SpaceX Acquires xAI
SpaceX has acquired Elon Musk's artificial intelligence startup, xAI, creating the world's most valuable private company. The combined entity is expected to price shares in an IPO that would value it at $1.25 trillion, Bloomberg reported.
The deal values xAI at $250 billion, according to The Information.
The transaction marks the largest tie-up in Musk's vast business portfolio and brings together two companies that have been soaring in value on the private markets.
Musk, who is also the CEO of SpaceX, wrote in a memo posted to the rocket company's website that the merger is largely about creating space-based data centers.
"In the long term, space-based AI is obviously the only way to scale."
Musk wrote that "current advances in AI are dependent on large terrestrial data centers, 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 merger brings together two of Musk's companies, each with its own financial dynamics. xAI is currently burning around $1 billion per month, according to Bloomberg.
SpaceX generated an estimated $8 billion in profit on $15 billion to $16 billion of revenue in 2025, Reuters reported.
Musk founded the reusable rocket maker in 2002, and has turned it into the leading provider of orbital launch services through contracts with NASA and the DoD. SpaceX also owns and operates the Starlink satellite internet service, which has more than 9,000 satellites in orbit and roughly 9 million customers.
In 2023, Musk launched xAI as a potential competitor to OpenAI, which kicked off the generative AI boom with the release of ChatGPT late the prior year. Musk was one of the co-founders of OpenAI in 2015, when the project was started as a nonprofit AI lab. He left in 2018, and is now involved in a heated legal battle with the company and CEO Sam Altman.
Early last year, Musk expanded xAI by merging it with his social network X, formerly known as Twitter.
Tesla and SpaceX previously invested $2 billion each in xAI.
SpaceX has been reportedly preparing an IPO for as early as June of this year. It's unclear whether the merger will affect that timeline.