Key Factors
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Alphabet’s addition to the Dow reveals how the venerable index is modernizing.
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A merger between SpaceX and Tesla might fast-track the mixed firm’s inclusion.
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However SpaceX might want to chart a path towards constant profitability earlier than the Dow would think about it.
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On June 23, S&P Dow Jones Indices introduced that Alphabet can be changing Verizon Communications within the Dow Jones Industrial Common.
Since 2020, seven of the Dow’s 30 parts have modified, together with the additions of Honeywell Worldwide, Salesforce, Amgen, Amazon, Nvidia, Sherwin-Williams, and now Alphabet, and the deletions of RTX, ExxonMobil, Pfizer, Walgreens Boots Alliance, Intel, Dow, and Verizon.
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House Exploration Applied sciences (NASDAQ: SPCX) — in any other case often called SpaceX — has solely been public for a few weeks. However the firm has a powerful case for becoming a member of the Dow sooner or later. Listed here are three causes SpaceX might finally be a part of the Dow, and whether or not the expansion inventory is a purchase now.
Picture supply: Getty Photographs.
1. Business management
With simply 30 parts, every Dow inventory represents sure industries and a inventory market sector. The strongest case for SpaceX becoming a member of the Dow is that it’s the undisputed chief within the industrial area launch business — conducting 82% of U.S. area launches.
If SpaceX can scale its Starlink community of broadband and cellular satellites, it might make a case for becoming a member of the Dow sooner or later. And coincidentally, that section might sooner or later surpass the community of the very firm that simply acquired booted from the Dow — Verizon.
However Starlink is merely one side of SpaceX’s funding thesis. The larger prize is synthetic intelligence (AI) via SpaceX’s possession of xAI and its objective to launch hundreds of thousands of AI compute satellites in area. To assist that imaginative and prescient, SpaceX plans to construct a large chip manufacturing plant referred to as Terafab and an built-in AI satellite tv for pc facility referred to as Gigasat in Texas. CEO Elon Musk has a formidable observe document unlocking manufacturing efficiencies with Tesla (NASDAQ: TSLA) — however AI compute satellites might be far bigger than Starlink satellites and carry far heavier payloads. To prime all of it off, SpaceX might face resistance from astronomers and nighttime sky viewers if it launches droves of AI compute satellites into Solar-synchronous orbit, inflicting unprecedented gentle air pollution.
Challenges apart, SpaceX is on the cusp of turning into an business chief in area expertise for many years to return — from connectivity and AI satellites to launching payloads and perhaps even interplanetary journey. If SpaceX can flip these massive concepts into sustainable companies for future development, it stands a very good probability of sooner or later being added to the Dow.
2. Market cap
One other issue SpaceX has going for it’s its dimension. Even after present process a major sell-off, SpaceX continues to be one among simply seven firms within the $2 trillion membership alongside Nvidia, Apple, Alphabet, Microsoft, Amazon, and Taiwan Semiconductor Manufacturing. And since Taiwan Semiconductor would by no means be added to the Dow as a result of it isn’t a U.S. firm, SpaceX is essentially the most beneficial U.S. firm not within the Dow.
NVDA Market Cap information by YCharts
If SpaceX maintains or will increase its market cap, it might strengthen the case for inclusion within the Dow. Nevertheless, dimension alone isn’t any assure of inclusion, because it took a number of years for Alphabet to be added even after it reached a multi-trillion valuation. And mega-cap development shares Meta Platforms and Tesla aren’t Dow parts.
3. A SpaceX/Tesla merger
SpaceX’s dimension and business management might finally result in its inclusion within the Dow. However the probably path to an expedited addition can be a merger between SpaceX and Tesla.
SpaceX and Tesla’s mixed market cap exceeds that of Microsoft and Amazon. SpaceX purchased xAI earlier this yr, however Tesla’s self-driving and robotics applied sciences closely depend on xAI. What’s extra, Tesla is a associate with SpaceX and xAI on Terafab. And SpaceX may gain advantage from Tesla’s experience in power storage.
It is value noting that there isn’t any automative firm within the Dow. Normal Motors was within the Dow, however was eliminated in 2009 in favor of Cisco Techniques after GM entered chapter safety. So if SpaceX and Tesla merged, it might give the Dow added publicity to automotive manufacturing, self-driving automobiles, robotics, power, automation, AI, and area applied sciences in an identical vein as Alphabet’s addition broadened the Dow’s publicity to cloud infrastructure, AI, search, leisure, media, self-driving automobiles, client electronics, and quantum computing.
SpaceX is effectively on its technique to stardom
Latest Dow shakeups illustrate the index’s willingness so as to add non-traditional blue-chip shares. Constant, stodgy dividend development is now not a key issue. Moderately, the Dow is searching for business leaders with endurance.
Whereas the Dow will not be the high-yield index of outdated, it is unlikely so as to add SpaceX except it is persistently worthwhile. Salesforce was added to the index in 2020 when it did not pay a dividend, and Nvidia was added in 2024 when it paid a really small dividend. However each these firms had been persistently rising earnings for years. Whereas SpaceX reported a internet loss in 2025 and is borrowing cash to gasoline its development plans.
There is not any denying SpaceX is chock-full of potential. Years from now, SpaceX may very well be a family identify pioneering the chopping fringe of human ingenuity. However for now, traders are higher off retaining SpaceX on a watchlist till it reveals significant progress in turning grand concepts right into a worthwhile enterprise mannequin.
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Daniel Foelber has positions in Nvidia. The Motley Idiot has positions in and recommends Alphabet, Amazon, Amgen, Apple, Cisco Techniques, Honeywell Worldwide, Intel, Meta Platforms, Microsoft, Nvidia, Pfizer, RTX, S&P World, Salesforce, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Idiot recommends Normal Motors, Sherwin-Williams, and Verizon Communications. The Motley Idiot has a disclosure coverage.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
