Elon Musk’s aerospace company SpaceX has acquired his artificial intelligence business xAI, in a $1.25tn (£910bn) merger that consolidates part of Musk’s empire as SpaceX prepares to go public later this year.
The two companies announced the deal on Monday in a statement on SpaceX’s website, saying the merger would form “the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform”.
SpaceX, one of the world’s most valuable private companies, will gain xAI properties such as its Grok chatbot and the social media platform X. The acquisition comes as Musk has pursued plans to put datacenters and solar-powered satellites in space as a means of powering artificial intelligence, an immense and exorbitantly expensive undertaking.
The deal reportedly valued SpaceX at $1tn and xAI at $250bn, putting the combined business on course for a stock market float valuing it well in excess of $1tn. The float is expected to be timed for early summer to coincide with a planetary alignment and Musk’s birthday.
Musk’s Plans For Space-based Data Centers
The announcement of the deal specifically cited Musk’s plans for space-based datacenters as a rationale for the deal.
“Current advances in AI are dependent on large terrestrial datacenters, which require immense amounts of power and cooling. Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment,” the announcement said.
“In the long term, space-based AI is obviously the only way to scale.”
Musk has been increasingly intertwining parts of his businesses in recent months through deals and acquisitions. xAI acquired the platform X in an all-stock transaction in early 2025, and last month Tesla revealed that it planned to invest $2bn in xAI.
Both SpaceX and xAI have received staggering valuations in the past year. As SpaceX continues to dominate satellite launches and secure extensive contracts with the US federal government, it sent a letter to investors in December that revealed an expected value of $800bn for the company.
