Investing.com -- Morgan Stanley said SpaceX and Tesla are deepening their technological and operational ties as both companies pursue physical AI, the application of artificial intelligence to the real world through robotics, energy and manufacturing.

Analysts led by Adam Jonas said the two Elon Musk-led companies "share tech, talent, and infrastructure in a shared mission of converting energy to intelligence." They cited SpaceX President Gwynne Shotwell’s comments ahead of the company’s IPO. "There’s no question that there’s synergies between Tesla and SpaceX in our futures, definitely, there’s a convergence of a kind of what we’re all trying to accomplish in the future."

Morgan Stanley counted 71 distinct mentions of "Tesla" in SpaceX’s S-1 filing, with 34% referencing direct Tesla-SpaceX collaboration and 41% tied to governance considerations and related-party transactions. The analysts outlined several areas currently linking the two companies, including a joint chip factory called Terafab, being built in Texas alongside Intel at a total construction cost reportedly exceeding $119 billion.

SpaceX also purchases significant volumes of Tesla batteries and vehicles, including $506 million in Megapacks and $131 million in Cybertrucks in 2025 to support its Colossus compute cluster. The two companies are also co-developing an agentic platform called Macrohard, and each is separately targeting 100 gigawatts of annual vertically integrated solar manufacturing capacity in the U.S.

SpaceX supplies Tesla with compute — projected to reach 4.9 gigawatts by the end of 2027 and 15.3 gigawatts of terrestrial capacity by 2031 — along with satellite-based connectivity through Starlink, which Tesla is integrating across its vehicle lineup starting with Cybercab. Morgan Stanley quoted Tesla CFO Bret Johnsen saying "connectivity to a humanoid robot or an autonomous car or other any type of flying vehicle is not something that you’re going to do with terrestrial solutions."

In return, Tesla provides SpaceX with robots that can serve as data-collecting nodes and distributed compute infrastructure, along with energy storage technology and manufacturing expertise spanning more than 135,000 employees, more than six times SpaceX’s headcount, the analysts noted.

As large language models (LLMs) approach potential performance limits, the analysts expect investor attention to shift toward underpenetrated markets like the physical world. They argued that while neither company adds much to the "pure LLM frontier model market," this dynamic "reveals a wide open lane in physical AI that these two companies may be uniquely capable of addressing, separately or, more likely, jointly."