Elon Musk’s rocket company, SpaceX, has acquired his artificial intelligence startup, xAI, as the combined business prepares for a potential blockbuster IPO. Musk announced the move in a blog post by saying that the goal is to build a tightly connected platform that brings together AI, rockets, satellite internet, and the X social media network. According to Bloomberg, the merged company could be valued at about $1.25 trillion. Public filings in Nevada show the transaction was completed on February 2, with SpaceX listed as the managing entity.
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This deal is the largest internal merger Musk has ever made and brings together two companies that have surged in private-market value. SpaceX was valued at around $800 billion in a secondary share sale last year, while xAI was recently valued at roughly $230 billion after a $20 billion funding round. Musk has steadily folded his businesses closer together, including merging xAI with X last year. Even Tesla (TSLA), Musk’s main source of liquid wealth, agreed last week to invest about $2 billion into xAI.
While SpaceX is profitable and dominant in launches and satellite internet through its Starlink network, xAI is still burning cash as it races to catch up with rivals like OpenAI and Google (GOOGL). Musk argues that the merger supports his long-term vision of moving AI data centers into orbit. SpaceX has already asked U.S. regulators for permission to launch up to one million satellites for an “orbital data center.” Musk claims that within two to three years, space could become the cheapest place to run AI computing.