SpaceX acquires xAI for space-based AI push

SpaceX has acquired Elon Musk’s AI startup xAI, aiming to unify Musk’s space and AI interests, according to Musk’s statement on February 2.

The deal makes xAI a wholly owned subsidiary of SpaceX.

The merger could enhance SpaceX’s data-center plans and strengthen Musk’s broader business ecosystem, which includes Tesla, Neuralink, and The Boring Company.

SpaceX’s shares could be valued at around US$527 each, with a total valuation of around US$1.3 trillion.

The company is also preparing for a potential IPO this year, which could value it at over US$1.5 trillion.

🔗 Source: Reuters

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The merger’s structure follows earlier planning, though the timeline remains unclear

Early talks framed the transaction as a share swap, with xAI shares exchanged for SpaceX stock 1.
Two special-purpose entities, “K2 Merger Sub Inc.” and “K2 Merger Sub 2 LLC,” were set up in Nevada on January 21 to support the deal 2.
The combination would bring together SpaceX, valued at $800 billion in a recent insider sale, and xAI, valued at $230 billion in November 1.
A cash-out option for some xAI executives, in place of SpaceX stock, remained under consideration with no signed agreement 3.

The merger may expand SpaceX’s space-based AI plans and defense posture

Bringing xAI into SpaceX may strengthen bids for defense work by pairing xAI’s Grok products with SpaceX national-security satellite programs, including Starshield (SpaceX’s military-focused satellite communications network) 1.
The approach fits the Pentagon’s “AI acceleration strategy” and builds on xAI’s contract worth up to $200 million to supply Grok products to the Pentagon 1.
On the commercial side, it may speed up SpaceX plans to put data centers in orbit; Musk said in Davos that “the lowest cost place to put AI will be in space” within two to three years 1.
Competitors also pursue space-based computing. Jeff Bezos’ Blue Origin has announced a high-capacity backbone network of thousands of satellites, while Google is researching space-based data centers through Project Suncatcher 1.