SpaceX has acquired Elon Musk’s artificial intelligence startup xAI, creating the world’s most valuable private company, the spaceflight firm announced on Monday.
Musk, CEO of SpaceX, detailed the merger in a memo posted on the company’s website. The primary aim is to develop space-based data centers, a concept Musk has pursued for months.
Current AI progress depends on large terrestrial data centers that demand vast power and cooling resources. Musk wrote that global electricity needs for AI cannot be satisfied on Earth, even short-term, without burdening communities and the environment.
xAI has faced accusations of causing such burdens near its data centers in Memphis, Tennessee.
Bloomberg News, which first reported the completed deal, values the combined entity at $1.25 trillion. SpaceX has been preparing an initial public offering as early as June this year. The memo did not mention the IPO, and it remains unclear if the merger impacts that schedule.
The acquisition unites two Musk companies facing distinct financial pressures. xAI spends about $1 billion monthly, per Bloomberg. SpaceX generates up to 80% of its revenue from launching Starlink satellites, according to Reuters.
Last year, xAI acquired Musk’s social media platform X, with Musk stating a combined valuation of $113 billion.
Musk noted that building space-based data centers requires a steady supply of many satellites, though he did not specify the number. This setup promises SpaceX a larger, ongoing revenue stream. Federal Communications Commission rules mandate de-orbiting satellites every five years, reinforcing the revenue cycle.
SpaceX and xAI maintain separate near-term goals, despite the shared long-term vision of space data centers.
