SpaceX acquires xAI in landmark deal as Elon Musk merges tech giants for AI and space dominance

Synopsis SpaceX has acquired AI startup xAI, merging two of Elon Musk's ventures into the world's most valuable private company. This strategic move aims to leverage space for AI's immense computing needs, with Musk predicting space-based AI compute will be the most cost-effective within three years. The combined entity is poised for a significant IPO, potentially valuing it at $1.25 trillion. SpaceX has officially acquired xAI, Elon Musk’s artificial intelligence company, marking one of the biggest private-sector mergers in modern tech history. Announced Monday, the deal brings together rockets, AI, space-based infrastructure, and social media under a single corporate roof, instantly creating what is now the most valuable private company in the world. The move underscores how central artificial intelligence has become to Musk’s long-term vision for space exploration, while also highlighting the massive capital demands facing companies racing to stay competitive in AI. “This marks not just the next chapter, but the next book in SpaceX and xAI’s mission,” SpaceX said in a statement posted on its website. ALSO READ: Quote of the Day by Bruce Lee: 'Mistakes are always forgivable,…'—Inspiring quotes by the renowned martial artist Why did SpaceX acquire xAI? Live Events The merger comes at a time when AI companies are scrambling for computing power, energy, and scale. According to PitchBook, SpaceX was valued at $800 billion as of a secondary share sale in December 2025, while xAI carried a valuation of $230 billion following a funding round in January. By combining forces, SpaceX gains direct control over AI development that could shape everything from satellite networks to deep-space missions. At the same time, xAI gains access to SpaceX’s vast infrastructure and capital resources, easing the pressure of competing in the increasingly expensive AI arms race, as per reports by CNN and CNBC. Musk has been vocal about where he believes AI computing is headed. “Current advances in AI are dependent on large terrestrial data centers, which require immense amounts of power and cooling,” he wrote on SpaceX’s website. “The only logical solution therefore is to transport these resource-intensive efforts to a location with vast power and space.” He estimates that the “lowest cost way to generate AI compute will be in space” within two to three years. ALSO READ: Word of the Day: Woebegone How does space-based AI computing fit in? Just days before the acquisition was finalized, SpaceX sought permission from the Federal Communications Commission to launch a constellation of up to 1 million satellites. The goal, according to the filing, is to build a network of solar-powered data centers in orbit to handle “the explosive growth of data demands driven by AI.” The idea reflects how tightly intertwined AI and space have become for Musk. SpaceX’s satellites could provide not only global connectivity but also the raw computing backbone needed to train and deploy advanced AI systems at scale. There was already deep operational overlap between SpaceX and xAI before the deal. Several employees worked across both companies, including Christopher Stanley, a longtime SpaceX security engineer who also serves as X’s senior director of security engineering. ALSO READ: Quote of the Day by Oprah Winfrey: 'The more you praise and celebrate…'—Here are some inspiring quotes by the incredible philanthropist on her birthday What controversies surround xAI? The merger also brings baggage. xAI owns Musk’s social media platform X, where its chatbot Grok has faced repeated criticism. Grok recently came under fire for generating sexual images of women, many of them real people. Last year, the chatbot was also criticized for violent and antisemitic posts, which xAI apologized for and attributed to a systems update, as per reports by CNN and CNBC. More recently, xAI has been hit with regulatory probes in Europe, India, Australia, and California. Authorities are investigating how Grok enabled users to generate and share sexualized images of children and non-consensual intimate images of adults. Despite these issues, investor appetite for AI remains intense. Nvidia, the world’s most valuable company, said last year it was making a $100 billion investment in OpenAI, underscoring how aggressively capital continues to flow into the sector, as per reports by CNN and CNBC. Will company culture clash after the merger? Not everyone is convinced the integration will be smooth. Some former xAI employees have publicly raised concerns about cultural differences between the two organizations. "xAI prides itself on ‘move fast and break things,’ flat hierarchy, act first ask questions later." wrote Benjamin De Kraker, a former staffer on xAI’s human data team. (It isn’t fully this, but tries to be) I have a hunch many xAI people will hit culture shock w/ SpaceX." SpaceX, known for its rigid engineering discipline and intense operational focus, may present a very different environment from xAI’s startup-style approach. ALSO READ: Word of the Day: Felicity What does this mean for a SpaceX IPO? The acquisition adds another layer of intrigue to SpaceX’s long-anticipated public debut. Musk confirmed in December that he plans to take SpaceX public, a move that could value the company at roughly $1.5 trillion, making it one of the largest IPOs ever. Bloomberg reported that the combined company could price shares at a valuation of around $1.25 trillion. Public records from Nevada, obtained by CNBC, show the deal was completed on Feb. 2, with Space Exploration Technologies Corp. listed as the managing member of X.AI Holdings. Both SpaceX and xAI have had little trouble raising private capital, but an IPO would dramatically expand their ability to fund projects ranging from AI infrastructure to Mars colonization. Musk described the merger as the creation of “the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet,” and the X social media platform. FAQs Why did SpaceX buy xAI? The deal strengthens AI capabilities, secures computing resources, and supports Musk’s long-term vision of space-based AI infrastructure. Is a SpaceX IPO still planned? Yes. Musk has confirmed plans for a SpaceX IPO, which could become one of the largest public offerings in history. 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