Elon Musk merges SpaceX with his $1.25 trillion AI company
Elon Musk is merging SpaceX and xAI in a transaction that values the combined entity at $1.25 trillion, as the world’s richest man aims to support his growing ambitions in artificial intelligence and space exploration. The acquisition of xAI was revealed in a statement on SpaceX’s website, signed by Musk, which confirmed a report from earlier Monday. According to sources, the deal assigns SpaceX a valuation of $1 trillion, while xAI is valued at $250 billion. Employees were informed of the combined company’s valuation in a memo on Monday, according to several sources. SpaceX announced its acquisition of xAI to “form the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform.” According to one of the individuals, the company is still anticipating an initial public offering later this year. SpaceX was preparing for an IPO that could potentially generate up to $50 billion, marking what would be the largest initial share sale to date.
According to sources, the shares of the combined firm are anticipated to reach a value of $526.59 each. “The deal is all stock,” one of the people said. Representatives for SpaceX and xAI did not provide an immediate response to requests for comment. The agreement unites two of the largest privately held companies globally. XAI secured funding at a valuation of $230 billion in January, whereas SpaceX planned to proceed with a share sale in December, valued at approximately $800 billion. The statement on SpaceX’s website did not disclose the terms of the offering, including price and valuation. Musk articulated the reasoning behind the deal, stating in the announcement that the most cost-effective method for conducting AI computations in the next two to three years will be in space. “This cost-efficiency alone will enable innovative companies to forge ahead in training their AI models and processing data at unprecedented speeds and scales, accelerating breakthroughs in our understanding of physics and invention of technologies to benefit humanity,” he wrote. SpaceX has submitted a request for authorization to deploy up to a million satellites into Earth’s orbit, as detailed in a filing made on Friday.
The offering further intertwines Musk’s diverse business endeavors. The billionaire acquired the social media platform Twitter in late 2022, renamed it X, and subsequently merged the site with his artificial intelligence startup xAI in a $33 billion deal. XAI, which also operates the chatbot Grok, is an expensive endeavor, incurring costs of approximately $1 billion each month in pursuit of its declared goal to achieve “a deeper understanding of our universe.” A merger with SpaceX consolidates capital, talent, and access to computing power — while also blurring corporate boundaries. In contrast to some of Musk’s other ventures, SpaceX emerges as perhaps his most successful and consistently thriving business.
The company, the sole American entity capable of regularly transporting astronauts to and from the International Space Station, serves as a crucial rocket launch provider for both NASA and the US Department of Defense, which the White House has proposed to rename the Department of War. The rising revenue generated from the Starlink network, which comprises over 9,000 satellites, is particularly noteworthy, now surpassing launch sales and offering a potential funding source for xAI’s capital-intensive operations.
