Elon Musk Merges SpaceX xAI Valued at 1.25 Trillion for Space-Based AI Future

Elon Musk has combined SpaceX and artificial intelligence startup xAI in a landmark all-stock deal that values the merged entity at $1.25 trillion, underscoring the billionaire’s ambition to fuse space infrastructure with large-scale AI development. The transaction gives SpaceX a valuation of $1 trillion and xAI a valuation of $250 billion, according to people familiar with the matter.

The acquisition of xAI was confirmed in a statement posted on SpaceX’s website and signed by Musk, corroborating an earlier Bloomberg News report. Employees were informed of the combined company’s valuation in an internal memo on Monday. Shares of the enlarged firm are expected to be valued at $526.59 each, people aware of the discussions said, requesting anonymity as the details are not public.

Explaining the rationale behind the merger, Musk said space would soon become the cheapest environment for artificial intelligence computation. “The least expensive way to do AI computations within two to three years will be in space,” he said, adding that the cost efficiencies could enable faster training of AI models and accelerate breakthroughs in physics and technology.

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SpaceX said the acquisition aims to create a “vertically integrated innovation engine” spanning AI, rockets, satellite-based internet, direct-to-mobile communications, and real-time information platforms. The move further blurs the boundaries between Musk’s various ventures, following his earlier decision to merge social media platform X (formerly Twitter) with xAI in a $33 billion deal.

Despite the merger, SpaceX is still expected to pursue an initial public offering later this year. The company had previously explored an IPO that could raise as much as $50 billion, potentially making it the largest share sale on record. Specific terms of the offering, including timing and pricing, were not disclosed.

The deal also highlights SpaceX’s growing financial muscle. Revenue from its Starlink satellite network—now comprising more than 9,000 satellites—has overtaken launch services, providing a significant cash flow stream that could support xAI’s capital-intensive operations. xAI, which runs the Grok chatbot, is reportedly burning about $1 billion a month in pursuit of its long-term research goals.

SpaceX has filed for permission to launch up to one million satellites into Earth’s orbit as part of its broader strategy. Widely regarded as Musk’s most consistently successful business, the company remains a critical launch partner for NASA and the US Department of Defence, while its expanding satellite network positions it as a central pillar in Musk’s vision of AI-powered, space-based infrastructure.

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