Elon Musk’s space firm SpaceX has acquired xAI, an artificial intelligence start-up also owned by Musk, in a tie-up which values the combined company at $1.25 trillion, cementing its standing as the most valuable private company in the world.
The deal values SpaceX at $1 trillion and xAI at $250 billion, according to investor Ross Gerber, a shareholder in the privately held xAI who received merger documents on Monday. Last year, Musk’s social media company X — which he purchased for $44 billion in 2022, when it was known as Twitter — was acquired by xAI in an all-stock deal.
The merger follows SpaceX’s filing with the Federal Communications Commission (FCC) last week seeking approval to launch a constellation of as many as one million data-centre satellites orbiting the Earth.
The combined company, whose portfolio includes rockets, satellites, an AI chatbot and a social media platform, may move forward with an initial public offering around June, according to the Financial Times. It is reportedly looking to raise up to $50 billion at a valuation of about $1.5 trillion. That would eclipse the $29.4 billion raised by Saudi Aramco in its 2019 listing, the largest to date.
Musk said a primary reason for the merger was the development of “orbital data centres”, estimating that “within two to three years, the lowest-cost way to generate AI compute will be in space”. However, a more practical motivation may be the need to generate capital for xAI, which requires vast sums to finance its infrastructure build-out as it seeks to catch up with Google, OpenAI and Anthropic in the generative AI market.
The merger is taking place at a time when the US regulatory landscape is favourable, with the Trump administration rolling back many antitrust and environmental regulations.
Musk’s SpaceX ally Jared Isaacman has been appointed head of NASA. FCC chairman Brendan Carr has also been a supporter of SpaceX’s Starlink, while Musk’s longtime friend David Sacks serves as the White House’s crypto and AI czar. In December, President Donald Trump signed an executive order establishing a single regulatory framework for artificial intelligence, undermining the authority of individual states.
Musk also runs electric vehicle maker Tesla, brain implant company Neuralink and tunnelling start-up The Boring Co. Last week, Tesla announced that it had invested $2 billion in xAI. Despite backlash against xAI’s Grok tool over its generation and spread of sexualised deepfake images of women and children, the company’s valuation continues to rise.