Elon Musk has folded his artificial intelligence startup into SpaceX, combining rockets, satellites, and AI under one umbrella in a deal that values the two businesses at a staggering $1.25 trillion.
SpaceX confirmed it will acquire xAI, the company behind the Grok chatbot, in a move Musk described as creating an “innovation engine.” While financial terms were not officially disclosed, sources familiar with the deal said xAI is valued at $125 billion and SpaceX at $1 trillion, making the combined entity the most valuable private company in the world.
The merger marks Musk’s latest effort to unify his expanding business empire. In recent years, he has blurred the lines between his ventures, linking AI development with electric vehicles, robotics, and space infrastructure. Just last month, Tesla invested $2 billion into xAI, with Musk suggesting the AI systems could eventually coordinate Tesla’s factories filled with autonomous robots.
Now, SpaceX is set to play a central role in powering those ambitions. Musk has argued that the future of AI will require enormous computing capacity and energy, far beyond what traditional data centers can handle. His solution is unconventional. Move computing into orbit.
In the memo announcing the deal, Musk suggested that space based data centers and AI satellites could provide nearly unlimited solar energy and processing power. Launching these systems from Earth, he wrote, would be the immediate focus, laying the groundwork for more ambitious goals like permanent lunar bases and even settlements on Mars.
Analysts say the consolidation may also have a financial motive. Folding xAI into SpaceX could streamline operations and make the company more attractive to public investors ahead of a potential initial public offering. Presenting one integrated story that includes rockets, satellites, internet services, and AI may help justify the eye watering valuation.
Still, the strategy carries risks. AI infrastructure is expensive, regulators are scrutinizing chatbot technology, and combining multiple complex businesses adds execution challenges.
Even so, the message is clear. Musk is not building separate companies anymore. He appears to be assembling a single ecosystem that stretches from factories on Earth to servers in orbit and beyond.