SpaceX Acquires Elon Musk’s AI Startup xAI in Deal Valued at $1.25 Trillion

SpaceX has acquired Elon Musk’s artificial intelligence startup xAI, a deal that SpaceX announced Monday and that Bloomberg News said values the combined company at $1.25 trillion. Musk framed the merger in a memo posted to SpaceX’s website as a step toward building space-based data centers, arguing that the power and cooling demands of AI will be difficult to meet with terrestrial infrastructure alone.

The tie-up brings together two Musk companies with very different near-term pressures. Bloomberg reported that xAI is currently burning about $1 billion per month, while SpaceX generates as much as 80% of its revenue from launching and operating its own Starlink satellites, according to Reuters. Musk suggested that supporting orbital computing infrastructure would require a steady stream of satellites, potentially creating a long-term revenue loop for SpaceX.

The deal also lands as SpaceX has been reportedly preparing for an IPO as early as June, though Musk did not address how the acquisition might affect that timeline. The merger follows increasing financial overlap among Musk’s ventures: both Tesla and SpaceX previously invested $2 billion each into xAI.

While Musk’s stated focus is space-based computing, SpaceX’s core priorities remain proving Starship’s ability to support future missions to the Moon and Mars, while xAI is racing against companies like Google and OpenAI in the AI market. The Washington Post reported Monday that pressure inside xAI recently contributed to loosened restrictions on its chatbot Grok, which became linked to the generation of non-consensual sexual imagery.

For now, the acquisition consolidates more of Musk’s technology empire under one roof — combining SpaceX’s launch and satellite infrastructure with xAI’s AI ambitions — as the company pursues an unconventional bet that the next phase of AI computing could extend beyond Earth.

This analysis is based on reporting from TechCrunch.

Image courtesy of SpaceX.

This article was generated with AI assistance and reviewed for accuracy and quality.