Elon Musk has confirmed that SpaceX has completed the acquisition of his artificial intelligence startup, xAI, in a transaction valuing the combined company at approximately $1.25 trillion, making it the world’s most valuable private firm.
The acquisition, one of the largest mergers ever recorded globally, brings together SpaceX’s rocket, satellite, and launch infrastructure with xAI’s rapidly expanding artificial intelligence capabilities, including its flagship chatbot, Grok. The move cements Musk’s vision of tightly integrating AI, space, and energy into a single, mutually reinforcing ecosystem.
Why SpaceX Is Betting on AI in Space
At the heart of the merger is Musk’s growing conviction that the future of artificial intelligence cannot rely solely on Earth-based infrastructure. In a memo published on SpaceX’s website, Musk argued that the explosive growth of AI is pushing terrestrial data centers to their limits.
Modern AI systems require massive computing power, cooling, and electricity. According to Musk, global energy demand for AI cannot be sustainably met by land-based data centers without placing strain on communities and the environment. Space-based data centers, powered by solar energy and supported by satellite networks, are increasingly central to his long-term plan.
This strategy aligns closely with SpaceX’s existing satellite business. The company already generates a significant portion of its revenue from launching and operating its Starlink constellation. Creating space-based AI infrastructure would ensure a continuous demand for satellite launches, replacements, and upgrades—effectively locking in long-term revenue for SpaceX.
Deal Structure and Valuation Details
Sources familiar with the transaction say the deal values SpaceX at roughly $1 trillion and xAI at $250 billion. Investors in xAI will receive SpaceX shares as part of the acquisition, while some executives may opt for a cash payout.
The merger sets a new global record for the largest corporate acquisition, surpassing Vodafone’s $203 billion takeover of Mannesmann in 2000. It also strengthens expectations that SpaceX’s long-rumored public offering—potentially valuing the company at over $1.5 trillion—could be one of the biggest IPOs in history.
Financial Pressures and Strategic Synergies
The deal also addresses financial realities facing both companies. xAI is reportedly burning close to $1 billion per month as it races to compete with established AI leaders such as Google, OpenAI, Meta, and Anthropic. Its costs are driven largely by chips, energy, and data-center infrastructure.
SpaceX, while highly valuable, operates in a capital-intensive industry with ambitious goals, including lunar missions and eventual crewed flights to Mars. By merging with xAI, SpaceX gains tighter control over AI development, while xAI gains access to space-based infrastructure that could dramatically lower long-term operating constraints.
Governance, Regulation, and Growing Scrutiny
Despite its strategic logic, the merger is likely to attract scrutiny from regulators and investors. Musk holds leadership roles across multiple interconnected companies, raising questions about governance, valuation fairness, and potential conflicts of interest.
SpaceX also holds billions of dollars in government contracts with agencies such as NASA and the U.S. Department of Defense, which may review the transaction for national security implications. The movement of engineers, data, and proprietary technology between Musk-controlled firms will be closely watched.
A New Phase of the “Muskonomy”
This acquisition marks another step in what analysts increasingly call the “Muskonomy”—a tightly integrated network of companies spanning electric vehicles, space, AI, brain–computer interfaces, and infrastructure.
