Space x AI

SpaceX Combines Rocket Science with AI Ambitions

Elon Musk’s SpaceX has bought out his artificial intelligence startup xAI, forming what is likely the most valuable private company on earth.

Key figures:

• SpaceX reportedly purchasing xAI at a $250 billion valuation
• New world record for the largest M&A deal
• Together, SpaceX and xAI are valued at $1.25 trillion

While the sums are remarkable on paper, the deal is about the world’s richest person rearranging his business portfolio. Other investors are involved, but Musk has voting control over both firms.

AI Gets a Rocket Ride in Musk’s Vision

SpaceX makes and launches rockets and spacecraft, and operates the Starlink internet satellite constellation — a group of satellites working together.

xAI is known for developing AI chatbot Grok, but it also recently bought Musk’s social networking site X (former Twitter), which generates vast amounts of data that can be used for AI training.

Musk’s idea is to combine xAI’s AI expertise with space technology, first launching AI satellites from Earth and ultimately creating data centers in space.

Exploring Space‑Based Data Centers

One of the most ambitious ideas tied to the merger is the concept of space‑based data centers. Today’s AI models require enormous amounts of energy. Earth‑based data centers strain power grids and require a lot of water for cooling.

• Concept: Launch server clusters into orbit using SpaceX's Starship, where they run on continuous solar power.
• Benefits: Lower cooling needs, abundant energy, and reduced land use (some still required for satellite launches).
• Challenges: High initial costs, maintenance difficulties, and regulatory hurdles.

It’s a bold idea, pursued also by rivals such as Starcloud and Jeff Bezos’s Blue Origin. Musk claims that “within 2 to 3 years, the lowest-cost way to generate AI compute will be in space.”

What to Expect From a SpaceX Listing

The merged company is considering going public in 2026, potentially targeting a valuation as high as $1.5 trillion. SpaceX is reportedly looking to raise around $50 billion in the initial public offering, which would make it the largest IPO on record. The current record is held by oil giant Saudi Aramco, which raised $25.6 billion in 2019.

Why an IPO?

• xAI is lagging behind competitors like OpenAI, Anthropic, and Google in the AI infrastructure build-up.
• Building data centers on Earth, let alone in space, requires a lot of capital.
• IPO raises SpaceX tens of billions and leaves the door open for further capital injections via new share issues.

OpenAI and Anthropic also pop up as potential 2026 IPO candidates.

How Musk’s Companies Fit Together

Elon Musk oversees an empire of companies that occasionally share ideas, talent, or technology. After the SpaceX-xAI merger, the landscape looks like this:

• Tesla: Electric vehicles, batteries, autonomous‑driving systems, and humanoid robots (in development). Increasingly focused on AI and robotics.
• SpaceX: Rockets, spacecraft, Starlink’s satellites, social media platform X, and AI tools such as Grok.
• Neuralink: Brain‑computer interfaces aimed at medical applications.
• The Boring Company: Tunneling and transport infrastructure.

Tesla is currently the only company in Musk’s portfolio that is listed on a stock exchange.