Elon Musk has brought his two biggest futuristic bets closer together. His space exploration company SpaceX has acquired his artificial intelligence firm xAI in a deal that values the combined private entity at around $1.25 trillion, according to reports.
The merger brings xAI, the company behind the AI chatbot Grok, fully under SpaceX, creating a single organisation that blends space technology, satellite networks and advanced artificial intelligence. While SpaceX is estimated to be worth about $1 trillion, xAI’s valuation is pegged at roughly $250 billion.
Musk said the deal is aimed at solving one of the biggest challenges facing AI today: infrastructure. Modern AI systems rely on massive data centres that consume huge amounts of electricity and water for cooling. Musk has argued that this model is unsustainable in the long run.
His solution is ambitious, move AI data centres into space.
By placing large-scale computing infrastructure in orbit, Musk believes AI systems could run on near-constant solar energy, reduce strain on Earth’s power grids and avoid many land-based environmental constraints. Space-based data centres could also operate at scale without competing with cities and industries for electricity and water.
As part of this broader vision, SpaceX has reportedly applied to US regulators for permission to launch up to one million additional satellites in the coming years. These satellites could form a vast network capable of supporting AI processing, data transfer and global connectivity from space.
The merger also strengthens the link between xAI and Musk’s social media platform X, which already uses AI tools such as Grok for content analysis and real-time information. Integrating these systems with SpaceX’s satellite and launch capabilities could give Musk an edge in building a global AI-powered communications ecosystem.
The deal comes at a time when SpaceX is preparing for a potential initial public offering (IPO), expected later in 2026. Analysts say combining AI and space infrastructure under one roof could significantly boost investor interest, while also positioning the company as a competitor to major cloud and AI firms.
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