Elon Musk: AI Computations Could Be Cheaper in Space as SpaceX Joins xAI
Elon Musk is merging SpaceX and xAI in a deal that values the combined company at $1.25 trillion, as he aims to advance his ambitious goals in artificial intelligence and space exploration. The acquisition of xAI was confirmed in a statement on SpaceX’s website, following a Bloomberg News report earlier Monday.
The deal values SpaceX at $1 trillion and xAI at $250 billion, according to sources familiar with the matter. Employees were informed of the combined valuation in a memo on Monday, some sources said.
SpaceX said it acquired xAI to “create the most ambitious, vertically-integrated innovation engine on (and off) Earth,” combining AI, rockets, space-based internet, direct-to-mobile communications, and a real-time information and free speech platform.
The company still plans to hold an initial public offering (IPO) later this year, one source said. SpaceX had been considering an IPO that could raise up to $50 billion, potentially making it the largest initial share sale in history.
Shares of the merged company are expected to be worth around $526.59 each, according to some sources who requested anonymity as the information is not yet public. The deal is entirely in stock.
This merger brings together two of the largest privately held companies in the world. xAI raised funds at a $230 billion valuation in January, while SpaceX was preparing for a share sale in December at a valuation of about $800 billion.
The statement on SpaceX’s website did not disclose specific terms of the offering, including price and valuation.
Musk explained the reasoning for the deal, saying that in two to three years, the cheapest way to run AI computations will be in space.
“This cost-efficiency will allow innovative companies to train AI models and process data at unprecedented speed and scale, accelerating breakthroughs in physics and technology that benefit humanity,” he wrote.
SpaceX is seeking permission to launch up to a million satellites into orbit to support this plan, according to a filing last Friday. The merger further connects Musk’s various business ventures. He acquired Twitter in late 2022, renamed it X, and merged it with xAI in a $33 billion deal.
xAI, which operates the chatbot Grok, is an expensive operation, spending around $1 billion per month to pursue its goal of “a deeper understanding of our universe.”
The merger with SpaceX combines capital, talent, and access to computing power, while also blurring corporate boundaries.
Unlike some of Musk’s other ventures, SpaceX stands out as his most successful and consistent business. It is the only American company that regularly sends astronauts to and from the International Space Station and serves as a key rocket launch provider for NASA and the US Department of Defense.
Revenue from the Starlink satellite network, which now has over 9,000 satellites, is growing steadily, outpacing launch sales and providing a potential funding source for xAI’s capital-intensive operations.
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