Elon Musk’s rocket firm SpaceX has acquired xAI, the factitious intelligence agency based by Musk three years in the past, in an enormous, and unconventional, deal that mixes the 2 privately held companies 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 firms in addition to publicly traded electrical automobile and robotics firm Tesla, described the mixture as one that may “kind probably the most formidable, 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 data and free speech platform,” he wrote in a weblog submit on SpaceX’s web site.
Musk cited the potential for space-based knowledge facilities, the energy-intensive computing services essential to energy AI providers, as one of the crucial necessary advantages of the mixture, regardless that the idea continues to be unproven and largely theoretical. “World electrical energy demand for AI merely can’t be met with terrestrial options, even within the close to time period,” Musk wrote within the weblog submit.
“By instantly harnessing near-constant solar energy with little working or upkeep prices, these satellites will rework our potential to scale compute,” Musk wrote.
Whereas experiences of a possible deal emerged final week, the stratospheric worth of the transaction and the swiftness with which it closed left many trade 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.
Based on 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 blending his belongings
Musk, the richest individual on this planet, has a documented historical past of mingling the monetary pursuits of his companies. In 2015, Tesla acquired Photo voltaic Metropolis, a photo voltaic power 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 called Twitter, in a $33 billion, all-stock deal. “xAI and X’s futures are intertwined,” Musk stated on the time.
Extra not too long ago, Tesla stunned shareholders simply final month when it revealed that it had invested $2 billion in xAI in change for a batch of most well-liked inventory as a part 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 grow to be a subsidiary of SpaceX, which may increase questions from traders about Tesla’s position in funding xAI’s progress. Along with the $2 billion funding, Tesla disclosed it offered $430 million of Megapack battery storage and programs 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 acknowledged purpose of making an AI that he described as “reality searching for,” and with a “rebellious streak.” The corporate’s Grok chatbot has courted controversy ever since, not too long ago getting blocked in some nations for producing sexualized deepfake photos of girls.
Musk didn’t point out Grok in any respect in Monday’s submit saying 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, house known as ‘house’ 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 know the Universe and prolong the sunshine of consciousness to the celebrities!” Musk wrote.
Musk stated his estimate over the following two to a few years is that the most affordable method to generate AI compute can be in house and that “progressive firms” 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 complete civilization on Mars, and finally enlargement to the Universe,” concluded Musk.
This story was initially featured on Fortune.com
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