Musk fuses SpaceX and xAI in a $1.25T power play
The merger aims to create an integrated innovation entity combining AI, rockets, and communication technologies, with a focus on developing space-based datacentres to meet growing AI energy demands.
SpaceX has acquired Elon Musk’s AI company xAI, bringing xAI’s Grok chatbot and the X social platform under the SpaceX umbrella in a deal that further consolidates Musk’s privately held businesses. Investor and media accounts of the transaction put the combined valuation around $1.25 trillion, reflecting SpaceX’s scale in launch services and Starlink, alongside xAI’s rapid growth in the AI market.
The tie-up is pitched as a way to integrate AI development with SpaceX’s communications infrastructure and space hardware, including ambitions to push computing beyond Earth. The companies argue that the power and cooling demands of AI, if met mainly through terrestrial data centres, will strain electricity supply and local environments, and that space-based systems could become part of a longer-term answer.
The deal lands after a period of intense deal-making around xAI. xAI completed a $20 billion Series E in early January that valued the company at about $230 billion, and Tesla has disclosed plans to invest $2 billion in xAI, underscoring how capital-heavy the AI race has become and how closely Musk’s firms are being linked through financing and ownership.
At the same time, Grok and X have faced mounting scrutiny over AI-generated harms, including non-consensual sexualised deepfakes, prompting investigations and renewed pressure on safeguards and enforcement. That backdrop adds regulatory and reputational risk to a structure that now ties AI tooling to a mass-distribution platform and to a company with major government and national-security-adjacent business lines.
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