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Elon Musk is combining two of his biggest private ventures in a move that could reshape the future of artificial intelligence and put it literally out of this world. SpaceX, his rocket company, has acquired the AI start-up xAI in a deal valued at $250 billion, according to people familiar with the matter.
According to a report in the Financial Times, the merger comes just two years after xAI was founded, and it follows a funding round that valued the company at $230 billion. SpaceX’s private valuation has also been boosted to $1 trillion, largely due to revenue gains from its Starlink satellite internet service, bringing the combined group’s total value to $1.25 trillion.
Under the deal, xAI shareholders will swap their shares for SpaceX stock at roughly a seven-to-one ratio. SpaceX executives also confirmed they are still planning for a public offering in June, which could raise up to $50 billion, potentially the largest IPO in history.
Musk said the goal of combining the two companies is to build "orbital data centers," AI servers in space. He argued that powering the next generation of AI models on Earth alone would demand enormous amounts of electricity and could strain communities and the environment. By moving operations into orbit, Musk believes AI can scale sustainably while advancing his vision of exploring the universe.
“Global electricity demand for AI simply cannot be met with terrestrial solutions,” Musk said. “In the long term, space-based AI is obviously the only way to scale.”
The move also consolidates Musk’s growing empire under one roof. Last year, xAI merged with his social media platform X, while Tesla, Neuralink, and The Boring Company remain under his control. Musk has been increasingly focused on AI, recently investing $2 billion of Tesla money into xAI and redirecting Tesla toward AI chips and humanoid robotics.
The billionaire has also hinted at even more ambitious plans, including landing large cargo shipments on the Moon and using lunar factories to produce satellites for further deployment in space.
Investors see the combination of SpaceX and xAI as a bet on both AI and space technology, two areas Musk has repeatedly said could be worth “trillions of dollars” in the future.
Recap: Elon Musk has merged SpaceX with his AI start-up xAI, creating a combined private company valued at $1.25 trillion. The plan aims to develop AI data centers in space to overcome Earth’s energy limits and scale the next generation of AI models. The companies are still targeting a June IPO, which could raise $50 billion, while Musk pursues broader ambitions spanning AI, space exploration, and robotics.
*Source: Financial Times
