Last night, EV maker Tesla (TSLA) made its new Roadster car fly over five parked vehicles with thrusters developed by rocket and satellite company SpaceX (SPCX). The display showed what their engineers can do together, and has led to more rumors of a potential merger. Nevertheless, the car is scheduled for limited production in 2028, so it will not be the main growth driver for either company. For Tesla, autonomous vehicles and commercial trucks are expected to be the new growth catalysts. For SpaceX, it's Starlink and AI. Based on the potential gains to their average analyst price targets, Wall Street currently prefers SpaceX.

Tesla

Tesla's new Roadster certainly delivered an impressive demonstration on October 15. With help from SpaceX-developed thrusters, the sports car accelerated from zero to 60 mph in under one second and even jumped over several vehicles. However, production is not expected until 2028, and the rocket-equipped version hasn't received approval for public-road use. Elon Musk also admitted that the Roadster would contribute little to Tesla's financial results. That makes the company's progress in self-driving technology and commercial vehicles far more important to its future growth.

Tesla's Full Self-Driving (FSD) software is already attracting more paying customers. The number of customers with paid access grew by 56% to 1.48 million in the second quarter. Tesla said that 45% were monthly subscribers, while the rest had purchased the software upfront. With subscriptions priced at $99 per month in the U.S., the service gives Tesla an opportunity to earn additional revenue from vehicles that it has already sold. More than 55% of new vehicle deliveries in North America also had FSD enabled through subscriptions during the quarter.

However, the technology still requires driver supervision, which makes the company's robotaxi rollout an important next test. That business made progress in September when Tesla began offering limited Cybercab rides in Austin. Unlike its existing passenger cars, the two-seat Cybercab has no steering wheel or pedals. Tesla hopes that removing the need for a human driver will eventually make its ride-hailing service more profitable.

Tesla is also entering a different market with its Semi truck. Deliveries began in September, with customers such as PepsiCo (PEP) already using the vehicles. The long-range Semi offers an estimated 500 miles per charge and can recover up to 60% of its range in 30 minutes. This is important to freight operators because charging time takes trucks away from paid work. Tesla was also selected as the lead supplier for a 2,500-truck order organized by a freight alliance. Its Nevada factory is designed to eventually produce 50,000 Semis annually.

SpaceX

Starlink remains SpaceX's strongest source of operating profit. Its subscriber count doubled from six million to 12 million over the year ended June, which helped second-quarter connectivity revenue grow by 66% to $4.29 billion. Operating profit in that business rose by 79% to $1.66 billion. However, the average monthly revenue per subscriber fell from $85 to $66 as SpaceX expanded into lower-priced markets. The company has partly offset that decline through larger customers. Revenue from enterprise and government services grew by 108% to $1.81 billion, supported by deals such as a new Starlink agreement with American Airlines (AAL).

That customer base gives SpaceX a starting point for its next move into mobile phone service. On October 8, it agreed to buy nationwide 800 MHz wireless spectrum from Grain Management. The transaction was worth approximately $8 billion, based on information originally reported by The Wall Street Journal. Lower-frequency signals travel farther and pass through walls more effectively than higher-frequency ones, which could address one of satellite service's main weaknesses.

The FCC has also authorized 15,000 next-generation satellites for Starlink Mobile. However, the spectrum purchase still needs regulatory approval, and SpaceX would need additional ground infrastructure to compete with established wireless carriers.

Artificial intelligence is another large opportunity. SpaceX reported $14.1 billion in signed cloud-service contracts during the second quarter, although that figure is contracted sales rather than revenue that has already been earned. Its AI business generated $2.56 billion in quarterly revenue, while the company spent $15.83 billion on AI facilities and equipment. The division still lost $1.26 billion from operations. Nevertheless, it is growing fast, and Musk expects it to reach $300 billion to $500 billion in annual revenue within four to five years.

Wall Street's Take

Turning to Wall Street, out of the two stocks mentioned above, analysts think that SPCX stock has the most room to run. In fact, SPCX's price target of $217.50 per share implies almost 49.2% upside potential. (See SPCX Stock Forecast).