Elon Musk’s SpaceX has acquired his AI company, xAI, creating what Bloomberg reports as the world’s most valuable private company, valued at $1.25 trillion. Musk, who leads both companies, said the merger aims to develop space-based data centers to support the growing energy demands of AI.
In a memo posted to SpaceX’s website, Musk explained that terrestrial data centers require immense power and cooling, and meeting global AI energy needs on Earth would impose hardship on communities and the environment. The merger will consolidate xAI’s AI capabilities, including its Grok chatbot and the X social media platform, with SpaceX’s Starlink satellite network.
The merger brings together two companies facing different challenges: xAI reportedly burns $1 billion per month, while SpaceX generates about 80% of its revenue from Starlink launches. Musk indicated that the plan will involve a constant deployment of satellites, which could create a continuous revenue stream.
While space-based data centers are the stated goal, the companies’ immediate priorities differ. SpaceX is focused on Starship rockets for Moon and Mars missions, while xAI competes in the global AI market against firms like OpenAI and Google. Recent reports note regulatory and ethical scrutiny over Grok’s previous misuse in generating sexualised content.
SpaceX has hinted that it may pursue an IPO later this year, though the impact of the merger on those plans remains unclear.
