Elon Musk has merged two of his biggest projects in what’s being called the largest corporate deal in history, combining SpaceX with the artificial intelligence xAI team in an “all-stock transaction” that values the newly combined group at around $1.25 trillion.
The merger was officially announced in a press release published on SpaceX’s website, with Musk describing the move as creating “the most ambitious, vertically-integrated innovation engine on (and off) Earth.”
The deal brings together SpaceX’s rockets, Starlink’s satellite network, xAI’s Grok chatbot, and the X social media platform.
SpaceX was valued at roughly $1 trillion, and xAI at $250 billion in the transaction, per CNBC, with xAI investors receiving about 0.14 shares of SpaceX stock for each xAI share they hold.
The primary push behind the merger seems to be that it solves what Musk describes as an impossible problem with traditional data centers. His solution: to launch data centers into space, where satellites would harness solar power, eliminating the need for expensive cooling systems.
“The capabilities we unlock by making space-based data centers a reality will fund and enable self-growing bases on the Moon, an entire civilization on Mars and ultimately expansion to the Universe,” Musk said in the statement announcing the merger.
SpaceX has already filed paperwork with the Federal Communications Commission requesting authorization to launch up to one million satellites that would function as ‘orbital data centers.” Musk claims that launching a million tons of satellites annually could add 100 gigawatts of AI computing capacity every year with minimal operational costs.
However, the merger brings heavy baggage for Musk’s team.
Outsiders may view the merger as a financial lifeline for xAI, which has been burning through roughly $1 billion per month to compete with established AI firms like OpenAI and Google.
Additionally, xAI’s Grok chatbot has faced regulatory scrutiny after generating sexualized deepfake images of women and children. Multiple countries, including France and the United Kingdom, have launched formal investigations, while Indonesia and Malaysia temporarily blocked the service. According to PBS, French prosecutors even raided X’s offices on February 3 as part of an expanded investigation.
Regardless, the newly combined companies are expected to pursue an IPO around mid-June, which could raise as much as $50 billion and potentially value SpaceX at over $1.5 trillion. If successful, it would be the largest initial public offering in history.
