Elon Musk Merges SpaceX and xAI, Pushing AI Computing Into Space

Elon Musk keeps reshaping the tech and space industries. After Grok AI faced controversy and temporary bans in several countries over deepfake concerns, Musk’s AI ambitions have not slowed. Instead, they have scaled dramatically.

According to Bloomberg, Musk is merging SpaceX and xAI in an all-stock transaction that values the combined entity at a staggering $1.25 trillion.

Elon Musk merges SpaceX and xAI

The deal assigns a $1 trillion valuation to SpaceX and $250 billion to xAI. Musk confirmed the acquisition in a statement published on SpaceX’s official website, marking one of the largest corporate combinations ever announced.

People familiar with the matter say shares in the combined company could be priced at $526.59 each, although the final terms remain undisclosed.

A vertically integrated AI and space giant

SpaceX says the merger aims to create a vertically integrated company that spans artificial intelligence, rocket launches, space-based internet, direct-to-device communications, and real-time information platforms. This structure positions the company to tightly link AI development with space infrastructure.

Despite the merger, the combined firm still plans to pursue an initial public offering later this year. Before the deal, SpaceX had reportedly explored an IPO that could raise up to $50 billion, which would have made it the largest public offering in history.

Musk believes space will soon offer the cheapest environment for large-scale AI computation. He argues that, within two to three years, AI training and data processing in orbit will outperform Earth-based alternatives in cost and scale.

To support this strategy, SpaceX is seeking regulatory approval to launch up to one million satellites. These satellites would expand beyond Starlink’s current role and help power Musk’s vision of space-based AI infrastructure.

SpaceX remains Musk’s most stable and successful venture, acting as a major launch provider for NASA and the US Department of Defense. Revenue from Starlink’s network of more than 9,000 satellites now exceeds SpaceX’s launch revenue, providing a potential funding engine for xAI’s capital-intensive AI projects.

Earlier this year, xAI raised capital at a $230 billion valuation, while SpaceX prepared a December share sale valuing the company at roughly $800 billion. The new merger effectively accelerates both companies’ growth plans under a single umbrella.

In related AI news, NVIDIA recently clarified that it has no obligation to invest $100 billion in OpenAI. Meanwhile, a new open-source AI agent called OpenClaw continues to push boundaries around autonomous AI capabilities.

Together, these developments highlight how competition and consolidation continue to intensify across the AI and space sectors, with Musk once again placing himself at the center of both.