Elon Musk Merges SpaceX with Artificial Intelligence Company xAI
By Nick Robins-Early
Deal comes as Musk pursues plans for datacenters and solar-powered satellites in space to propel AI.
A SpaceX Falcon Heavy rocket carrying a Noaa weather satellite lifts off from Kennedy Space Center in Florida in June 2024.
Elon Musk’s aerospace firm SpaceX has acquired his artificial intelligence business xAI, in a merger that consolidates part of Musk’s empire as SpaceX prepares to go public later this year, at a valuation likely to exceed $1tn.
The two companies announced the deal on Monday in a statement on SpaceX’s website, saying the merger would form “the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform”.
SpaceX, one of the world’s most valuable private companies, will gain xAI properties such as its Grok chatbot and the social media platform X. The acquisition comes as Musk has pursued plans to put datacenters and solar-powered satellites in space as a means of powering artificial intelligence, an immense and exorbitantly expensive undertaking.
The announcement of the deal specifically cited Musk’s plans for space-based datacenters as a rationale for the deal.
“Current advances in AI are dependent on large terrestrial datacenters, 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 announcement said.
“In the long term, space-based AI is obviously the only way to scale.”
Musk has been increasingly intertwining parts of his businesses in recent months through deals and acquisitions. xAI acquired the platform X in an all-stock transaction in early 2025, and last month Tesla revealed that it planned to invest $2bn in xAI.
Both SpaceX and xAI have received staggering valuations in the past year. As SpaceX continues to dominate satellite launches and secure extensive contracts with the US federal government, it sent a letter to investors in December that revealed an expected value of $800bn for the company.
Despite widespread backlash to xAI’s Grok AI tool over its promotion of racist ideology and spread of nonconsensual sexualized deepfake images of women and children, the artificial intelligence company has also grown its valuation amid the AI boom. It announced a $20bn Series E fundraise last month from major investors, which valued the company at $230bn.
Speculation and leaks about the deal, first reported by Reuters, have proliferated in recent days. Musk appeared to give vague confirmation of the acquisition earlier on Monday, writing simply “yes” in reply to a post on X that referenced reports of the merger.
The news is a positive diversion for Musk after Tesla released an earnings report last week that showed declining revenues and a struggling car business. A few days later, a Department of Justice release of 3m files related to sex offender Jeffrey Epstein showed Musk exchanging numerous friendly emails with the disgraced financier and making plans to visit his private island. Musk has not responded to Guardian inquiries about the latest Epstein emails.
He called the release of the emails a “distraction” on X and claimed that he was “well aware that some email correspondence with him could be misinterpreted and used by detractors to smear my name”.
