock up 2%.

Wedbush analyst Dan Ives told Barron's in January that 2026 was the "beginning" of a convergence for Tesla with robo-taxis, robots, and SpaceX, creating a "new Musk ecosystem."

Now, he sees stronger ties developing between SpaceX and Tesla in the coming 12 to 18 months. "Musk wants to own and control more of the AI ecosystem, and, step by step, the holy grail could be combining SpaceX and Tesla," wrote Ives on Tuesday. Together they can lead "the AI Revolution."

Space, cars, and computers didn't seem to fit together a few years ago. Now, a combination seems inevitable.

Ives rates Tesla stock a Buy and has a $600 price target, the highest on Wall Street, according to FactSet.