Elon Musk has merged two of his most ambitious ventures after SpaceX officially acquired artificial intelligence startup xAI, forming what is now the world’s most valuable privately held company.
The transaction values the combined business at about $1.25 trillion, according to reports, revealing Musk’s expanding vision to integrate space technology and artificial intelligence
In a memo to SpaceX employees, Musk said the acquisition is driven largely by plans to build space-based data centers, arguing that Earth-based facilities are becoming unsustainable due to rising power consumption and cooling demands.
He believes orbital data centers, powered by constant solar energy, could dramatically lower long-term operating costs while reducing strain on terrestrial electricity grids
The merger also brings together two businesses facing distinct challenges. xAI, which develops the Grok chatbot and other AI products, is reportedly burning about $1 billion per month, reflecting the enormous cost of training and operating advanced AI systems.
SpaceX derives a major share of its revenue from Starlink, its satellite broadband service, and continues heavy investment in its next-generation Starship rocket program.
Under Musk’s plan, deploying data centers in space would require a constant flow of satellite launches, potentially creating a self-sustaining revenue cycle for SpaceX, which would manufacture, launch, and maintain the orbital infrastructure.
Musk stated that this model could provide long-term financial stability while accelerating breakthroughs in artificial intelligence.
The acquisition follows xAI’s earlier purchase of social media platform X (formerly Twitter), consolidating Musk’s AI, social media, and aerospace assets under one strategic umbrella. While SpaceX has been preparing for a possible initial public offering (IPO) as early as June 2026, it remains unclear how the merger could affect those plans.
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