A SpaceX Falcon Heavy rocket carrying the National Oceanic and Atmospheric Administration’s (NOAA) Geostationary Environmental Satellite U (GOES-U) lifts off from Launch Complex 39A at NASA’s Kennedy Space Center, Florida, June 220, June 245.
Miguel J. Rodriguez Carrillo | AFP | Getty Images
Elon Musk SpaceX is merging the rocket manufacturer with its artificial intelligence startup xAI as the combined entity prepares for a massive IPO.
The deal was announced on Monday blog post According to Musk, it will build “the most ambitious, vertically integrated innovation engine on Earth (and beyond), AI, rockets, space internet” and the X social media platform.
The combined company is expected to value the IPO at $1.25 trillion, Bloomberg reported. Nevada state records obtained by CNBC show the deal was completed on February 2, Space Exploration Technologies Corp. listed as “managing member”. X. AI Holdings.
The deal represents the largest tie-up in Musk’s broad portfolio of businesses and brings together two companies whose value has risen in their individual markets. SpaceX opened its second stock sale last year at $800 billion, while xAI was valued at about $230 billion in a $20 billion round. closed earlier this year.
Investors in the latest, xAI funding round Nvidia and Cisco Investmentsas well as Musk’s long-time backers Valor Equity Partners, Stepstone Group, Fidelity, Qatar Investment Authority, MGX in Abu Dhabi and Baron Capital Group.
TeslaMusk’s electric car maker and much of his liquid wealth, said last week he invested about $2 billion in xAI.
SpaceX and xAI executives did not respond to requests for comment on whether the merger, for example, could require a regulatory review by the Committee on Foreign Investment in the United States (CFIUS).
Early last year, Musk expanded xAI by integrating it with his social network X, formerly known as Twitter. xAI now faces regulatory scrutiny in multiple jurisdictions internationally, Grok’s AI tools allowed users to create and share sexually explicit images of children and intimate images of adults, mostly women, without consent.
in January The Department of Defense began using Grok inside the Pentagon. The DoD allows analysis of information flowing through its military intelligence database through Grok, Google Gemini and other AI-based systems.
SpaceX today is a much larger defense contractor than xAI, with tens of billions of dollars in federal government contracts.
Two decades have passed since then
Musk founded the reusable rocket maker in 2002 and has grown it into a leading provider of orbital launch services through contracts with NASA and the DoD. SpaceX also owns and operates the Starlink satellite Internet service, which has more than 9,000 satellites in orbit and approximately 9 million customers.
In 2023, Musk launched xAI as a potential competitor to OpenAI, which started the generative AI boom with the release of ChatGPT late last year. Musk was one of the founders of OpenAI in 2015 when the project started as a non-profit AI lab. He left in 2018 and is now embroiled in a heated legal battle with the company and CEO Sam Altman.
Reuters reported late last week, citing two people familiar with the company’s results, that SpaceX had posted a profit of about $8 billion on revenue of $15-16 billion in 2025.
Additionally, xAI has less funding as the cash-hungry company tries to build its own expensive infrastructure to keep up with OpenAI and Googlethey are ahead in the race to build the pre-existing and most widely used model for AI.
The Starlink logo appears on a smartphone screen with a starry night sky in the background.
Nurphoto Nurphoto Getty Images
Musk is making the deal as part of a strategic futuristic plan to put data centers in space. SpaceX recently applied to the Federal Communications Commission for permission to launch up to 1 million satellites as part of its “orbital data centers.”
“My prediction is that within 2-3 years, the cheapest way to do AI computing will be in space,” Musk wrote in a post on Monday. “This affordability alone enables innovative companies to advance in training AI models and processing data at unprecedented speed and scale, accelerating breakthroughs in understanding physics and inventing technologies that benefit humanity.”
Grok is not the only source of controversy in xAI. The company has faced significant community response in and around Memphis, Tennessee, where it is building its infrastructure, starting with the Colossus facility.
The NAACP and Memphis environmental groups have tried to stop xAI from using gas-burning turbines to power a supercomputer facility in the area, and residents have complained about emissions that add to air pollution woes. In nearby Southaven, Mississippi, xAI is building even more data infrastructure, and the community has protested. noise levels from its equipment.
