SpaceX and xAI merge into a combined $1.25 trillion entity

Elon Musk announced that SpaceX had acquired xAI in an all-stock deal, valuing SpaceX at $1 trillion and xAI at $250 billion for a combined $1.25 trillion — reported at the time as the largest merger of any kind on record. xAI shareholders received SpaceX stock at a fixed exchange ratio, folding the AI lab, and the X platform xAI had itself absorbed the previous year, into SpaceX’s corporate structure ahead of a planned SpaceX IPO.

Musk framed the combination around plans for space-based data centres, saying it was “intended to support the development of data centres in space” as a way around terrestrial power constraints. Analysts quoted in coverage were sceptical of near-term feasibility, citing unresolved problems in radiation shielding, cooling systems in vacuum, and the cost of launching heavy compute hardware into orbit. The plan was later named Starmind, envisioning a constellation of solar-powered satellites carrying AI accelerators to run inference in space, with prototype AI1 satellites targeted for launch in early 2027.

The deal drew scrutiny beyond its size. It closed while xAI’s Grok image-generation tools faced investigation in multiple jurisdictions over explicit deepfakes, and as French authorities searched X’s offices as part of a separate inquiry into alleged algorithmic abuse. The merger nonetheless pushed SpaceX’s valuation to within reach of Tesla’s, consolidating Musk’s launch, satellite-internet, social-media and AI businesses under a single corporate umbrella and setting up Grok’s subsequent operation under a unit branded SpaceXAI.