Elon Musk’s rocket firm SpaceX has acquired xAI, the unreal intelligence agency based by Musk three years in the past, in an enormous, and unconventional, deal that mixes the 2 privately held corporations into an organization with an astounding $1.25 trillion reported valuation and plans for a historic IPO this yr.
Musk, who’s the CEO of each corporations in addition to publicly traded electrical car and robotics firm Tesla, described the mix as one that can “kind essentially the most bold, vertically built-in innovation engine on (and off) Earth, with AI, rockets, space-based web, direct-to-mobile-device communications, and the world’s foremost real-time info and free speech platform,” he wrote in a weblog publish on SpaceX’s web site.
Musk cited the potential for space-based knowledge facilities, the energy-intensive computing services essential to energy AI companies, as one of a very powerful advantages of the mix, though the idea continues to be unproven and largely theoretical. “World electrical energy demand for AI merely can’t be met with terrestrial options, even in the close to time period,” Musk wrote in the weblog publish.
“By straight harnessing near-constant solar energy with little working or upkeep prices, these satellites will rework our skill to scale compute,” Musk wrote.
Whereas stories of a possible deal emerged final week, the stratospheric worth of the transaction and the swiftness with which it closed left many business observers in awe, underscoring the huge expectations round AI in addition to fears of an overheated market that may very well be due for a reckoning.
In line with reporting in Bloomberg, the deal between SpaceX and xAI will result in a mixed enterprise worth of $1.25 trillion, with shares of xAI valued at $526.59 apiece. Musk has reportedly been hashing out the potential phrases of a SpaceX IPO this yr that will worth the corporate at $800 billion, setting the stage for what may very well be the biggest preliminary public providing of all time.
Representatives from SpaceX and xAI didn’t instantly reply to requests for remark.
Musk has a historical past of mixing his property
Musk, the richest particular person in the world, has a documented historical past of mingling the monetary pursuits of his companies. In 2015, Tesla acquired Photo voltaic Metropolis, a photo voltaic vitality firm based by Musk’s cousins and on whose board Musk served as chairman.
And in March 2025, xAI acquired X, the Musk-owned social platform previously often known as Twitter, in a $33 billion, all-stock deal. “xAI and X’s futures are intertwined,” Musk mentioned at the time.
Extra just lately, Tesla stunned shareholders simply final month when it revealed that it had invested $2 billion in xAI in alternate for a batch of most well-liked inventory as half of xAI’s $20 billion Sequence E funding spherical. That funding means Tesla shareholders now personal most well-liked inventory in an organization that has turn into a subsidiary of SpaceX, which might elevate questions from traders about Tesla’s function in funding xAI’s development. Along with the $2 billion funding, Tesla disclosed it offered $430 million of Megapack battery storage and techniques to xAI in 2025, costing it $285 million, exhibiting the round nature of Musk’s companies.
What about Grok?
Musk based xAI in 2023, with the said aim of creating an AI that he described as “reality searching for,” and with a “rebellious streak.” The corporate’s Grok chatbot has courted controversy ever since, just lately getting blocked in some nations for producing sexualized deepfake photographs of ladies.
Musk didn’t point out Grok at all in Monday’s publish asserting xAI’s merger with SpaceX, focusing as a substitute on his imaginative and prescient of vastly increasing AI tech capabilities with out the hindrance of limits imposed by Earth. “I imply, area known as ‘area’ for a motive,” wrote Musk, emphasizing his level with a cry-laughing emoji.
“This marks not simply the following chapter, however the subsequent e book in SpaceX and xAI’s mission: scaling to make a sentient solar to grasp the Universe and lengthen the sunshine of consciousness to the celebs!” Musk wrote.
Musk mentioned his estimate over the following two to 3 years is that the most cost effective method to generate AI compute might be in area and that “revolutionary corporations” will shortly speed up their breakthroughs.
“The capabilities we unlock by making space-based knowledge facilities a actuality will fund and allow self-growing bases on the Moon, a whole civilization on Mars, and in the end enlargement to the Universe,” concluded Musk.
This story was initially featured on Fortune.com
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