SpaceX jumps about 9% before the bell as Elon Musk floats a Tesla merger, and Tesla reports tonight

The biggest story before Wednesday's open is not a number on an index. It is a question about Elon Musk's empire. SpaceX shares jumped in premarket trading after the company reported a sharp jump in quarterly revenue, and Musk used the earnings call to say that SpaceX and Tesla are formally studying a merger. Tesla reports its own third-quarter results after the bell tonight, alongside Meta and IBM, which turns Wednesday into one of the busiest days of the earnings season.

SpaceX was up about 9% in premarket trading, according to CNBC. TipRanks put the gain at about 10% and FXStreet at about 8%, a spread that reflects the time of each quote. The stock had slipped 0.1% in Tuesday's regular session, before the results came out, according to Reuters.

What SpaceX reported

SpaceX said third-quarter revenue rose 161% from a year earlier to $14.58 billion, ahead of the $12.72 billion analysts expected, according to LSEG data cited by CNBC. The company reported operating income of $2.8 billion and net income of $4.4 billion, compared with a net loss of $1.05 billion in the same quarter last year.

The driver was artificial intelligence. SpaceX's compute business, which sells data-center capacity to other technology companies, brought in about $7.5 billion in the quarter, up from $813 million a year earlier, according to the BBC. CNBC described the AI business as growing roughly ninefold.

The forecast drew as much attention as the quarter itself. Chief financial officer Bret Johnsen said revenue in the first quarter of 2027 should come in between $33 billion and $37 billion, well above the average analyst estimate of $22.2 billion, according to LSEG. Johnsen tied the outlook to increased visibility into the company's compute contract pipeline over the next six months, CNBC reported.

The merger question

Asked about a combination with Tesla, Musk said both companies had set up special committees made up of independent directors, at the request of shareholders. "Do I think it would be a good idea? Yes," he said, according to the BBC, CNBC and Ars Technica.

He was careful to add caveats. "Because I'm a conflicted party, I can't actually be in the discussions of the special committees," Musk said, as reported by TechCrunch and The Guardian. He said the committees had not agreed on terms of any transaction and that there is no guarantee they will. "I think some people out there assume that a SpaceX and Tesla merger is a certainty and I think that would be overstating it," he said, per The Guardian.

Shareholders would have the final say. Musk said a deal would need the support of 50% of all Tesla shareholders, a bar he described as quite high, according to the BBC. With Tesla valued at roughly $1.5 trillion, the BBC noted, a combination would rank among the largest mergers on record.

Futures and the rest of the tape

The SpaceX results helped lift technology futures. Nasdaq 100 futures were up 0.50% and S&P 500 futures up 0.22% at about 5:35 a.m. Eastern, with Dow futures up 0.01%, according to TipRanks. Regards of Wallstreet showed Nasdaq 100 futures up 0.43% and S&P 500 futures up 0.17% shortly before 6 a.m., while FXStreet had the Nasdaq 100 up about 0.7% during European hours.

AI hardware names were also in demand after Super Micro Computer raised its revenue forecast, with Dell and Hewlett Packard Enterprise moving higher in sympathy. Netflix went the other way: the stock fell more than 5% before the bell, according to FXStreet, after the company issued fourth-quarter revenue guidance of $13.44 billion, below the roughly $13.52 billion analysts expected, and lowered its advertising outlook, according to CNBC.

On Tuesday, the Dow rose 529.85 points, or 1.02%, to 52,495.88, the S&P 500 added 0.28% to 7,712.57 and the Nasdaq Composite slipped 0.02% to 26,424.82, according to Reuters.

Oil, yields and the Fed

Oil is climbing again. Brent crude was up roughly 0.8% to 1.5% at about $109.60 to $110.40 a barrel early Wednesday, and U.S. crude was near $98.60 to $99.30, according to CNBC, Moneycontrol and Investing.com, as attacks on tankers near the Strait of Hormuz and on Saudi energy facilities kept supply worries alive. Gold was around $4,120 an ounce, on track for a fourth straight daily decline.

The 10-year Treasury yield was steady near 5.12%, according to CNBC, after easing on Tuesday. Traders in fed funds futures see about an 85% chance that the Federal Reserve holds rates at its Oct. 27-28 meeting, according to CME FedWatch data cited by FXStreet and the Seoul Economic Daily.

The calendar today

AT&T, Abbott Laboratories, Thermo Fisher Scientific, NextEra Energy and Philip Morris International are among the companies scheduled to report before the open. The Mortgage Bankers Association publishes its weekly mortgage-application data this morning. After the close, Tesla, Meta, IBM, Lam Research and Texas Instruments report, followed on Thursday morning by weekly jobless claims.

Why it matters

SpaceX's results are a direct read on how much money AI computing is generating, at a moment when investors have been questioning the returns on that spending. The merger talk adds a second layer: any combination of SpaceX and Tesla would affect two of the largest stocks in the market and the funds that hold them. Musk himself stressed that nothing has been agreed. Tonight's Tesla report is the next chance for investors to hear more.