Space Exploration Technologies Corp., known as SpaceX, has acquired artificial intelligence company xAI as part of a move to unify Elon Musk’s technology ventures ahead of a planned public offering, company statements and reporting show.
Elon Musk confirmed the deal publicly in a statement on February 2, saying the acquisition brings two major parts of his business under one corporate structure. SpaceX will merge with xAI as it prepares for a potential IPO later this year.
The deal combines SpaceX’s rocket and satellite launch business with xAI’s generative AI tools, including the Grok chatbot, and the social media platform X that xAI acquired in 2025.
The combined entity is expected to carry a valuation of about $1.25 trillion, with SpaceX valued near $1 trillion and xAI near $250 billion.
What Changed With the Merger
SpaceX until now has been entirely private, funding its satellite internet and rocket projects through private investment.
Its Starlink constellation provides broadband around the world, and its rockets are core to U.S. and international launch services.
The purchase of xAI marks a shift into artificial intelligence and broader tech services, with corporate leadership citing strategic integration of AI and space infrastructure to support high-performance computing needs.
Musk’s public comments about the deal highlight the limitations of current terrestrial AI infrastructure.
In SpaceX’s announcement, he noted that large AI data centers on Earth demand huge amounts of power and cooling, and that space-based compute resources could offer a path forward for future scaling.
Inside the Companies
Employees at xAI received an internal memo after the deal was announced.
The document said the company name will remain xAI for now, with its mission unchanged and equity structures to be clarified later, according to Business Insider reporting.
xAI staff will not immediately integrate with SpaceX operations because of regulatory constraints around defense and aerospace technologies, the memo said.
The memo also confirmed that the merged entity is still preparing for a possible IPO in 2026, though timing and valuation for that public offering remain uncertain at this stage.
Musk described the merger as enabling advanced projects like launching AI data centers in orbit.
Broader Strategic Context
The acquisition follows months of speculation and reporting that SpaceX and xAI were in merger talks ahead of a brewing IPO.
Investors are watching closely. The IPO, if it proceeds this year, could rank among the largest in history, with some market commentary suggesting it would raise tens of billions of dollars.
Market analysts say the deal reflects Musk’s ambition to integrate aerospace and AI technologies and position the combined company at the intersection of data connectivity, compute power and global communications.
Critics caution that melding such disparate businesses could face technical and regulatory obstacles.
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