Elon Musk’s SpaceX Acquires xAI in $1.25 Trillion Merger Ahead of Planned IPO

Elon Musk has merged his aerospace company SpaceX with his artificial intelligence start-up xAI in one of the largest private technology deals in history, valuing the combined entity at roughly USD 1.25 trillion, according to reports.

The acquisition was announced by SpaceX on Monday, with Musk’s note on the deal posted by the rocketmaker and shared on his social media platform X.

A CNBC report said the merger was completed on Monday, while Bloomberg reported that the combined company has been valued at USD 1.25 trillion, ahead of a potential initial public offering later this year.

SpaceX’s stake in the merged entity is estimated at around USD 1 trillion, while xAI is valued at approximately USD 250 billion.

Musk is joining his space exploration and artificial intelligence ventures into a single company before the massive planned IPO, which is expected to make its debut later this year.

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Musk had expanded xAI last year by merging it with his social network X, formerly known as Twitter.

As a result, xAI owns and operates the social media platform, alongside its main product, the AI chatbot Grok. Grok is currently under investigation in the European Union over its AI image generation feature, amid concerns that it was used to create sexualised images.

xAI has said it has imposed restrictions on Grok users that limit image editing.

The merger brings together several of Musk’s businesses under one roof, including the Grok chatbot, SpaceX’s rocket operations, its satellite communications arm Starlink, and the social media platform X.

In his note on the SpaceX and xAI merger, Musk said the combination would form an “innovation engine” uniting AI, rockets, space-based internet, and media.

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“This marks not just the next chapter, but the next book in SpaceX and xAI's mission: scaling to make a sentient sun to understand the Universe and extend the light of consciousness to the stars!” Musk said.

In an update on the SpaceX website dated February 2, Musk described the combined entity as the “most ambitious, vertically-integrated innovation engine,” reiterating that it marks “not just the next chapter, but the next book in SpaceX and xAI's mission.”

According to a SpaceX press release, the merger will eventually allow the placement of AI data centres in space, powered by solar energy. Musk said, “My estimate is that within 2 to 3 years, the lowest cost way to generate AI compute will be in space. This cost-efficiency alone will enable innovative companies to forge ahead in training their AI models and processing data at unprecedented speeds and scales, accelerating breakthroughs in our understanding of physics and invention of technologies to benefit humanity.”

He added that, “This new constellation will build upon the well-established space sustainability design and operational strategies, including end-of-life disposal, that have proven successful for SpaceX's existing broadband satellite systems.”

The merger follows SpaceX’s move last week to file an official request with the US Federal Communications Commission to deploy and operate a constellation of up to one million satellites designed as orbital data centres with unprecedented computing power for advanced AI models and applications.

Musk has repeatedly spoken about the need to accelerate the development of technology that would allow data centres to operate in space, a goal that he has suggested may now become easier to achieve under the combined company structure.

(With inputs from ANI)