SpaceX has acquired Elon Musk’s artificial intelligence startup, xAI, making it the world’s most valuable private company, the spaceflight company announced Monday.
Musk, who is also the CEO of SpaceX, wrote in a memo posted on the rocket company’s website that the merger is primarily about creating a space-based data center – an idea that has been mooted for the past few months.
“Current progress in AI depends on large terrestrial data centers, which require a lot of power and cooling. The global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without causing hardship to communities and the environment,” he wrote. (xAI has been accused imposing some difficulties that in a community near a data center in Memphis, Tennessee.)
The combined company’s bond value is $1.25 trillion, according to Bloomberg News, which is the first full reported give a deal. SpaceX has the news preparing for IPO for early June this year. It’s unclear whether the merger will affect that timeline. Musk did not address the IPO in a public memo.
The merger brings together two of Musk’s companies, each with their own financial challenges. xAI is now on fire around $1 billion per monthaccording to Bloomberg. SpaceX, meanwhile, generates up to 80% of its revenue from launching its own Starlink satellites, according to Reuters. last year, xAI gets Xthe social media company is also owned by Musk, with Musk claiming the combined company is worth $113 billion.
Musk wrote in the memo that it will take a continuous stream – although he did not specify the number – of satellites to create the space-based data center, ensuring that SpaceX will have a greater revenue stream for the future. (That revenue cycle might seem even more interesting when you consider that satellites must be de-orbited every five years by the Federal Communications Commission.)
While a space data center may be a well-defined goal, SpaceX and xAI have very different short-term goals.
Techcrunch event
Boston, MA
|
June 23, 2026
SpaceX is currently trying to prove that its Starship rocket can carry astronauts to the moon and Mars, while xAI competes with artificial intelligence companies such as Google and OpenAI. The pressure on xAI becomes large, the The Washington Post reported on Fridaythat Musk loosened restrictions on the company’s chatbot Grok – which contributed to being a tool to create AI-generated non-consensual sexual images of adults and children.
Musk is also headache from Tesla, The Boring Company, and Neuralink. Tesla and SpaceX invest before $2 billion each in xAI.