SpaceX Acquires xAI as Elon Musk Aims to Build Space-Based AI Data Centers

Elon Musk’s SpaceX has acquired xAI, bringing the Starlink satellite network, SpaceX rockets, the Grok chatbot and the X social platform under a single corporate umbrella.

Announcing the transaction, Musk said, “This marks not just the next chapter, but the next book in SpaceX and xAI’s mission: scaling to make a sentient sun to understand the Universe and extend the light of consciousness to the stars!”

Transaction Terms & Valuation

The transaction values SpaceX at $1 trillion and xAI at $250 billion, Reuters reported. Under the agreement, xAI investors will reportedly receive 0.1433 SpaceX shares for each xAI share they hold. Some xAI executives may elect to take cash instead of stock, at a reported cash option price of $75.46 per xAI share.

As per market-data firm LSEG data, the transaction sets a new record for the world’s largest M&A deal, surpassing Vodafone’s $203 billion takeover of Mannesmann in 2000.

Reports say the combined company would price shares at roughly $527 each. The merger comes as SpaceX prepares for a likely public offering later this year, with some coverage suggesting a potential post-IPO valuation north of $1.5 trillion.

Musk’s Rationale Behind Merger

Musk said that current advances in AI are heavily dependent on large, terrestrial data centres that consume large amounts of electricity and require intensive cooling. He argued that global power demand driven by AI cannot be sustainably met on Earth in the near term without placing significant strain on communities and the environment.

Over the long run, Musk described space-based AI infrastructure as the only viable path to meaningful scale. “Harnessing even a millionth of the Sun’s energy”, he noted, would generate more than a million times the power currently used by human civilisation. “The only logical solution is to move these resource-intensive efforts to a location with virtually unlimited energy and space,” he said.

By directly tapping near-constant solar power with minimal operating and maintenance costs, orbital infrastructure could dramatically transform how compute is scaled. Space, Musk added, offers an environment where energy generation is unconstrained by weather, land availability or local ecological limits.

“It’s always sunny in space! Launching a constellation of a million satellites that operate as orbital data centers is a first step towards becoming a Kardashev II-level civilization, one that can harness the Sun’s full power, while supporting AI-driven applications for billions of people today and ensuring humanity’s multi-planetary future,” he said.