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SpaceX Buys xAI in $1tn-Scale Merger
SpaceX has acquired Elon Musk’s AI company xAI in a major merger aimed at advancing space-based artificial intelligence, as the aerospace firm moves toward a potential $1tn-plus public listing.
SpaceX launch pad in the Kennedy Space Center by Unsplash
Elon Musk’s aerospace company SpaceX has acquired his artificial intelligence business xAI in a merger that consolidates key parts of his business empire, as SpaceX prepares for a potential public listing later this year at a valuation expected to exceed $1tn.
The two companies announced the deal on Monday in a statement published on SpaceX’s website. They said the merger would create “the most ambitious, vertically integrated innovation engine on (and off) Earth,” combining artificial intelligence, rockets, space-based internet, direct-to-mobile communications, and what they described as the world’s leading real-time information and free speech platform.
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As part of the acquisition, SpaceX will gain control of xAI’s assets, including its Grok chatbot and the social media platform X. The deal comes as Musk advances plans to deploy datacenters and solar-powered satellites in space to support artificial intelligence systems, a strategy that would require vast financial and technical resources.
The announcement explicitly cited space-based datacenters as a key rationale for the merger. “Current advances in AI are dependent on large terrestrial datacenters, which require immense amounts of power and cooling,” the statement said. “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.” It added: “In the long term, space-based AI is obviously the only way to scale.”
The merger continues a recent pattern of Musk increasingly intertwining his companies through acquisitions and cross-investments. In early 2025, xAI acquired the platform X in an all-stock transaction. Last month, Tesla disclosed plans to invest $2bn in xAI.
Both SpaceX and xAI have seen dramatic increases in their valuations over the past year. SpaceX, one of the world’s most valuable private companies, has continued to dominate satellite launches and secure major contracts with the US federal government. In December, the company sent a letter to investors indicating an expected valuation of $800bn.
xAI has also grown rapidly amid the global artificial intelligence boom, despite significant controversy surrounding its Grok AI tool. The chatbot has faced widespread backlash for promoting racist ideology and for the spread of nonconsensual sexualized deepfake images of women and children. Nevertheless, xAI announced a $20bn Series E fundraising round last month that valued the company at $230bn.
Speculation about the merger had circulated for several days following leaks and reports, first published by Reuters. Musk appeared to confirm the deal earlier on Monday, replying “yes” to a post on X that referenced reports of the acquisition.
The announcement offers a positive diversion for Musk after Tesla released earnings last week showing declining revenues and a struggling automotive business. Days later, the US Department of Justice released 3m files related to sex offender Jeffrey Epstein, which included emails showing Musk exchanging friendly messages with Epstein and making plans to visit his private island. Musk has not responded to inquiries about the latest emails.
On X, Musk described the release of the Epstein-related emails as a “distraction” and said he was “well aware that some email correspondence with him could be misinterpreted and used by detractors to smear my name.”
Editor’s Note:
This article is based solely on statements from SpaceX and publicly reported information regarding the merger with xAI. Valuations, strategic intentions, and timelines referenced reflect company disclosures and media reports at the time of publication.
