Elon Musk merges SpaceX with xAI at $1.25tn valuation | SpaceX
Elon Musk’s aerospace company SpaceX has acquired artificial intelligence business xAI in a $1.25 trillion (£910bn) merger, consolidating part of Musk’s empire as SpaceX prepares to go public later this year.
The two companies announced the deal Monday in a statement on SpaceX’s website, saying the merger would create “the most ambitious, vertically integrated innovation engine on (and off) Earth with artificial intelligence, rockets, space-based internet, direct-to-mobile communications, and the world’s leading platform for real-time information and free speech.”
SpaceX, one of the world’s most valuable private companies, will gain xAI features such as the Grok chatbot and social media platform X. data centers and solar-powered satellites in space as a means of powering artificial intelligence, a massive and prohibitively expensive undertaking.
The deal reportedly values SpaceX at $1 trillion and xAI at $250 billion, putting the combined business on track to float on the stock market with a value of over $1 trillion. The float is expected to be timed to coincide with planetary alignment and Musk’s birthday in early summer.
Musk will turn 55 on June 28, when Jupiter and Venus appear very close to each other.
The announcement of the deal specifically cited Musk’s plans for space-based data centers as the reason for the agreement.
“Current advances in AI are dependent on large terrestrial data centers that require enormous amounts of power and cooling. The global electricity demand for AI cannot be met by terrestrial solutions even in the near term without causing hardship to communities and the environment,” the announcement said.
“In the long term, space-based AI is clearly the only way to scale.”
Musk has been increasingly intertwining parts of his business through deals and acquisitions in recent months. xAI acquired the X platform in an all-stock transaction in early 2025, and last month Tesla announced plans to invest $2 billion in xAI.
Both SpaceX and xAI received surprising valuations last year. As SpaceX continues to dominate satellite launches and sign extensive contracts with the U.S. federal government, it sent a letter to investors in December. Expected value is 800 billion dollars for the company.
Despite widespread backlash against xAI’s Grok AI tool for promoting racist ideology and spreading sexualized deepfake images of women and children without consent, the artificial intelligence company also increased its valuation amid the AI boom. The company, which announced last month that it had raised $20 billion in Series E funding from major investors, was valued at $230 billion.
Speculations and leaks regarding the agreement, First reported by Reuters has increased in recent days. Musk gave a vague confirmation of the acquisition early Monday, writing only “yes” in response to a post on X referencing merger reports.
The news was a welcome distraction for Musk after Tesla released an earnings report last week that showed declining revenues and a struggling auto business. A few days later, the Justice Department’s release of 3 million files on sex offender Jeffrey Epstein showed that Musk had exchanged scores of friendly emails with the disgraced financier and made plans to visit his private island. Musk did not respond to the Guardian’s questions about the latest Epstein emails.
He described the publication of the emails as a “distraction” from X and claimed he was “well aware that some email correspondence with him could be misinterpreted and used by detractors to tarnish my name.”
