Musk’s SpaceX swallows xAI ahead of mega IPO
Elon Musk’s rocket company SpaceX has acquired his AI firm xAI in a deal valuing the combined business at roughly $1.25 trillion (£910bn) as the billionaire tightens control of his empire, ahead of a long-trailed IPO.
The all-stock transaction, announced on SpaceX’s own website on Monday, values SpaceX at about $1 trillion, and xAI at $250bn.
The merger creates the most valuable private company in the world, setting the stage for what could be one of the largest market floats in history later on this year.
The deal also folds xAI’s Grok chatbot and social media platform, X, into SpaceX, linking Musk’s AI ambitions, satellite internet and launch infrastructure under one single corporate roof.
Musk claimed the combined group would form a “vertically integrated innovation engine”, spanning rockets, AI, space-based internet connectivity, and communications.
SpaceX’s prepares to IPO
The tie up comes as SpaceX prepares for a public listing as early as this summer, a move that has been seen as a major driver of the consolidation of firms.
By absorbing xAI, SpaceX can pitch public investors a unified growth story built around AI compute, energy and infrastructure, rather than a standalone rocket business.
At the core of the strategy is Musk’s push for space-based data centres. In his announcement, the tech titan argued that terrestrial AI infrastructure is hitting hard limits due to power constraints.
He said that global electricity demand for AI “cannot be met with terrestrial solutions” without social and environmental costs.
“In the long term, space-based AI is obviously the only way to scale”, the statement wrote.
The merger also fits with Musk’s growing habit of consolidating his various companies into a single entity.
Elon Musk’s empire
Just last year, xAI acquired X in an all-stock deal, giving the AI startup access to its data and distribution.
Tesla also revealed last month that it planned to invest $2bn in xAI, despite shareholder concerns over conflicts of interest.
The valuations of SpaceX and xAI have both surged over the past five years, with SpaceX holding billions of dollars in US government contracts and disclosing to investors in December that it expected to be valued at around $800bn.
Meanwhile, xAI raised $20bn in a Series E funding round last month, which valued the business at around $230bn.
The deal is likely to draw scrutiny from regulators and national security firms, given SpaceX’s defence and intelligence contracts, as well as Musk’s overlapping leadership roles across multiple firms.
And for Musk, the merger offers a reset after a turbulent few weeks marked by poor Tesla earnings and growing pressure over xAI’s governance.