Here’s Why This Investor Is Praising SpaceX’s Acquisition of xAI

Peter Singlehurst, an investor who leads the private companies team at Baillie Gifford & Co., recently praised SpaceX for acquiring xAI because the move could position the combined business for a new growth phase. He explained to _Bloomberg _that SpaceX is in a strong financial position, with a solid balance sheet, strong profitability, and healthy cash flow. Because xAI requires large amounts of capital to expand its artificial intelligence infrastructure, SpaceX could provide the financial backing needed to support that growth.

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Singlehurst also noted that Elon Musk‘s companies are often connected through a complex network of partnerships and shared strategies. Furthermore, he pointed to a past example that worked out well. Indeed, when Tesla TSLA -0.96% ▼ acquired SolarCity, many investors were initially skeptical, yet the combination ultimately proved to be successful. In a similar way, Singlehurst believes that the SpaceX and xAI partnership could create strong long-term value.

In fact, he described SpaceX as one of the companies in Baillie Gifford’s portfolio with the most powerful competitive advantages and one of the strongest long-term growth opportunities. He also pointed out how SpaceX’s ability to dramatically lower the cost of launching rockets could create entirely new business opportunities. Singlehurst said that when launch costs fall by such large amounts, it can unlock new applications that previously seemed impossible, such as Musk’s long-term vision of building data centers in space.

What Is the Prediction for TSLA Stock?

When it comes to Elon Musk’s companies, most of them are privately held. However, retail investors can invest in his most popular company, Tesla. Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 13 Buys, 11 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average TSLA price target of $399.25 per share implies that shares are trading near fair value.

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