SpaceX-xAI Merger Propels Musk’s Empire to $1.25tn

Elon Musk’s rocket company SpaceX has acquired artificial intelligence start-up xAI for $250bn, combining two of his largest private businesses as he seeks to gain an edge in the global AI race. The transaction values the combined entity at $1.25tn, following a revaluation of SpaceX to $1tn.

According to people familiar with the matter, SpaceX based xAI’s price on a recent $20bn funding round that valued the two-year-old company at $230bn. SpaceX’s valuation was increased from a recent $800bn secondary share sale, reflecting higher revenues from its Starlink satellite broadband service.

Share Conversion and IPO Plans

SpaceX chief financial officer Bret Johnsen told investors on Monday that shares in the combined group would be priced at $527. xAI shareholders will receive SpaceX stock at an exchange ratio of roughly seven to one.

Executives confirmed that SpaceX is still targeting an initial public offering in June. Musk has previously pushed for that timing due to a rare planetary alignment involving Jupiter, Venus and Mercury. The IPO is expected to raise up to $50bn, potentially making it the largest flotation in history, surpassing Saudi Aramco’s $29bn listing in 2019.

However, bankers cautioned that the scale and complexity of the xAI acquisition could complicate the accelerated timetable for going public.

Orbital Data Centres as the Future of AI

Musk said the merger supports his broader ambition to develop what he described as “a sentient sun to understand the Universe and extend the light of consciousness to the stars.”

xAI, alongside rivals such as OpenAI and Meta, has spent the past two years racing to build the data centres and specialised chips needed to train and run advanced AI models. Musk argued that this infrastructure cannot be sustained on Earth alone.

“Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment,” Musk wrote. “In the long term, space-based AI is obviously the only way to scale.”

The planned IPO would help fund the launch of large satellites designed to host AI data centres in orbit.

Consolidation Across Musk’s Businesses

The acquisition is part of a wider consolidation of Musk’s companies. Last March, xAI merged with Musk’s social media platform X in a deal that valued the combined group at $113bn, pricing xAI at $80bn and X at $33bn. That integration allowed xAI to train its models on X data and embed its Grok chatbot directly into the platform’s feeds. Musk bought X, formerly Twitter, for $44bn in 2022.

Musk also leads electric-vehicle maker Tesla, brain-implant company Neuralink and tunnelling venture The Boring Co. Last week, Tesla disclosed a $2bn investment in xAI, while Musk cut two EV models from Tesla’s line-up and pivoted the company further towards AI chips and humanoid robots. Investors have increasingly speculated that Musk may eventually merge Tesla with his other businesses.

From Orbit to the Moon

Looking further ahead, Musk said SpaceX could begin landing large cargo shipments on the Moon. He suggested that lunar factories could use local resources to manufacture satellites and deploy them deeper into space.

The SpaceX-xAI deal marks a decisive step in Musk’s effort to link artificial intelligence, energy and space infrastructure into a single, long-term strategy that he believes could ultimately be worth trillions of dollars.